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The export of American Manufacturing Know how has given competing countries a 30 year boost ahead as our competitors. Forget about the unskilled labor intensive jobs that would have gone overseas. We sent manufacturing equipment, we sent people to train maintainance and mchining support people. We did all this for quick boosts of companies bottom lines . Yes , certain corps made 10% more for a while.

the problem is it was like playing monopoly. We sold all our holdings in manufacturing know how for a hand full of quick cash. No matter how much cash you have , if you have no property , you eventually lose in Monopoly. Its the same now. We gave away the greatest American Asset , "American Know How". We put countries that would have taken 30 years to develop their own know how into a position where they manned our machines with low paid laborers. Without us handing then turnkey manufacturing know how , those people would still be painting eyes on plastc snow men.

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Originally Posted by Saltys (Post 878590)

HUH?

Is this guy split personality?

why of course he is.... that's why JohnR listed him twice.

Quote:

Originally Posted by Saltheart (Post 878705)

This is all very true, and add to it the fact that these other countries don't have the legal protection for intellectual property that the US does.

On one hand this means the US will always be a more desirable place for some industries to innovate...but on the other...

And perhaps our best export...the American Dream.

-spence

People don't want to work around here. They are too lazy and it's too easy to live off of our system. I have job openings and will train and hire anyone just in case anyone wants to try to bust my balls. People will work for a day or a week. That's even if they show up. Some even say it's not for me and then go about their jobless business. I would send my stuff overseas in a second if it were possible. I'm losing money because I can't hire jobless people that are doing just fine on the plan they are on now.
Posted from my iPhone/Mobile device

Quote:

Originally Posted by spence (Post 878728)

And perhaps our best export...the American Dream.

-spence

you've mentioned "THE AMERICAN DREAM" a couple of times now...base on your rhetoric...this appears to be higher taxes, increased regulation, more dependence on an increasing number of unsustainable government programs, government acting in ways that they determine will "benefit" American citizens, even if the citizens object, "forced modelling":yak5:....and on and on...haven't seen much in your musings that I'd relate to "THE AMERICAN DREAM"

Reader's digest version of article: Bill Gross was right. We are in a "new normal" of slow economic growth, chronically high unemployment, and it sucks and will continue to suck donkey balls.

Quote:

Pimco?s Gross Proves Summers Wrong as Selloff Shows ?New Normal? Is Real - Bloomberg

Pimco’s Gross Proves Summers Wrong as Selloff Shows ‘New Normal’ Is Real

By Sree Vidya Bhaktavatsalam - Aug 10, 2011

Bill Gross was right after all.

Former White House economic adviser Lawrence Summers and Christina Romer, the former chairman of the U.S. Council of Economic Advisers, were among critics who challenged a view promoted by Gross’s Pacific Investment Management Co. that the U.S. economy may be headed for a long period of below-average growth and high unemployment, a scenario known as “new normal.” Money manager Kenneth Fisher called the concept “idiotic.”

Now Gross and co-chief investment officer Mohamed El-Erian, who coined the term more than two years ago, have been vindicated by the U.S. Federal Reserve, which said yesterday that the economic recovery is “considerably slower” than anticipated, following the biggest stock market loss since December 2008. BlackRock Inc. (BLK) co-founder Laurence D. Fink, who in January said he didn’t believe in the “new normal,” is forecasting growth of 1 percent to 2 percent for much of the decade.

“A lot of the new normal characteristics have played out,” El-Erian, chief executive officer of Newport Beach, California-based Pimco, said in an interview. “Some people confused new normal with fatalism, but the intention was the opposite. There was the hope that policy makers would recognize that there are structural responses they needed to embark on.”

‘Japanese-Like Growth’

The Federal Reserve yesterday pledged for the first time to keep its benchmark interest rate at a record low at least through mid-2013 to revive the flagging U.S. recovery. Chairman Ben S. Bernanke and his colleagues acted after reports showed the economy was slowing and an unprecedented downgrade by Standard & Poor’s to the U.S. credit rating triggered a stock market rout that wiped out $1 trillion in the first trading session after the cut.

“It’s pretty amazing that the Fed will be exceptionally low until 2013,” said Jason Rogan, director of U.S. government trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. “They are telling you that we are in a stage of Japanese-like growth.”

