TPS

If you are talking about small businesses, especially individually owned, I'd totally agree. On the other hand, large corporations are a different story. Two things: one, the majority of funds invested in markets come from non-taxed sources--pension funds, and other institutional investors; two, if a US corporation borrows $100 million then decides to build a factory in Indonesia, how does that increase American jobs?

Isn't that the entire point, that the relatively recent infusion of money from speculators (in unregulated markets, where there are no contract limits) has caused the price to rise by some 10-30% higher than they should be?

I guess the Fed's interest rate cuts, bail out, and flooding the markets with liquidity have nothing to do with trying to prevent the recession?

One can't guess what the next "event" will be, but I would add that if government(s) do something to regulate the "dark markets," then we'll see a "correction" as well. $4/gal is also radically changing habits in this country, so an unexpected(?) decline in US demand could trigger as well. Btw, be careful about suggesting I might know what I'm talking about, you could get blacklisted around here...

Once you make the statement that it's a long term argument, one can't prove it or disprove it because no one can "prove" what factors caused the ensuing growth. I've showed in a previous post (long ago) that gdp growth has averaged about 3% per year over time regardless of what has happened with marginal tax rates. Btw, how long is "long term?" You gave credit to Bush2's tax cuts for stimulating growth several years after them; what about now?

Here's a little primer for you: http://www.investopedia.com/university/futures/futures2.asp Specifically this part, "Now that you see that a futures contract is really more like a financial position, you can also see that the two parties in the wheat futures contract discussed above could be two speculators rather than a farmer and a bread maker. In such a case, the short speculator would simply have lost $5,000 while the long speculator would have gained that amount. In other words, neither would have to go to the cash market to buy or sell the commodity after the contract expires.) "

I assume this is supposed to counter the point made in the article I posted? If so, I'm a bit shocked that an article in The Economist could have such a glaring error. Futures speculators do not take delivery, nor do they have to "sell" to someone who will. They "close" their position by taking an opposite position in the same contract. The majority of futures contracts are not "delivered."

I think the true test of his argument is if we see the speculative bubble burst in the next 6 months or so. Speculators are betting on the continued rise, and as long as they can find others to make that bet, the game continues. No different than speculation on any other asset.

Thanks for making my point. Care to share with us how much more income those making over $200k earned in 2005 vs. 2000? And what their average tax rate was? You also misunderstand my point. I am in agreement with anyone who believes tax rates are too high for all Americans and government spending is out of control. My argument is focused on the dubious supply side econ claim that tax cuts lead to an increases in tax revenues. Tax revenues fall in the year of tax cuts, then as long as gdp increases, next year's revenues will be higher than the previous year's revenues, but more than likely not higher than the year prior to the tax cut. Simply look at personal federal tax revenues prior to Bush's tax cuts, during, and after at www.cbo.gov. We are over-taxed and spending is out of control, which is why I won't vote repub or dem. I'm on your side on this issue. Where I am not is my focus on the question "do cuts in marginal tax rates increase or decrease tax revenues?" I've answered that in the paragraph above.

Which is why they can also sit back and say, "Gee, it's supply and demand...don't blame us..."

unregulated markets Interesting piece on how unregulated futures markets are contributing to rising oil prices. Regulated markets have a cap on the amount of contracts any single buyer can purchase to prevent speculators from doing exactly what they're doing now in the unregulated markets. As Keynes said, "Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes a bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done."

SD, It is true that the top 20%'s share of income taxes paid has increased even though their marginal rates have been lowered. But it's one of those "other issues" I said the analysis ignores. The share of income received by the top 20% has increased from 41.1% in 1980 to 48.5% in 2006 (actually, almost the entire gain was made by the top 5%). Personal income (nominal) in 2006 was $11.6 trillion. The changing distribution of income meant that the top 20% received $1.2 trillion more income in 2006 than if their share remained at 41.1%. The so-called rich (top 20%) pay most of the federal INCOME taxes because they "earn" 50% of all income. Again, this is only one part of the picture painted in that article. First, SS revenues have been the most stable source for the government at roughly 6.5% of gdp since the Reagan tax increase. Second, when marginal rates have been lowered, federal income tax revenues are initially lowered; however, over time, as the distribution changes, of course income tax revenues increase again.

Yes, a brilliant piece. A graph that shows a roughly horizontal line at 19.5% because the vertical coordinates are such to make it look like there's virtually no movement. However, when one actually looks at the numbers from the CBO web site, those "little movements" from a $10 trillion base really mean something. For example, revenues as a % of gdp were 20.9% in 2000 and 16.3% in 2004. That change means a drop in revenues by a few hundred billion dollars. One doesn't quite see anything so significant from that graph. Or, the other period when marginal rates were reduced, in 1982 revenues were 19.2% and in 1986 they were 17.5%. Those almost imperceptible dips in the "hoser" graph, mean significant changes in revenues. That's why in both periods we saw the most significant increases in the government budget deficits. Yes GG, spending was NOT held in check, but revenues also dropped. The other big problem with the piece is that he shows the marginal tax rate changes and "total" revenues, which includes corp taxes, social security taxes, and a few other sources. If someone wants to make an argument about the effect marginal personal rates have on revenues, then focus on the individual income tax revenues, not total revenues. For example, while Reagan cut the marginal personal rate in the 1980s, the Greenspan Commission recommended an increase in SS taxes, which also happened under Reagan. There are a few more issues, but it's late...

