Just a meta-comment to cheesehead:

If you could be a bit more succinct and less prone to pointless wrangling of the you-said-I-said-type I would pay more attention to your views. As it is I neither have the time, nor the inclination.

GE's Effecdtive tax rate = 3.2%
 

It is becoming clear that on the revenue side of the equation, one of the major reasons (if not *the* main one) the US government has a gigantic hole in its balance sheet is that US corporations - especially huge multinational ones led by familiar names such as Google ("don't be evil" apparently does not include dodging billions of dollars in taxes per annum) and (of course) Goldman Sachs-and-Pillages - have exploited loopholes in the tax code (many of which they lobbied hard for) to reduce their effective tax rates to near zero. Latest egregious example on this front is GE, as ZeroHedge explains:

[url=http://www.zerohedge.com/article/how-ge-paid-total-5-billion-domestic-taxes-betwen-2002-and-2009-639-billion-domestic-revenue]How GE Paid A Total Of $5 Billion In Domestic Taxes Between 2002 And 2009 On $639 Billion In Domestic Revenues[/url]
[quote]One of the more popular topics recently is the collapse in corporate tax revenues, and the resultant push by the administration to ramp up taxation at the corporate level. As Zero Hedge has been disclosing for two months now, it all has to do with the now discredited concept of the "wall of money", which is mostly accumulated offshore and is thus not only available domestically, but is not taxed by the US. However, one company which has somehow managed to slip through the cracks is the infamous General Electric: the company, that in addition to the banks, has been the biggest beneficiary of Obama's taxpayer largesse. Here are the numbers: in the period between 1991 and 2009 GE's pretax income is cumulatively $293 billion on which however the firm has paid only $25.2 billion in current domestic taxes, or a 8.58% cumulative tax rate. Yet [b]where it gets wild is the narrower period between 2002 and 2009, during which timeframe the firm made a generous $164.4 billion in pretax net income (not to mention $639 billion in domestic revenue, just over half of total revenues of $1.2 trillion) it paid only $5 billion in domestic current taxes, or a 3.17% tax rate![/b] So our question to the administration is how does $639 billion in domestic revenue, and $164 billion in total net income, result in $5 billion in taxes? Perhaps if the desperately broke administration is so concerned about refilling its empty coffers, it should first of all look at the most profitable (presumably) company in America... And perhaps CNBC can share some coverage on the topic of its parent company's taxation strategy.[/quote]
[i]My Comment:[/i] Happy Halloween, everybody - may yours be less "tricky" than a GE accountant.

[QUOTE=ewmayer;234880]It is becoming clear that on the revenue side of the equation, one of the major reasons (if not *the* main one) the US government has a gigantic hole in its balance sheet is that US corporations - especially huge multinational ones led by familiar names such as Google ("don't be evil" apparently does not include dodging billions of dollars in taxes per annum) and (of course) Goldman Sachs-and-Pillages - have exploited loopholes in the tax code (many of which they lobbied hard for) to reduce their effective tax rates to near zero. Latest egregious example on this front is GE, as ZeroHedge explains:

[url=http://www.zerohedge.com/article/how-ge-paid-total-5-billion-domestic-taxes-betwen-2002-and-2009-639-billion-domestic-revenue]How GE Paid A Total Of $5 Billion In Domestic Taxes Between 2002 And 2009 On $639 Billion In Domestic Revenues[/url]

[i]My Comment:[/i] Happy Halloween, everybody - may yours be less "tricky" than a GE accountant.[/QUOTE]

"I pledge allegiance to.....
... and to the republic for rich it stands"

[QUOTE=ewmayer;234880]It is becoming clear that on the revenue side of the equation, one of the major reasons (if not *the* main one) the US government has a gigantic hole in its balance sheet is that US corporations - especially huge multinational ones led by familiar names such as Google ("don't be evil" apparently does not include dodging billions of dollars in taxes per annum) and (of course) Goldman Sachs-and-Pillages - have exploited loopholes in the tax code (many of which they lobbied hard for) to reduce their effective tax rates to near zero. Latest egregious example on this front is GE, as ZeroHedge explains:

[url=http://www.zerohedge.com/article/how-ge-paid-total-5-billion-domestic-taxes-betwen-2002-and-2009-639-billion-domestic-revenue]How GE Paid A Total Of $5 Billion In Domestic Taxes Between 2002 And 2009 On $639 Billion In Domestic Revenues[/url]

[i]My Comment:[/i] Happy Halloween, everybody - may yours be less "tricky" than a GE accountant.[/QUOTE]

How much of this profit did GE return to the stockholders in the
way of dividends?? Where did the profits go? Or did it all go into
the hands of the senior executives running the company???