Pimco outlined the “new normal” scenario at its annual Secular Forum in May 2009 that set investment guidelines for the firm for the next three to five years. The forecast predicted that, following the market collapse in 2008, the U.S. economy would grow at a below-average pace for the next several years as growth in the developed markets slows, unemployment stays elevated and the “heavy hand of government” would be evident in the markets.

Quantitative Easing

Unprecedented asset purchases by the Fed helped revive the economy and financial markets. U.S. stocks doubled from their low in March 2009 to their high in April earlier this year.

Bill Miller, the manager famed for beating the Standard & Poor’s 500 Index for a record 15 years through 2005, rejected the idea of a “new normal” in 2009, saying that the odds may not favor a prolonged period of slow growth.

Summers, the former White House economic adviser, said in 2009 he would be “very reluctant to accept the idea” of an extended period of slow growth for the U.S. economy. Romer has said she found the “fatalism” of the idea that unemployment would remain elevated because of structural issues “distressing.”

Summers wasn’t immediately available for comment, according to spokeswoman Victoria Groves. Romer didn’t return a call seeking comment.
‘Three-Plus Percent’

As the economy strengthened, the criticism grew louder. In April, Romer said that the jobless rate “is not the new normal.” BlackRock’s Fink said during a conference call with investors and analysts in January that he never shared Pimco’s view on the post-crisis economy.

“We never believed in the ‘new normal,’ ” Fink said then. “We were always talking about a U.S. economy growing three-plus percent.”

At the fixed-income unit of BlackRock, investment chief Rick Rieder had been less optimistic, telling clients since at least May 2010 that economic growth in the U.S. will be held back by “structural” factors such as problems in the labor market and the debt problems in Europe.

“We think there will be growth in the range of 1 to 2 percent,” Rieder, chief investment officer for fundamental fixed income at BlackRock, said in an interview yesterday. Fink used the same numbers in an interview with Bloomberg Television’s Erik Schatzker in June, adding growth will remain “modest” for the next 10 years.

Rieder oversees more than $600 billion for New York-based BlackRock, which is the world’s largest asset manager with $3.7 trillion. Fink, who co-founded BlackRock in 1988, is chief executive officer of the firm. While he oversees the asset- management firm, investment decisions are left to individual portfolio managers.

‘People Are Pessimistic’

Fisher said that Pimco and others are choosing to ignore the positives in the market, while focusing on unemployment and consumer spending, which are “late lagging indicators.” While he hasn’t changed his view on the “new normal,” it will be hard to make investors change their minds, said Fisher, chief executive officer of Fisher Investments Inc. in Woodside, California, which runs $44 billion in assets.

“People are pessimistic in the aftermath of a bear market, so I expect ‘new normal’ to stay popular,” he said in an interview. “I don’t expect it to go away anytime soon.”

Gross domestic product expanded at a 1.3 percent annual pace in the second quarter, less than forecast by economists, a July 29 government report showed. The economy almost stalled in the prior quarter, growing at a 0.4 percent pace, the weakest three-month period since the recovery began in mid-2009.

Hiring has slowed as employers lost confidence in the recovery. Average monthly payroll gains fell to 72,000 in the three months through July, from 215,000 in the prior three months. The jobless rate fell to 9.1 percent in July from 9.2 percent in June as Americans gave up looking for work.

Missing the Rally

The Fed said yesterday it expects a “somewhat slower pace of recovery over coming quarters,” adding that “downside risks to the economic outlook have increased.” The Fed also said there has been “a deterioration in overall labor-market conditions in recent months” and household spending has “flattened out.”

Gross hasn’t always been right about market calls. Earlier this year, he dumped U.S. Treasuries from his $245 billion Pimco Total Return Fund (PTTRX), only to miss a rally as investors fled to safer assets amid market volatility and the sovereign debt crisis in Europe. His fund has advanced 3.6 percent this year, lagging behind 66 percent of peers, Bloomberg data show.

Earlier this month, Pimco cut its forecast for U.S. economic growth from a range of 2 to 3 percent to a range of 1 percent to 2 percent.

El-Erian said he also “underestimated” how far the Federal Reserve would go to stimulate the markets and the economy by embarking on a second round of asset purchases using a technique called quantitative easing.

