Ah, those lovely U.S. taxes—there’s no way to avoid them, even when living abroad. You can’t even renounce citizenship in order to avoid taxes, as documented in the article, Expatriation Tax. Even if you’re no longer a U.S. citizen, the U.S. reserves the right to require you to pay U.S. taxes if you’re either (A) in non-compliance with filing rules or (B) you’re rich (in which case, you probably won’t be paying anything significant, like other rich Americans). I’m not sure how this is... [More]

After a relatively long dry spell of more toned-down blog entries, Krugman finally sinks his teeth into his opponents again, while at the same time pointing out an interesting concept, the anti–straw-man.

“[T]he construction of anti–straw-men: […] attributing to your intellectual opponents sophisticated, reasonable positions they do not in fact hold, ignoring the nonsense they actually espouse. […] both the OECD and Rajan are calling not just for fiscal austerity but for raising interest... [More]”

Despite the worst economy since the Great Depression and the clear failure of all of the policy tenets of the last three decades, economics and financial reporting has continued largely unchanged. It does not provide context or information that would help people understand why their wages are low, why their houses are underwater (worth less than they still have to pay for them) or why they can’t find jobs. Instead, it continues to generate vast amounts of propaganda designed to continue... [More]

From the article, Roubini on Greece by Felix Salmon (Reuters):

“Sweden’s Bo Lundgren was also on the panel, and he helped explain how the Swedish population has the crucial and decidedly un-Greek ability to unite behind unpopular yet necessary policies once their political leaders have set a certain course. Greece, which is already seeing riots at any hint of fiscal austerity, just isn’t the kind of nation which is likely to decide that five years of wage cuts in a painful and deflationary recession is a price worth... [More]”

From the world of misleading propaganda journalism comes this story: Social Security to start cashing Uncle Sam’s IOUs by Stephen Ohlemacher (Yahoo! News). First off, the author makes sure to use the term IOU right in the title to get people into the right frame of mind. If they get the mistaken impression that the Social Security is issuing IOUs, then that’s a real shame.

Before analyzing any further, a quick recap of how Social Security works is in order. Social Security is individually funded by a special tax (FICA) and, as... [More]

The following six-minute video is of Marcy Kaptur (Ohio) grilling Timothy Geithner about his activities, interests and intentions during and after the bailout.

Kaptur CHEWS Up Tiny Tim GOLDMAN And Spits Him Out (YouTube)

Kaptur is absolutely right to do this and Geithner’s exasperation comes across as extremly dickish. He is an appointed official, she is an elected official; he answers to her. That his every answer must be “Goldman Sachs” when asked about his cohorts is his fault, not hers. It would be nice if not only he, but many others who, as... [More]

Jim Kunstler is never a very uplifting read, but neither do you ever have to worry about him blowing smoke up your ass. There’s one guy who tries not to see rainbows wherever he looks. His latest, Six Months To Live?, is even more downbeat than usual—if that’s even possible—but it’s difficult to argue that he doesn’t have a point. Or that his predictions are complete nonsense. The term “perfect storm” is thrown around entirely too much, but the signs are there:

• Effects of the sub-prime... [More]

The title of the article, The Big Squander by Paul Krugman (NY Times), neatly illustrates the deferential interpretation of the financial robbery it describes.

“About the A.I.G. affair: During the bubble years, many financial companies created the illusion of financial soundness by buying credit-default swaps from A.I.G. — basically, insurance policies in which A.I.G. promised to make up the difference if borrowers defaulted on their debts. It was an illusion because the insurer didn’t have remotely enough money to make... [More]”

The economy has been topic numero uno for many months now, including the almost three months of the Obama administration. During that time, the administration, Wall Street and the media have tried on explanations like they were trying on hats, changing stories and justifications as soon as it looked like the American people—despite all efforts—might be grasping just how thoroughly they were being screwed by what amounts to nothing more than a self-elected aristocratic elite. The following... [More]

Hinwil is a smallish town in the canton of Zürich in Swizerland. It can, by no stretch of the imagination, be characterized as either remotely Hawaiian or Australian. Even more so as an especially long winter retains its iron grip on the region. Why is it then that a local discounter (Aldis) has found it to be economically attractive to carry both ukuleles and didgeridoos, as shown in the photos below?

UkulelesDidgeridoos

Is it really so bad to see the back of an economic system that provides us with lunacy... [More]

We are ill-equipped to deal with huge numbers. Many of couldn’t tell the difference between 100,000 people and 1 million people. We are notoriously bad at estimating, conceiving of and comprehending large numbers. This makes it that much easier to pull the wool over our eyes when it comes to budgets and finance. Take, for instance, the $1 trillion figure being bandied about these days. What does one TRILLION dollars look like? (PageTutor) provides a handy visual mnemonic, starting with a single $100 bill... [More]

Man Up! Hedge-Fund Man’s Advice for Wall Street by Michael Lewis (Bloomberg) is a (somewhat) amusing look at the world through the eyes of “typical” trader on Wall Street. This trader is wondering why Wall Street is wasting its time worrying about what the rest of the non-Wall Street-world thinks. Instead, he feels his fellow traders should stick to the plan and stick it to a government that gave them so much money without bothering to force any conditions first.