[QUOTE=garo;234617]This has degenerated into the standard wrangling match that happens whenever cheesehead gets deeply involved in a thread. [/QUOTE]

Does anybody other than the attacked person still bother reading his long boring "You haven't admitted that you said" and "You haven't admitted I said ..." posts? I long ago stopped reading cheesehead posts at the first such statement.

[QUOTE=wblipp;235038]Does anybody other than the attacked person still bother reading his long boring "You haven't admitted that you said" and "You haven't admitted I said ..." posts? I long ago stopped reading cheesehead posts at the first such statement.[/QUOTE][AOL]Me too!!![/AOL]

[QUOTE]Housing is the most affordable it's been since the pre-boom years. During the boom, Zandi said, prices were overvalued by about 50%; today it's close to zero. [/QUOTE]

Overvalued close to zero? According to who? The best I can tell, there is nothing to prevent another 30% slide in house prices, or even a 50% slide. Where do these pundits get these numbers? I'm not going to speculate which hole they come out of.

The underlying problem with the housing market is that several million houses are headed to market with weak demand and few buyers. No matter how much money you throw at that situation, the result is depressed prices.



On a different topic, the Quantitative Easing (QE) bomb is about to be laid. Why do I call it a bomb? Lets look at the net effect. We have a relatively fixed amount of dollars tied to a relatively fixed amount of value in this world. Now we arbitrarily increase the number of dollars by an amount equal to roughly 5% of the total without changing the underlying value behind the dollars. Now lets talk about a retired couple living on a pension and maybe a social security check, but between the two they get by fairly well. Enter QE with dilution of value and voila, you have a situation where the fixed income couple is now in desperate straits because their money no longer has the purchasing power to buy the necessities of life. So when you think about QE, remember that we are talking about taking money away from people and giving it to the corporate financial juggernaut. Those people include YOU and ME! I am deliberately reducing this to extremely simple terms. You can quibble if you choose, but the overall concept will stand on its own legs. Want to see it in action? Just look at the conversion rate for yen to dollars today.

DarJones

[QUOTE=Fusion_power;235195]On a different topic, the Quantitative Easing (QE) bomb is about to be laid.[/QUOTE]

Indeed - to use a phrase popularized during a little dust-up that erupted in 1776 or thereabouts, this kind of central-bank-caused deliberate currency debasement is the ultimate form of "taxation without representation", because congress has no say in such "monetary policy" matters, and continues to give the FedHeads a free pass as they make mockery of the "stable prices" part of their mandate, by freely and openly interpreting it as "stable rate of inflation", with the "stable" part of the self-modified mandate being rather optional, and made doubly obscure by deliberate obfuscations in the government measurements of CPI. (E.g. prices of dollar-value-sensitive items such as food and fuel stripped out of "core inflation", liberal application of "Hedonic adjustments" which assume that ground chuck is equivalent to top sirloin if folks can no longer afford the latter and opt for the former...not yet clear where "dog food" ranks on this scale, "Owner equivalent rent" subbed in for actual home prices, that sort of stuff).

OTOH, your point about the dollar/yen exchange rate raises an interesting question: The Japanese have been steadily (and spectacularly unsuccessfully) attempting to QE their way out of their late great RE bubble-and-bust for nearly 2 decades now, but their currency continues to show freakish strength. Anyone have any insights as to why? Could it be that - unlike in most profligate-spending countries - the Japanese were able to do most of their debt issuance domestically, by essentially trading an entire nation's accumulated savings for over 100% GDP-worth of near-zero-yielding government IOUs? I must admit the continuing strength of the yen baffles me, and it must be both baffling and worrisome for the Japanese leadership, which knows that its export economy is the sole thing keeping the country from all-out collapse, and said export economy is highly sensitive to such currency fluctuations. (There have been numerous recent intervention attempts by the Japanese central bank, which have proved both futile and expensive).

Of course there are Fed defenders - PhD economists, no less - who are now arguing that spiking commodities prices are in fact a [url=http://www.zerohedge.com/article/fed-trying-force-surge-commodity-prices-and-input-costs-diapason-explains-why-precisely-case]good thing[/url]:
[quote]"In fact, if the increase in oil prices is gradual, the persistent rise in inflation can cause a GDP expansion."[/quote]
[i]My Comment:[/i] That`s right - An economy which cycles 10% more dollars, each of which is worth 10% less in terms of purchasing power, counts as "economic growth" to these innumerate fools.