“QE2 was a failed attempt to use the balance sheet of the Federal Reserve to set the U.S. economy on a path of growth,” El-Erian said in the interview. “We saw a short-term boost to growth which has now petered out.”

To contact the reporter on this story: Sree Vidya Bhaktavatsalam in Boston at sbhaktavatsa@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net

One big positive I've noticed with the economy being this way is that the strip clubs have been able to hire much better looking dancers than in the past. Girls that otherwise wouldn't consider that type of work now are doing it because they can make decent money.

Of course this doesn't fix the problems with the economy, but it is a silver lining, at least for me.

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Originally Posted by fishbones (Post 878828)

Laugh or cry - this time I'll laugh :rotf2:

History will show this is a Depression, we call it a recession now because it is more optimistic.......

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Originally Posted by spence (Post 878491)

That's why Alan Simpson said you have to hit every cow. Entitlements, pork, international aid, corporations, wealthy etc... make everyone feel a little pain and you can solve the problem.

-spence

you've mentioned Simpson a couple of times as though he may have some credability with you....

August 11, 2011 4:00 A.M.

Alan Simpson on Obama’s Leadership
The president needs to put forth a budget plan.

As a former senator who served under four different presidents, Alan Simpson (R., Wyo.) is perplexed at the way the current one has “led” since taking office in 2009. “One thing that’s puzzled me from the beginning of this administration is that, on every major piece of legislation, he’s said, ‘Let Congress decide,’” Simpson tells National Review Online. “With every other administration in the past, whether it was Carter, Reagan, Bush, or Clinton, whenever they wanted to do something big, those of us in Congress would always say, ‘Okay, where’s the White House bill?’ They always had a plan to show us.”

Unfortunately, Simpson argues, President Obama has failed to adopt this approach, opting to let Congress take the lead on legislative matters, even those of paramount importance, such as health care, the federal budget, and — most recently — the debt ceiling. “I’ve never seen that done before,” he says. “Congress is never going to hammer out a sensible bill if they don’t know what the White House is going to do with it.”

Only House Budget Committee chairman Paul Ryan (R., Wis.), he points out, has had the gumption to step forward with a plan to “slay the biggest mastodon in the kitchen” by tackling the biggest driver of the national debt — entitlement spending — and face the inevitable “howling, shrieking, moaning” of the political class. “The president will say that he has a plan,” Simpson says. “He gave a speech and said he wanted to cut $4 trillion, which is a minimal number, but then he’s not going to touch Social Security and Medicare, for crying out loud.” That just won’t cut it.

The same goes for the AARP and others who refuse to acknowledge the need for meaningful entitlement reform. “If you can’t figure out where these programs are going, you’re off your rocker,” he says. And contrary to what most Democrats like to argue, the new health-care law did nothing to improve their long-term outlook. “You can call it Obamacare, or Elvis Presley care, or whatever you want to call it, it can’t work. It can’t sustain itself.”

Simpson says the Tea Party has been “a force” in the deficit debate, but suggests their role is being over-hyped by the media. “There are some very good people in the Tea Party, and there are just as many screwballs, lightweights, and boobs as there are in the Democratic and Republican parties,” he says. “They get all the play because the media is only interested in conflict, confusion, and so on.”

Funny, he didn't mention the Tea Party as an obstacle...he does chastise Grover Nordquist and cite him as an obstacle with regard to tax reform but in terms of calling for the necessary cuts on a scale that he seems to believe are needed...the Tea Party Terrorists is the only group out there that I'm aware of actually demanding these large cuts ...

Quote:

Originally Posted by fishpoopoo (Post 878819)

Reader's digest version of article: Bill Gross was right. We are in a "new normal" of slow economic growth, chronically high unemployment, and it sucks and will continue to suck donkey balls.

Here's another good read by Bill Gross...long but well worth it.

-spence

Quote:

The past several decades have witnessed an erosion of our manufacturing base in exchange for a reliance on wealth creation via financial assets.
Fiscal balance alone will not likely produce 20 million jobs over the next decade. Government must take a leading role in job creation.
A growing number of skeptics wonder whether college is worth the time or the cost.