The best public course for the $$ in the region, IMHO, is the former Hunter's Pointe, now Lochness Links, in Welland (unless you don't like links-style golf). It's about 30 minutes from the Peace Bridge. Of course, it also depends on your skill level. Ivy Ridge was developed by a couple of guys who essentially were copying the HP course. Ivy is a lot easier, but fun, and you don't have to go over the bridge. Harvest Hills is another links-style course. Both (Ivy and HH)are fun, but Lochness still reigns. http://www.hpgolf.ca/

Feingold I don't care who is in the White House, this BS should stop.

I think the Bills had a perfect scenario for their first two picks. CB and WR were the two most glaring needs. They end up getting the #1 CB, then have their pick of the three tallest possible WR R1 picks. They got another need position with the 3rd--they'd be lying if they said they went "bpa" here. The other major area of need was STs, and that's what I expected to see in the remainder of the draft, and it looks like they did that, for the most part. Certainly we can all disagree over various "needs" the Bills had, but I think they did a very good job of addressing most of the holes they had. Now let's see if we can find the next "jason peters" among the udfas! Thanks to all the knuckleheads for posting doom and gloom. Always entertaining!

Meant as sarcasm...

What's wrong with using creative ways to generate revenues in supporting the growth of local government?

This is a nice little summary of things: Money editorial although I disagree with how he tries to tie the Fed's bailout to taxpayers paying for it. In a world of fiat currencies, we'll pay for this via the inflating currency.

no doubt he did a pretty stupid thing, especially since he pissed both wall street and the bush admin off. <just came across this piece he wrote in the post about how the admin blocked states from preventing subprime lending. enemies

Since I'm in agreement with you on the Fed's actions, I'll refrain....

Geez, I go on my annual golf weekend and miss the best discussion in years! Good stuff guys. I can't even find a post where I disagree with GG. I would add that the creation of the Fed was instigated by Mr JPMorgan himself because he didn't want to have to put up his own (bank's) money to stave off the next crisis as he did in 1907. A few other things to add: - The Fed has really only two goals/functions: trying to maintain price stability; and maintaining trust/confidence (via ensuring adequate liquidity) in the system. In times of crisis, price stability goes out the window. - A friend of mine's wife has been emailing me articles relating to the moral hazard issue, asking why shouldn't people have to "pay for their mistakes" (buying houses beyond their means)? My friend owns the best restaurant in my home town of Riverside (county), CA--the capital of mortgage defaults. I asked her, what would you rather have happen: make these people pay for their mistakes, or keep the restaurant in business? The FED is not trying to prevent a recession--we're in one; rather, it's trying to prevent a depression. - My favorite economist, the late H. Minsky, has a book titled "Can IT Happen Again?" IT being a depression. He argued IT could NOT happen again because of a large government sector which stabilizes aggregate demand, and the Fed's "lender of last resort" function which ensures liquidity in times of crisis. This current environment is the most severe test of this view. While I joked in a response to GG that we're in a depression, I do believe that adequate monetary and fiscal policies can prevent IT from happening again. However, I also have to believe that there are some serious deals being made with those countries (China, Japan, OPEC countries) that hold significant $ assets, getting them to refrain from selling off these assets until things have "settled down." ??? Pure speculation on my part. - Love "The Drane's" posts. However, I have to ask if you believe we really had a "capitalist system" before this crisis? - Last point, this crisis reminds me a bit of the South American debt crisis of the 1980s. The solution then (The "Baker Plan") was to let banks carry "dead assets" for several years, slowly writing them off. It was manageable because banks' assets were more diversified. - Great time to be teaching economics.

Here are two options; one risky, one not. Minimal risk: follow JSP's recommendation and pay off the 6.8% fixed rate loan with your "own" money. It's always better to pay off a higher interest loan with funds making less. That would leave you with a payment of $630/mo. Throw the remainder of the cash into a mutual fund and add to it on a montly basis. Risky option: Throw the $32k into a mutual fund. If it earns the historical average of about 12%, then in about 4.3 years you'll have an amount equal to what you owe. Pay it off, then put the majority of your $920 loan payment into the MF. Current problem with this strategy is we're near the peak of a cycle. If there's a significant market correction after you've thrown the $32K in, you're screwed.

I was on the west coast when they went on sale, and I was told they went on sale at 10 am est. I got up at 6:50 am, a little hung over mind you, and got two pretty decent tickets. Well, I get an email about 3 weeks ago telling me my tickets are being printed and there's a facsimile of the tickets on the email. Lo and behold, I bought tickets for the night before at Turning Stone CAsino!! Damn beer!! Oh well, i can always go early and play some golf. Who knows, maybe Don and Walt will need a 4th...