“Think about this. Some fool comes along and gives you $15... [More]”

The article, Why I am a Green, not a Democrat by Mitchel Cohen (Informed Comment), wasn’t exactly about finance, but it did involve this interesting question that the author wanted to ask of the exceedingly smarmy Senator Chuck Schumer. It’s about a slated fare increase on NYC transit from the current $2.00 to $3.00 per ride. The fare increase is “to raise $1.2 billion claimed by the MTA as its deficit”. Naturally, the MTA is not allowed to run a deficit, so it has to make up the difference. Since bailing out a transportation... [More]

The blog entry, Washington Post Crashed-and-Burned Watch (“Bipartisan” Edition) by Brad DeLong (Grasping Reality), lists the actual votes for the spending bill recently passed by the Congress and the Senate.

“The Obama bipartisan proposal receives 0 Republican votes in the House, and 0 Republican votes in the Senate. An extremely small group of posturing senators makes the plan materially worse – reducing its likely efficacy as an employment boost by roughly 600,000 or so – and it looks as though the final passage bill will... [More]”

The blog post, Gary Ackerman goes off on the SEC (NY Newsday), refers us to a five-minute video of a portion of the investigation of how the SEC managed to avoid shutting down Bernie Madoff ten years ago. The video is linked below.

Rep. Ackerman on Madoff Fraud (YouTube)

I’ve taken the liberty of providing a rush transcript of the best bits below. In all cases, “you” refers to the SEC.

“Your mission you said was to, ‘protect investors and detect fraud quickly’. How’d that work out? What went wrong? […] One guy with a few friends and helpers... [More]”

Even the pundits most slavishly devoted to the myth of the free market think that the economy is in dire straits. Things look bad on many fronts and even those that denied that anything was wrong even as late as August now agree that the recession actually started in December of 2007. As the elections neared last year, it was accepted wisdom that all of our woes were due to the poor taking out shaky mortgages. Once that canard failed to hold up, the media stopped trying to come up with causes... [More]

David Rees weighs in with possibly one of the last GYWO cartoons ever. He started about eight years ago and has moved on to videos instead. As usual, he manages to capture that which is most important out of the miasma of obfuscation that the mainstream media emits (as Homer Simpson put it: “It’s funny because he says what we’re all thinking.”

get your war on 81 − #6

And the money quote, transcribed for posterity.

“Oh, enough with all the “broad bipartisan” bullshit! Did Republicans not got [sic] their asses totally... [More]”

Bill Watterson understood how things worked 15 years ago, which is pretty much how things still work today (click to see a larger version).

Calvin's Premium Lemonade Stand

The date for the cartoon was obtained from this comment, Re: $8.4 BILLION Profit for Oil Giant (This Quarter Only!) and the image originally found on the Truth About Cars blog. Another full transcript of the cartoon is available at Recurring themes in Calvin and Hobbes; Wikipedia, the original source has since been edited and longer contains it. Such... [More]

In discussions between two opposing viewpoints, people tend to choose a “winner” based on who’s willing to raise the volume and lower the level of discourse. If they can identify with one side’s points—or have no reason not to believe them—they tend to identify that way. Simplistic and specious reasoning, straw-man logic and outright, bold-faced lies often carry the day. Check out any Bill O’Reilly interview[1] and you’ll see a master of the form at work.

Now, the right-wing version involves ... [More]

So, suddenly everyone cares about macro-economics. Suddenly, we’ve upgraded our interest in the magic, money-making machine—this financial Perpetuum Mobile—from non-existent to frantic. For the longest time, very few of us cared exactly how it worked or why. No one bothered to ask why it was a given that investing in the market made sense—be it through funds, pensions or directly[1]—that’s why it’s called a given. (Duh.) We ignored clear signs that some were making out like bandits—and... [More]

As of the weekend, we heard that the Dow industrials [was] down over 5,500 points, or 39%, from year-ago peak (MarketWatch). It’s strange, though, because doesn’t crash mean that everything stops working? Crash means bread lines and digging holes and filling them in again to pass the time. At least, that’s what happened during the last crash. What does crash mean today? The internet clearly still works. Jets are still flying on time... [More]

They say that the financial system is on the brink of collapse, that it has stopped “working”. This sounds bad. However, before rushing to support whatever solution is put forward to fix it, it would be best to figure out what it was like when it was working smoothly. Only then can you know whether or not you want to fix it. Some of the votes of “no” to the bailout came from representatives that believed just that: that the goal is not to put everything back the way it was, with the same people... [More]

Most of us don’t follow the markets very assiduously. We buy into pensions or mutual funds or get CDs or money-market funds at the bank or we just have a savings account with decent... [More]

Even the most razor-sharp of hewers to the party line must be having a tremendous amount of psychic agony in trying to follow the script. If cognitive dissonance can cause actual, physical pain, then now is surely the time for it to do so. John McCain is praising the bailouts and buy-outs of major American financial institutions to high heaven, while at the same time calling for even less regulation—ostensibly because there are still a few banks that haven’t managed to glut themselves into... [More]

Two point five kids.

Four-bedroom house in a good neighborhood.

Two-car garage full of garden tools and two new cars in the driveway.

Good schools.

Fancy vacations.

Keeping up with the Joneses.

The American Dream.

It’s called a dream because it doesn’t seem realistic that it will come true for every American. And it doesn’t—but only for those losers who aren’t willing to work hard enough for it. That’s the hard-as-nails story anyway—the philosophical core of the American... [More]

Factors in Our Colossal Mess by Gabriel Kolko (CounterPunch) offers a nigh-panicked critique of the out-of-control hyper-captitalism found in the rarified air of the international financial instruments markets. With a name like that, it’s already clear that the intent is to hoodwink and the system does not disappoint. With the introduction of ever faster computing, ever more memory and ever tighter integration of information and communication, traders, who used to be limited in their schemes to invent money out of thin air,... [More]