A mind is a precious thing to waste, so why are millions of America’s students wasting theirs by going to college? All of us who have been there know an undergraduate education is primarily a four year vacation interrupted by periodic bouts of cramming or Google plagiarizing, but at least it used to serve a purpose. It weeded out underachievers and proved at a minimum that you could pass an SAT test. For those who made it to the good schools, it proved that your parents had enough money to either bribe administrators or hire SAT tutors to increase your score by 500 points. And a degree represented that the graduate could “party hearty” for long stretches of time and establish social networking skills that would prove invaluable later on at office cocktail parties or interactively via Facebook. College was great as long as the jobs were there.

Now, however, a growing number of skeptics wonder whether it’s worth the time or the cost. Peter Thiel, an early investor in Facebook and head of Clarium Capital, a long-standing hedge fund, has actually established a foundation to give 20 $100,000 grants to teenagers who would drop out of school and become not just tech entrepreneurs but world-changing visionaries. College, in his and the minds of many others, is stultifying and outdated – overpriced and mismanaged – with very little value created despite the bump in earnings power that universities use as their raison d’être in our modern world of money.

Fact: College tuition has increased at a rate 6% higher than the general rate of inflation for the past 25 years, making it four times as expensive relative to other goods and services as it was in 1985. Subjective explanation: University administrators have a talent for increasing top line revenues via tuition, but lack the spine necessary to upgrade academic productivity. Professorial tenure and outdated curricula focusing on liberal arts instead of a more practical global agenda focusing on math and science are primary culprits.

Fact: The average college graduate now leaves school with $24,000 of debt and total student loans now exceed this nation’s credit card debt at $1.0 trillion and counting (7% of our national debt). Subjective explanation: Universities are run for the benefit of the adult establishment, both politically and financially, not students. To radically change the system and to question the sanctity of a college education would be to jeopardize trillions of misdirected investment dollars and financial obligations.

Conclusion to ponder: American citizens and its universities have experienced an ivy-laden ivory tower for the past half century. Students, however, can no longer assume that a four year degree will be the golden ticket to a good job in a global economy that cares little for their social networking skills and more about what their labor is worth on the global marketplace.

Fareed Zakaria, as usual, has a well-thought-out solution. “We need,” he writes, “a program as ambitious as the GI Bill,” but one that focuses on retraining existing unemployed workers and redirecting our future students. Instead of liberal arts, he suggests focusing on technical education, technical institutes and polytechnics as well as apprenticeship programs. Our penchant for focusing on high tech value-added jobs should be modified and redirected, he claims, to mimic the German path, which allows people with good technical skills but limited college education to earn a decent living.

One thing college does do is to keep 25 million students off the unemployment rolls, much like it did for me when I went on my own four year vacation. The world was a different oyster in 1966, however, and it behooves America to recognize the reversal and the necessity for significant changes if it is to compete in the global marketplace of the 21st century.

It is becoming obvious that the 2012 election will be fought on a battlefield of job creation. A 9.1% official unemployment rate, and a number nearly double that when discouraged and part-time workers are included in the rolls, portend an angry and disillusioned electorate, which will include millions of jobless college graduates ill-trained to compete in the global marketplace. Over the past 10 years under both Democratic and Republican administrations, only 1.8 million jobs have been created while the available labor force has grown by over 15 million. It is clear, however, that neither party has an awareness of the why or the wherefores of how to put America back to work again. Few economic advisors from either party ever mention structural long-term disconnects in employment – a recognition that cyclical influences will no longer dominate the U.S. labor market. Manufacturing and goods exports have ceded enormous ground to China and other developing labor markets, as America’s reliance on services and high tech innovation has exposed gaping holes in an historically successful model. Almost any industry dominated or significantly connected to finance and financial leverage has hit the canvas and stayed down in the aftermath of Lehman 2008. Housing construction, real estate brokerage, banking and consumer retail employment will likely never come back to levels dominated by our prior decade’s excessive leverage and its abuse leading to overconsumption. Because of that focus, a “shovel-ready,” vigorous manufacturing sector is not there to pick up the slack.

Similarly, the high tech paragons of the 21st century – Apple, Microsoft, Google, Facebook et al. – never were employers of high school or B.A. college graduates in significant numbers. Production of hardware, to the extent that any was needed, quickly gravitated to foreign ports of call where workers were willing to produce an excellent product for 1/10th of the U.S. wage. The past several decades have witnessed an erosion of our manufacturing base in exchange for a reliance on wealth creation via financial assets. Now, as that road approaches a dead-end cul-de-sac via interest rates that can go no lower, we are left untrained, underinvested and overindebted relative to our global competitors. The precipitating cause of our structural employment break is both internal neglect and external competition. Blame us. Blame them. There’s plenty of blame to go around.