On a lighter note, in a very funny take on QE (and an even funnier riff on the name of country-music legend Merle "The Hag" Haggard), reader "Merle Hazard" sent Mish a little homegrown C&W video:

[url=http://globaleconomicanalysis.blogspot.com/2010/11/musical-tribute-to-quantitative-easin.html]Musical Tribute to Quantitaive Easin'[/url]

...And ZeroHedge has an [url=http://www.zerohedge.com/article/iceland-volcano-gods-angry-again-threaten-european-airspace-latest-volcanic-eruption]amusing headline[/url] on the latest (literal) rumblings out of Iceland, which does not omit the obligatory farting-in-the-general-direction-of-a-certain-Frederic-Mishkin:
[quote]More unpronounceable geological mayhem is about to come to the fore out of Iceland's business end. The country's volcano gods, which as we pointed out previously demand the sacrifice of a former FRBNY henchman to be placated, will not be denied, and will likely make airplane travel in and out of Europe just that more problematic, and just in time for the holiday season. While most have been following the tremor activity around Katla, this time the action takes us to the heretofore unknown, to most, Grimsvotn. As AP reports "torrents of water are pouring from a glacier that sits atop Iceland's most active volcano, an indication that the mountain is growing hotter and may be about to erupt, scientists said on Monday."[/quote]

"Grim's votin'"

Political commentary from a geological feature?

[QUOTE=ewmayer;235269]Indeed - to use a phrase popularized during a little dust-up that erupted in 1776 or thereabouts, this kind of central-bank-caused deliberate currency debasement is the ultimate form of "taxation without representation"[/QUOTE]Yeah, that is something which seemed like a good idea at the time but didn't last for long. Duplicity of the US government again.

[spoiler]In case you don't get it, many people pay taxes to the US government but are disenfranchised at election time. Bitter, moi?[/spoiler]


Paul

[QUOTE=cheesehead;235316]"Grim's votin'"[/QUOTE]

He changed his mind, is staying home due to a bad case of the Sneffels.

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In today`s news: Australian dollar now worth more than $US for first time since 1982 ... Irish debt yields soar once again ... Banks reported to be sitting on a 9-YEAR-long [url=http://globaleconomicanalysis.blogspot.com/2010/11/9-years-of-housing-backlog-at-current.html]backlog of home inventory[/url] (yes, years, not months) ... rumors in Europe of a December 7 [url=http://www.zerohedge.com/article/december-7-unofficial-pan-european-bank-mutiny-day]bank run as form of protest[/url], a kind of "flash mob bank run" ... latest midterm election predictions have the Republicans gaining not just a majority in the House of the Representatives, but gaining a significant majority; Senate looks like a tossup at the moment, could end up split 50/50 (which would represent a pickup of a whopping 10 seats for the GOP). I almost perversely hope the GOP wins a majority in both houses, because then it would quickly prove that they are equally clueless at fixing what really ails us as are the Democrats, and that their talk about fiscal discipline was exactly the hypocritical empty blather most of us who watched the "fiscal restraint" they showed during the W. Bush years believe it to be.

[b]Election-related aside:[/b] I actually ran into an otherwise-intelligent-seeming person over the weekend who has decided to throw his hat in with the Tea Party ... ugh. He started ranting about the nameless evil that is, um, named Obama, at which point I couldn't resist a jibe along the lines "Well, what did you expect from a Muslim terrorist who's not even a citizen of the U.S.?" He laughed and said, "haw - I don't think he's a Muslim ... but I do think he's not a citizen." Where do folks like this come from? (This particular one, not completely surprisingly, hails from Alabama.) Of course since most of us will never be in a position to personally view the relevant physical evidence, it leaves endless room for charlatanry and "unreasonable doubt". You say "dude, that`s idiotic", and the claimer can simply retort "well, have you seen the birth certificate? Huh? have you? Yeah, I didn't *think* so." So how does one try to reason with such a person? (I didn't in this case, BTW, but the general question remains).

To me, the ridiculousness of such claims is embodied by this: Anyone in the US who has a relative or neighbor who has been screened for a security clearance has an idea as to how thoroughly the government does such things. So the idea that the same paid-to-be-paranoid national security apparatus is going to risk giving the nuclear codes and commander-in-chief status to someone without doing an unbelievably thorough background check is simply ludicrous.[/i]

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The US Social Security Administration admitted to a tiny boo-boo in its recent data releases related to the top-earning Americans ... if you call a factor-of-6x overestimation "tiny", that is:

[url=http://www.bloomberg.com/news/2010-11-02/-invalid-multiple-tax-forms-by-supposed-billionaires-skew-wage-figures.html]`Invalid' Forms by Supposed Billionaires Skew U.S. Wage Figures[/url]: [i]The Social Security Administration asked its inspector general to investigate how a $32.3 billion mistake skewed its statistics on 2009 wages in the U.S.[/i]
[quote]Two people were found to have filed multiple W-2 forms that made them into multibillionaires, an agency official said yesterday. Those reports threw statistical wage tables out of whack and, in figures released Oct. 15, made it appear that top U.S. earners had seen their pay quintuple in 2009 to an average of $519 million.

The agency yesterday released corrected tables that showed the average incomes of the top earners, in fact, declined 7.7 percent to $84 million each.

