European Tribune - Community, Politics & Progress.

Why do the rich pay "almost all" taxes?

by das monde
Wed Mar 4th, 2009 at 03:20:02 AM EST

The following exchange is from a Foxnews' show. It's a "fair and balanced" passion of Brit Hume (until recently, their anchor newsman). Speaking on Obama's tax increases:

Hume: Well it's just so dishonest because the top what, 2% of tax payers in this country pay something on the order of 40% of the taxes already. The top 5% pay 60% of the taxes already, income taxes. And the top 50% pay all but, you know they pay like 95% of the taxes. So most of the people in this country, most of the people pay almost, either no income taxes at all or almost none. That's like half the income brackets. So the idea that the playing field is somehow tilted in favor of the few is bosh!
[...]
The share of income taxes paid by the higher income people over the years has not gotten smaller under the Republicans. It's gotten larger. Why do you...
Williams: And why is that Brit? Because they're earning more money.

[UPDATE: As remarked by Jake and Daily Kos readers, Brit Hume refers exclusively to income taxes. Regular folks appear to catch up on payroll and consumption taxes.]

Front-paged with an edit by afew

The really sad reason is, of course, that more and more Americans are earning less and less - in fact, so much more less that you can't collect much [income] taxes from half of them.

The Reagan-style free economy is not great for most Americans, eventually. Bubbles and credit expansion can only hide the truth only for so long.

Even by then, was it difficult to see through the rosy numbers? Why does this graph have no political impact?

Here you can find more of telling statistics:

Real household incomes fell in 94% of the states (47 out of 50) in 1999-2005...
...families have the lowest rates of saving since 1929 and historic record debt ratios...
...families must work more months each year (than before) to pay all taxes...
...61% of married mothers of small children work - 6 times more than 11% in 1950...
...household debt ratios increased 90% faster than growth of the economy since the late 1960s...
...the median income of men in their 30s fell 12% from 1974 to 2004 when adjusted for inflation...

The economy cannot be great, if more and more people get inadequately less income to spend.

If you have a spare hour, watch this lecture by Elizabeth Warren; she teaches contract law, bankruptcy, and commercial law at Harvard Law School. (Her talk starts at 4:50 mark.)

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Why do the rich pay "almost all" taxes? | 62 comments (62 topical, 0 editorial, 0 hidden)

Tip jar (4.00 / 15)

Two hat tips to commenters here. And surely, read the investment advice of Archdruid.

by das monde on Mon Mar 2nd, 2009 at 08:40:41 AM EST

Re: Tip jar (none / 0)

And I've just diared accusations of the super rich avoiding their taxes. Shame on me.

Ad astra per aspera

by In Wales (inwales aaat eurotrib.com) on Mon Mar 2nd, 2009 at 09:04:56 AM EST
[ Parent ]

Re: Tip jar (none / 0)

Oh, it was me later...

It should be interesting, how much of the avoided taxes are on the super-rich balance?

by das monde on Mon Mar 2nd, 2009 at 09:14:09 AM EST
[ Parent ]

Simple answers to simple questions (4.00 / 3)

...because they capture a disproportionate share of income, and own an even more skewed share of assets?

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Mar 2nd, 2009 at 09:18:23 AM EST

Re: Simple answers to simple questions (4.00 / 5)

Jerome a Paris:

own an even more skewed share of assets

Exactly.

We should be transferring the burden of taxes away from earned income towards unearned income derived from privilege.

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Mon Mar 2nd, 2009 at 09:22:55 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

Chris Cook

We should be transferring the burden of taxes away from earned income towards unearned income derived from privilege.

We will have little choice if we want to maintain government income through the barren desert that lies ahead. But that doesn't mean we will do it.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Mar 2nd, 2009 at 01:01:47 PM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

Because they have the most disposable income?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Mon Mar 2nd, 2009 at 09:28:20 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

Hang on a minute. Exotic holidays, yatchs, private schools and tax avoidance specialist accountants don't come cheap, you know.