Solutions from policymakers on the right or left, however, seem focused almost exclusively on rectifying or reducing our budget deficit as a panacea. While Democrats favor tax increases and mild adjustments to entitlements, Republicans pound the table for trillions of dollars of spending cuts and an axing of Obamacare. Both, however, somewhat mystifyingly, believe that balancing the budget will magically produce 20 million jobs over the next 10 years. President Obama’s long-term budget makes just such a claim and Republican alternatives go many steps further. Former Governor Pawlenty of Minnesota might be the Republicans’ extreme example, but his claim of 5% real growth based on tax cuts and entitlement reductions comes out of left field or perhaps the field of dreams. The United States has not had a sustained period of 5% real growth for nearly 60 years.

Both parties, in fact, are moving to anti-Keynesian policy orientations, which deny additional stimulus and make rather awkward and unsubstantiated claims that if you balance the budget, “they will come.” It is envisioned that corporations or investors will somehow overnight be attracted to the revived competitiveness of the U.S. labor market: Politicians feel that fiscal conservatism equates to job growth. It’s difficult to believe, however, that an American-based corporation, with profits as its primary focus, can somehow be wooed back to American soil with a feeble and historically unjustified assurance that Social Security will be now secure or that medical care inflation will disinflate. Admittedly, those are long-term requirements for a stable and healthy economy, but fiscal balance alone will not likely produce 20 million jobs over the next decade. The move towards it, in fact, if implemented too quickly, could stultify economic growth. Fed Chairman Bernanke has said as much, suggesting the urgency of a congressional medium-term plan to reduce the deficit but that immediate cuts are self-defeating if they were to undercut the still-fragile economy.

Academics also point to a theory known as Ricardian equivalence, a notion named after David Ricardo from the early 19th century. His ivory tower theorem was that consumers would become more and more confident of their financial future if in fact they believed that their own government’s exuberance would be held in check. Balance the U.S. or any government budget, he prophesized, and the private sector would extend and lever theirs. Well, commonsensically and anecdotally, I know of no family who, after watching the Republican candidates’ debate in New Hampshire, went out the next day and bought themselves a flat screen under the assumption that their Medicare entitlements would be cut in future years and the U.S. budget balanced. Ricardo and his “equivalence” belong in the trash bin of theses and research aimed more towards academics than a practical remedy to America’s job crisis.

What then, shall we do? My preferred solution has long- term elements, which includes the opening language in this Investment Outlook, concerning the value of a college education as currently structured. Peter Thiel may be on to something, but all of our kids just can’t up and quit college à la Bill Gates. Still, if we are to compete globally while maintaining a higher wage base, we must train for “middle” in addition to “high” tech. Philosophy, sociology and liberal arts agendas will no longer suffice. Skill-based education is a must, as is science and math.

Additionally and immediately, however, government must take a leading role in job creation. Conservative or even liberal agendas that cede responsibility for job creation to the private sector over the next few years are simply dazed or perhaps crazed. The private sector is the source of long-term job creation but in the short term, no rational observer can believe that global or even small businesses will invest here when the labor over there is so much cheaper. That is why trillions of dollars of corporate cash rest impotently on balance sheets awaiting global – non-U.S. – investment opportunities. Our labor force is too expensive and poorly educated for today’s marketplace.

In the near term, then, we should not rely solely on job or corporate-directed payroll tax credits because corporations may not take enough of that bait, and they’re sitting pretty as it is. Government must step up to the plate, as it should have in early 2009. An infrastructure bank to fund badly needed reconstruction projects is a commonly accepted idea, despite the limitations of the original “shovel-ready” stimulus program in 2009. Disparate experts such as GE’s Jeff Immelt, Fareed Zakaria, Jeffrey Sachs and Paul Krugman believe an infrastructure bank to be an excellent use of deficit funds: a true investment in our future. While the current administration admits that the $25 billion in Recovery Act spending on infrastructure only created 150,000 jobs, it also stabilized and improved this nation’s productivity for years to come. Clean/green energy investments also come to mind, most of which require government funding and a government thrust in order to create millions of jobs. China knows this and is off and running. The U.S. needs to learn from their state-oriented model. In times of extremis, pushing on the private sector string is ineffective, especially within the context of a global marketplace that offers alternative investment locations. Government must temporarily assume a bigger, not a smaller, role in this economy, if only because other countries are dominating job creation with kick-start policies that eventually dominate global markets.

