Friday, December 10, 2010

Obama and The GOP Finally get Stimulus Right! The Benefits of Lower Taxes Explained Part II

12/10/2010 Santa Cruz, Bolivia – Pop in your mints…
We are arriving in Bolivia today for what will be a wonderful holiday with our in-laws who live in Cochabamba.  In the coming weeks these chronicles will come to you from the southern hemisphere.  Stay tuned.  For today we must end the suspense which we left off yesterday, if nothing else for our own benefit!  So where were we?  Ah yes, we left off yesterday by making an assertion and then seemingly disproving our own hypothesis.  What is going on?  We must rectify this immediately!  So we head back to the car lot where we revisit our 100,000 prospective car buyers. 
You recall, don't you, dear taxpayer, the 100,000 persons trying to determine whether or not to purchase a certain car that costs $20,000 facing a 10% sales tax if they were to make the purchase?  Do you recall that 30,000 of those who wanted a car could make the purchase if only the tax were 5% instead of the current 10% and are forced to delay their purchases?  Do you recall that the government would lose $40 Million of tax revenue by lowering the tax rate to 5%?  Do you recall the most famous reindeer of all?

Thursday, December 9, 2010

Obama and The GOP Finally get Stimulus Right! The Benefits of Lower Taxes Explained Part I

12/9/2010 Miami, Florida – Pop in your mints…
We awoke Tuesday to some good news.  While we did not hear the tune of Kumbaya resounding out of Washington, details of a compromise on taxes between Democrats and Republicans did emerge.  On the surface it appears that this development is very promising and, dare we say, will turn out to be a truly effective form of stimulus.  We believe that it will be effective because it appears to do the only two things that a government can do to stimulate economic activity.  First, it provides a degree of certainty for key decision makers.  Currently, key decision makers had no choice but to plan for tax increases in 25 days.  Now, it appears that they can count on tax decreases for the next 755 days.  Second, and more importantly, is the nature of those tax decreases.  They include a 2% reduction in payroll taxes, which is roughly the equivalent of the government giving a nearly 2% pay increase to every worker.  It also provides businesses with a 100% tax break on all capital equipment purchased in 2011.
At The Mint we pray that this change in mentality will stick in Washington.  Over the past 3 years we have seen the government increasingly move in to manage the economy with increasingly disastrous results.  This tax deal would mean that the government is moving towards giving more power back to the people, where it rightfully should rest.
Free people are more productive.  This is simply a historical fact.  The fact is sometimes confused by applying the terms "Free" and "Democratic" to societies that, in terms of economic policy, are anything but free and democratic.

Wednesday, December 8, 2010

The Irish Take the Hatchet, Scalpel, and Plunger to The National Budget, JP Morgan to corner the Copper Market?

12/8/2010 Portland, Oregon – Pop in your mints…
Yesterday we awoke to some wonderful news regarding the US economy for which we are still pinching ourselves for fear of waking up.  We will explore this more in the coming days but it appears that Obama and the GOP have finally got stimulus right!
In other news we see that JP Morgan has been extremely busy accumulating Copper for its clients.  What does it see on the horizon?  Is it simply trying to offset its ever-increasing Silver liabilities?  One can only imagine.  But we do know one thing for sure, that so much of one commodity controlled by one entity, albeit in trust, is a very bad thing.  Keep your eye on the price of Copper, one of our Key Indicators here at The Mint.
Today we are feeling greener than usual, not environmentally conscious but rather, physically ill.  It appears the Irish and, by extension, other heavily indebted Euro-zone governments think that they can appease their creditors by hacking and slashing their operating budgets to the bone and increasing taxes on their populace.  This creates a viscous cycle and one that, through the latest tax deal, we appear to be averting here in the US.  Not that government belt tightening is a bad thing, it is, on the contrary, a wonderful thing for the general population.  On that note we are reminded of a hilarious Saturday Night Live skit aired during the last presidential campaign in which Obama and McCain debate as to whether they would take a Hatchet or Scalpel to the US Budget deficit.  You can enjoy it here

Tuesday, December 7, 2010

The FED Can’t Get Money Printing Right? Buy Silver, Crash JP Morgan!

12/7/2010 Portland, Oregon – Pop in your mints…
We can't believe it!  It appears that the Federal Reserve can't even get their insane money printing experiment right.  Apparently $110 billion of their new $100 bills have a small crease in them rendering them, well, worthless.  Not that they were worth much before, they only cost $0.12 each to make.  All the same, there is debate now as to what should be done.  Apparently 30% of the bills are bad.  Should they burn them all or sort through them and pull out the good ones?  We have an idea, invite the general, unemployed public to sort through a few stacks and let them keep 0.12% of the bills that they sort.  I'll bet the job would be done in a week.  But no, the overpaid bureaucrats are seizing the moment to blame each other and calculate that it could take them up to 30 years to sort them.  Apparently the "frustration level is off the charts" amongst those to blame for the error.

The FED's Printers go on the Fritz
The irony that these were to be the first bills printed with Timothy Geithner's signature is not lost on us.

But the American Feds aren't the only ones making large scale mistakes.  The National Australia Bank (NAB) had a huge computer system meltdown caused by a corrupted computer file in its payment system which left many of their customers without access to cash.  Property and Car deals couldn't go through, payroll direct deposits did not process, credit and debit cards did not work.  As the 4th largest bank, retailers were very concerned that commerce may screech to a halt over the weekend as shoppers could not access funds.

Monday, December 6, 2010

US Unemployment Rate Unsurpirsingly Jumps, Austerity Spanish Style

12/6/2010 Portland, Oregon – Pop in your mints…
The drama in Europe continues.  We see that our beloved Spain has decided to calm the markets by, among other things, selling a stake in AENA, its airport authority.  Not surprisingly, the Spanish air traffic controllers went on strike and the Military having to step in and do air traffic control.  Privatization would hit this special interest group (the air traffic controllers) extremely hard.  How hard?  Will they lose their jobs?  Will their lives be endangered?  Will they be asked to work excruciating, long hours?
Viva España!
Having lived and studied in Spain for three years we suspected that the reason for the strike probably had something to do with losing a ridiculous privilege.  This strike is no exception.  It seems that the 2,400 air traffic controllers made an average of $463,600 per year by clocking overtime for attending union meetings and probably time spent merely thinking about work.  Privatization, the selling of a grossly mismanaged state enterprise to a buyer motivated to generate profits would mean an abrupt end to their supposed racket.  Are they overpaid?  We are not to judge.  But with the average Spaniard making $26,500, you can bet many of their countrymen do!
Back in the US, on Friday the Board of Labor Statistics dropped what theoretically would have been a bomb on optimism as it reported that the Unemployment rate increase to 9.8% for the month of November, up from 9.6% in October.  What does it mean?  Is 9.8% unemployment too high?  Here at The Mint we track the BLS Non-farm payroll unemployment rate as a key statistic.  Not because we believe that it is a real indication of how many persons are unemployed, but because it tells us what the FED will do next with respect to monetary policy.