Ad astra per aspera

by In Wales (inwales aaat eurotrib.com) on Mon Mar 2nd, 2009 at 10:08:10 AM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

Because that's where the money is?

by someone (s0me1smail(a)gmail(d)com) on Mon Mar 2nd, 2009 at 11:38:23 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

And in doing so, create economic distortions.

Like create financial instruments that have no connection to the underlying asset (ostensibly) being securitized.

The really absurd thing is being the extent to which this is literally true in the sense that the rush to bet on the derivativee meant that the conveyance of the underlying asset was never even properly recorded.

But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks' minimalist approach to meeting legal requirements -- bookkeeping matters, really -- when pooling thousands of loans into securitization trusts.
Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.
But this seems not to have been a priority with many big banks. The result is that bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.
On Feb. 11, a circuit court judge in Miami-Dade County in Florida set aside a judgment against Ana L. Fernandez, a borrower whose home had been foreclosed and repurchased on Jan. 21 by Chevy Chase Bank, the institution claiming to hold the note. But the bank had been unable to produce evidence that the original lender had assigned the note, which was in the amount of $225,000, to Chevy Chase.

Yet another argument for nationalization. If the government owns all the banks that can't provide proof that they own mortgages, then the simple fact of the government owning them all means that question is cleared up.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Mar 2nd, 2009 at 10:13:51 AM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

MFM

If the government owns all the banks that can't provide proof that they own mortgages, then the simple fact of the government owning them all means that question is cleared up.

Logically this would seem to be true. However, I am not so sure that it would hold up in court if "creditors" still couldn't produce the document. However, that might be the leverage to get some useful mortgage reform through Congress. But that would require that Congress not give the banks everything for nothing first.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Mar 2nd, 2009 at 01:07:11 PM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

As I understand it, the problem wasn't with documentation at the originating bank. It was that there was never a proper record made of conveyance of the note from the originating bank to the "trust" used in securitizing the mortgages.

I could be wrong. But, if you have a limited number of banks that are swapping these notes around as part of deals, going in and merging them into a single, federal bank, (Bank of the United States, anyone?) means that the issue of balancing accounts between them largely goes away.

The government eats the overall loss, but because the derivative deals are wiped out, the size of this loss is much smaller.

It's been the damned derivatives that have made this so difficult. The answer, I think, is to go through and unwind the majority of these deals. A nationalization would allow information to flow freely. I assume that, at least in part, the "stress test" is about getting a grip on how badly interwined these things are.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Mar 2nd, 2009 at 01:21:30 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

On the other hand, one could transfer all the properties to a Custodian, rent them to the former owners at an affordable index-linked rental, "unitise" the resulting rental pool, and sell the Units to risk averse investors.

The bank replaces a dated obligation to repay a secured loan with an undated (quasi-Equity) obligation to pay a "Capital Rental" and so the credit event insured against (default) disappears with the secured loan.

Modern conservatives engage in one of man's oldest exercises in moral philosophy: the search for a superior moral justification for selfishness.Galbraith

by ChrisCook (cojockathotmaildotcom) on Mon Mar 2nd, 2009 at 02:12:17 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 3)

MFM. I think that the problem is a technicality of the law. When asked for proof that they are the entitled to bring legal action against the holder of a mortgage, the entity bringing suit must be able to produce the original document. Else they have no standing in court. I.E. someone else may have the original and have a better claim. The laws apparently have not been updated to accommodate all of the fancy "move it around electronically" modus operandi of the present financial system.

Fixing this could get interesting if anyone stands up for the mortgagees. No one thinks that real estate values are going back to even 2005 levels any time soon. There is considerable sentiment that mortgages need to be written down to something closer to the true market value of the houses at present, if only to reduce the incentive for "jingle mail." A price for so doing could be extracted. This could take the form of Chris Cook's solution or others that have been proposed.