And how about at least an intelligent discussion on “trade policy” which incorporates more than just a symbolic bashing of Chinese currency relative to the dollar. Who, from either side of the aisle is willing to discuss the use of trade measures in order to help balance our $500 billion trade deficit? This is delicate territory, reawakening fears of Smoot-Hawley in the 1930s, but we are in delicate territory regarding our unemployment rate as well. Warren Buffett in 2003 advocated an idea he called “Import Credits” which he claimed would increase exports in the hundreds of billions and jobs in the hundreds of thousands. Republicans? Democrats? Discussion please.

In the end, I hearken back to revered economist Hyman Minsky – a modern-day economic godfather who predicted the subprime crisis. “Big Government,” he wrote, should become the “employer of last resort” in a crisis, offering a job to anyone who wants one – for health care, street cleaning, or slum renovation. FDR had a program for it – the CCC, Civilian Conservation Corps, and Barack Obama can do the same. Economist David Rosenberg of Gluskin Sheff sums up my feelings rather well. “I’d have a shovel in the hands of the long-term unemployed from 8am to noon, and from 1pm to 5pm I’d have them studying algebra, physics, and geometry.” Deficits are important, but their immediate reduction can wait for a stronger economy and lower unemployment. Jobs are today’s and tomorrow’s immediate problem.

Those who advocate that job creation rests on corporate tax reform (lower taxes) or a return to deregulation of the private economy always fail to address dominant structural headwinds which cannot be dismissed: 1) Labor is much more attractively priced over there than here, and 2) U.S. employment based on asset price appreciation/finance as opposed to manufacturing can no longer be sustained. The “golden” days are over, and it’s time our school and jobs “daze” comes to an end to be replaced by programs that do more than mimic failed establishment policies favoring Wall as opposed to Main Street.

William H. Gross
Managing Director

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Originally Posted by spence (Post 880142)

Here's another good read by Bill Gross...long but well worth it.

-spence

you are joking right?

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Originally Posted by scottw (Post 880178)

you are joking right?

I know it is a lot for you to read at one time. If it helps try thinking about baseball.

If that super rich guy went up your ass then this will push it even deeper...get out the lube.

http://www.nytimes.com/2011/08/15/op...h.html?_r=2&hp

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Stop Coddling the Super-Rich
By WARREN E. BUFFETT
Published: August 14, 2011

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

-spence

Quote:

Originally Posted by spence (Post 880195)

I know it is a lot for you to read at one time. If it helps try thinking about baseball.

-spence

you've become even nastier than Paul Krugman...perhaps more demented too..if they gave out a Nobel Prize for cranky, delusional leftists...well....

it's excessively long...and boring.. because he's used twice as many words as was necessary to try to impress the progressives...

June 24, 2011
Paul Krugman: It's Not the Madmen in Authority, It's the Fact That the Academic Scribblers Are Mad...

The Triumph of Bad Ideas: Bill Gross of Pimco calls for more fiscal stimulus and denounces the “anti-Keynesian” consensus. Now he tells us. But can we note just how bizarre our situation is? Keynesian economics has actually come through the crisis with flying colors. The only knock on it is the “Obama tried stimulus and it failed, neener neener” thing — but those of us who took our Keynesianism seriously warned literally from the beginning that the stimulus was far too small. And yet in the political domain Keynesianism is seen as discredited, while various forms of crowding out/austerity is expansionary talk, which have in fact totally failed — look at interest rates! — have become orthodoxy.

concensus...concensus...where have I heard that bef--...ohhh...this means that Bill Gross is a D-E-N-I-E-R!!!!!
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Great argument for Keynes

FAREED ZAKARIA, HOST: 'But even if you were, wouldn't John Maynard Keynes say that if you could employ people to dig a ditch and then fill it up again, that's fine, they're being productively employed, they'd pay taxes, so maybe Boston's Big Dig was just fine after all."