Social Security spokesman Mark Lassiter provided few details about the W-2 forms and declined to answer questions about how they were filed, how many were filed by the same two people, or if a hoax was suspected. [b]“We call it erroneous, you call it fictitious. It’s the same thing,” Lassiter said. “There were some invalid, I guess is the best way to put it, W- 2s.”[/b][/quote]
[i]My Comment:[/i] Now about the "validity" of those GDP, inflation, and unemployment numbers...


Denninger has a long, non-rantish, and very interesting piece today which re-examines the common theses as to what caused the Great Depression (and similar economic downturns in the not-too-distant past), and puts forth an alternative hypothesis to the effect that it is not the usual suspects (market crashes followed by deflationary pressures which are not swiftly counterbalanced by massive government stimulus spending), but rather the phenomenon of profit margin collapse (which can be due to either or both of input-price spikes and lack of final demand), often driven by misguided government attempts to reflate bubbles, debase currencies or engage in knee-jerk trade-war-inducing protectionism, which turn triggering events like market crashes into wide-scale depressions. Definitely worth a read:

[url=http://market-ticker.org/akcs-www?post=170949]On The Reality Of Depressions; Bernanke`s Folly[/url]: [i]The common claim, often repeated, is that Ben Bernanke knows what caused The Great Depression and he (has avoided / can avoid / will avoid) one here - because he's studied it in depth.[/i]
[quote]Has anyone questioned the primary thesis behind why there was a Depression?

I don't think so.

But I think we should.

In 1929 the stock market crashed. But stock market crashes were not new things then. Indeed, monstrous, violent moves in the market were the norm from 1900 when we first have Dow Jones data - onward to the start of the "Roaring 20s" - roughly in 1924.

As the below chart shows, there were serious and extremely violent market crashes in 1901-03, 1906-08, 1917 and of course 1920 - the one nobody talks about.

1920 is where I would like to focus my attention. It came on the heels of World War I. A huge number of returning troops came into the workforce, overwhelming labor supplies. There were serious changes in fiscal and monetary policy on top of it. There is much attention paid to a claim that The Fed basically caused the Depression by raising rates from 4.75% to 7%. This is implausible as the triggering cause, although it certainly slowed bank lending. More importantly, there was a large inflation in both asset and general price levels, with the DOW rising from 80 - 120 - a 50% increase in less than a year.

President Harding was urged by Herbert Hoover (then Commerce Secretary) to protect private businesses, including banks, from the consequences of their bad decisions. He refused. The contraction was extremely sharp, with deflation of, according to some estimates of approximately 18% at retail and more than 30% at wholesale. GDP fell by 7%.

Unemployment also rose rapidly, reaching over 11%.

But the recovery was equally swift. Having been purged of inefficient businesses and excessive debt, the economy came roaring back. By 1923 full employment had once again been reached and industrial production registered an astounding 60% increase. The stock market came roaring back at the same time, with the DOW going from 65 to 105 in about a year.

What was different after the crash of 1929?[/quote]
[i]My Comment:[/i] I disagree with his opening "I don`t think so" claim, but a very interesting article nonetheless. The issue of margin collapse is especially critical at the current juncture because Bernanke`s ongoing efforts to debase the currency seem to be "bearing fruit" (if one can describe the effects in such positive-sounding terms), and there are big-time signs of margin collapse all around us. Mish says inflation is not a worry because lack of demand has prevented producers from passing their increased input costs onto consumers in most cases (i.e. there are no clear signs of "cost-push inflation") and hence is not a worry, but if inflation on the producer side is destroying profit margins, that seems rather a good reason to worry to me. Again, I think in this case Mish - who likes to say that most inflation gauges are measuring the wrong thing, and that true inflation is "an increase in money supply and credit" - is the one who may be taking his eyes off the ball by ignoring any inflationary signs lying outside his own pet definition. I shall have to give this one some thought.

Denninger continues with effects of cost-push inflation at the personal level, as captured in the latest economic data:
[quote]A million people came off unemployment benefits over the last month. This month's personal income and spending shows that spending is continuing while income is collapsing. This is margin compression at the personal level, and we have multiple companies and reports showing insane amounts of cost-push pressure on inputs, with Kimberly-Clark, among others reporting the highest increases in input cost pressures in the firm's history. Look at the GDP report. Virtually all of it was inventory - 1.44% of the 2% headline. Without the inventory build we saw only 0.56% GDP growth, and the deflator - the implicit inflation gauge in the numbers - stands at 2.2% across all products and services.

Even high-flying companies like Apple are reporting margin pressures. But don't be fooled by firms like Apple and other semiconductor manufacturers. High-tech toys are great, but you can't eat them, they won't heat your house, and you can't get to work in one. You have to look at the necessities and their derived products to see where we're headed - and there, it does not look good at all.[/quote]
[i]My Comment:[/i] All, I want to know is, where can I get one of those W-2 forms that makes one into a multibillionaire?