Dealing with the slice and dice Mortgage Backed Securities situation with different parties holding different "tranches" of these MBSs is a different matter. Clearly the high risk, high return bottom tranches should be wiped out. But the decline has put at risk even the top tranches. And when four different classes of investors all have a stake in the returns from a pool of mortgages the question arrises, "Who has the right to sue?" And when no one can come up with the original document, when the mortgage broker who arranged the loan is long out of business....

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Mar 2nd, 2009 at 03:18:28 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

I want to see if you can clear this up.

Are you saying then that the originating bank doesn't even have a the note underlying the mortgage?

That's insane. I understand that there is slicing and dicing, but I'd think that the originating bank actually has the note.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Mar 2nd, 2009 at 03:47:18 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

It would appear that the banks have not only been criminally insane but insanely incompetent.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Mon Mar 2nd, 2009 at 03:54:36 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 3)

I'm reminded of some apocryphal comments from the airport cabby on the way home from Spain - who also runs an estate agency.

I'm not going to vouch for the reliability of any of this, but he seemed a sensible sort. According to him the banks don't want people to hand their keys because it costs them a fortune to sort out the paperwork.

Legally, if there's any charge on a property - which there is in the case of slicing and dicing - the bank does not own it. At best it owns a share in it.

And it's actually possible for a bank to be in the equivalent of negative equity. If a foreclosed property sells for much less than the loan book mortgage cost, the bank is still on the hook for for the difference in somewhat the same way that the original buyer was.

So if the original buyer moves out of the country and can't be chased for the debt, the bank is left holding - something - of indeterminate value and ownership, which it can't necessarily sell.

He also said he knew of at least one case where someone handed their keys in, and a few rounds of financial pinball later a holding company contacted the owner and said he could have the keys back for a nominal sum.

Effectively the holding company either needed a quick cash sum or didn't think it was worth trying to sell in a dead market - or possibly it was hoping that the former owner wasn't going to ask any hard questions, and his house is still co-owned by most of the financial industry.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 2nd, 2009 at 04:12:34 PM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

Is this about the Spanish British or American banks?

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 02:20:01 AM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

It's worth looking at experienced bank regulator William Black:

naked capitalism: William Black: "There Are No Real Stress Tests Going On"

My nightmare scenario which I fear is often true is that A) because the biggest originators of nonprime loans were mortgage bankers, B) because every large mortgage banker that specialized in nonprime loans went bankrups, C) because many of them went into Chapter 7 liquidations and even those that went into Chapter 11's had little incentive to hang on to files on mortgage loans they had sold to other entities -- the loan files on many nonprime loans may no longer exist. (My fervent prayer is that the loan servicers have tapes with copies of the underlying loan files, but I fear that this prayer will not be answered.) Under this nightmare scenario it will be extraordinarily hard to determine loan quality and losses and very hard to foreclose against borrowers that can afford attorneys (admittedly a minority) and that claim fraud in the inducement.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Mar 2nd, 2009 at 04:04:38 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 3)

Under this nightmare scenario it will be extraordinarily hard to determine loan quality and losses and very hard to foreclose against borrowers that can afford attorneys (admittedly a minority) and that claim fraud in the inducement.

and how is that a nightmare for the majority of people involved?

If you're not part of the solution, you're part of the precipitate.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Mar 2nd, 2009 at 04:15:33 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 6)

Because we will end up paying the bill for it all.

Nationalization is the answer, but there's an idiot streak that runs through the US when it comes to the government being involved in the economy.

I just had someone challenge me today to give one case where nationalization solved anything, and I look em in the eye, and say, Sweden 1995.

And they get flustered, and argue that the government made things worse there.

These days, I feel like we are repeating all the mistakes of the Great Depression. i.e. a belief in self regulating markets was popped by reality, and now the lingering of free market ideology has created the equivalent of the Bavarian redoubt who are damned if they won't trash the whole economy before pragmatic solutions like nationalization get in the way of the way they think that the world works.