So in Zakaria's view, the government employing people to do absolutely nothing of value would fix the economy.

Krugman..."the stimulus wasn't nearly big enough"
Gross...."more fiscal stimulus"-government spending
Fareed Z...."dig holes and fill them in to stimulate the economy"
Jeffrey Sachs..."Sachs says he would've been fine with a massive stimulus that had been focused on green jobs, "in which the fall in consumer spending would be offset by investments in sustainable energy."-Ezra Klein

like this one
http://www.bostonherald.com/business...8&pos=breaking
hey, how many Obama touted Green Jobs Companies have gone belly up now and how much has it cost the tax payers???

these guys are great:uhuh: I think we've located Spence's "most economists"
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Spend>>>spend>>>>spend!!!!

arguing for bigger government, more spending and "stimulus", a more statist approach BRILLIANT!!....and citing the Three Stooges of Keynesian economics and Crony Capitalism...Fareed Z, Krugman and Immelt, that's just novel.............wonder if Fareed and Gross know that Krugman recently called for an alien invasion to stimulate military sending to bring the economy back?...

On Sunday's "Fareed Zakaria GPS," New York Times columnist - and, ahem, Nobel laureate - Paul Krugman actually advocated space aliens attack earth thereby requiring a massive defense buildup by the United States that would stimulate the economy.

it's clear Spence that you would be far more comfortable in one of those little socialist countries across the pond:uhuh:

Quote:

Originally Posted by spence (Post 880195)

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

-spence

so... write a check Buffet .....between Soros and Buffet..the left sure champion some real low life billionaires

Buffett pretty much owes his entire fortune to the death tax. #^&#^&#^&#^& Patten notes that one of the less renowned legs of Buffett’s business is “a huge casualty and life insurance business which provides massive reserves of cheap capital to support his other two investing activities.” The third leg of Buffett’s business specializes in the purchase of “family owned businesses at fire sale prices.”

These people were never high rollers, but assets (like farmland) have enough value on paper when it is passed to heirs that their estates end up owing as much as 55% in death taxes. When heirs can’t pay these high taxes without liquidating the business, businesses like Buffett’s development arm swoop in and pick up the property at bargain basement prices.

Back in 1931, the liberal son of an immigrant banker knew what to call this kind of business. Matthew Josephson wrote The Robber Barons to argue that the industrial giants of the 19th century had not created wealth in the right way. They had acted like the feudal barons who for centuries had dominated the mountain passes through the Alps. The great corporations of the Gilded Age "monopolized strategic valley roads or mountain passes through which commerce flowed" just like the old barons-of-the-crags.

Hello, Warren? Isn't your business model exactly the one that so offended young Matthew back in the Great Depression after he got back from a decade living la vie bohème as an ex-pat in Paris? Aren't your businesses sitting at an economic choke-point, exploiting the unintended consequences of bad government economic policy, gouging successful family businesses both coming and going, and exploiting grieving widows?

Warren E. Buffett urged Congress Wednesday to maintain the estate tax, saying that plans to repeal the tax would benefit a handful of the richest American families and widen income disparity in the United States.

Mr. Buffett, the billionaire chairman of Berkshire Hathaway, told the Senate Finance Committee that advocates of repeal were “dead wrong” to call the tax a “death tax.”
It would be more appropriate to call it a “death present,” Mr. Buffett, 77, said. “A meaningful estate tax is needed to prevent our democracy from becoming a dynastic plutocracy.”

Several members of the megarich class, including Buffett, George Soros and William Gates, Sr (Bill Gates' father), opposed efforts by the Bush administration in 2001 to eliminate the estate tax. Gates testified in Congress and expressed concern that eliminating the estate tax would reduce charitable donations.

Although there is little empirical evidence linking charitable contributions to a motivation to avoid taxes, giving away your fortune before you die is one sure way to avoid the estate tax. In 2004, The Wall Street Journal suggested to Buffett that he should make sure his money would go to the government if he felt so strongly about the need for an estate tax. The Journal challenged him not to take advantage of the loophole in estate-tax laws by donating his wealth to a foundation before his death. However, as everyone knows by now, this is exactly what Buffett did when he pledged to give $31 billion to the Bill & Melinda Gates Foundation and another $6 billion to foundations run by his children. typical