And so the crisis grows deeper.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Mar 2nd, 2009 at 04:24:55 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 3)

I think he means a nightmare from the point of view of a bank regulator who knows a whole heap of "securitised" assets may never be evaluated, not from the POV of mortgage holders faced with foreclosure.

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Mar 2nd, 2009 at 04:32:22 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 4)

I can see a thriving business for law firms that offer to work on a contingency basis for homeowners. They could stipulate that their fees would come out of a new, much smaller loan against the property where they prevail or where the mortgage is reduced by, say, half or more.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Mar 2nd, 2009 at 04:26:16 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 4)

Are you saying then that the originating bank doesn't even have a the note underlying the mortgage?

In some cases it was mortgage brokers. They were so busy making money that they didn't have time for all of that pesky paperwork. What could possibly go wrong, anyway. No one will ever ask for that. One thing is certain. We don't have a good handle on just what proportion of loans have been thus mishandled, nor are the banks likely to tell us.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Mar 2nd, 2009 at 04:20:46 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 4)

I just realized that. Shit...

Not good, not good at at all.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Mar 2nd, 2009 at 04:25:36 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 3)

MfM--

Don't worry: This is a problem only for the investment banks who were stupid enough to go in at the second tier of this ponzi scheme.

This won't affect the taxpayers at all, unless they are stupid enough to try to keep the banks afloat by bailing out their bad paper . . .

Doh.

The Fates are kind.

by Gaianne on Tue Mar 3rd, 2009 at 06:49:18 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

Unfortunately, it's not just investment banks. It's real banks, and a major part of the problem, as I understand it (and others can correct me if I'm wrong), is that a lot of people have their 401(k)s tied in with these companies, too, in the form of preferred stock and so on. It's not nearly as simple as the folks on dKos would like us to believe.

Now maybe the answer is to nationalize -- or alternatively to simply let them fail -- and wipe them out anyway. (I think that's what I would do.) But it seems there's a major problem sitting there that isn't being talked about that might help to explain why the government is so hesitant to make a serious move.

Just something to consider.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Tue Mar 3rd, 2009 at 08:07:55 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

There is nothing wrong with letting private pension plans collapse that higher public pensions cannot solve.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 08:12:19 AM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 4)

Maybe Americans need to have their collective 401(k) investment cleaned so they realise that the "state pension insolvency crisis" was a bogus argument to convince them to divest from Social Security and into a stock market ponzi scheme, and after realising that they won't do it again.

Social Security was invented during the Great Depression for a reason.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 08:13:44 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

Which is all well and good strictly from the perspective of economics, but you want to run for reelection as POTUS or a congresscritter after you've wiped out a big chunk of your constituents retirement accounts?

It's not so clean when you add the political consideration.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Tue Mar 3rd, 2009 at 08:19:59 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

It's not clean it's messy. But as JakeS says

There is nothing wrong with letting private pension plans collapse that higher public pensions cannot solve.

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 08:40:35 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

I don't disagree. I'm just saying.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Tue Mar 3rd, 2009 at 08:41:53 AM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 3)

Mig

Maybe Americans need to have their collective 401(k) investment cleaned so they realise that the "state pension insolvency crisis" was a bogus argument...

The markets are in the process of administering that lesson as we blog, but the "realize" part is in doubt. We have the RW bloviating on steroids at the moment and much of the MSM is too timid or too reluctant to engage in forceful reporting for me to have any confidence in the outcome. The longer this runs and the greater the amount of public obligations that are poured down black holes such as AIG the greater the danger that the Obama Administration will effectively be discredited.

Obama is now playing Hamlet. I fear he will become Tony Blair and that the Democrats will become NuLab.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Tue Mar 3rd, 2009 at 12:38:20 PM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

Well, you need someone with a bully pulpit to deconstruct the "public pension insolvency crisis" arguement now that people are paying attention. Like Krugman, for instance. But I don't think he (or anyone else) is likely to do it...

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 12:43:49 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 4)

What is the public pension insolvency crisis? Last time I checked, sovereigns cannot be insolvent against liabilities denominated in their own currencies.

For that matter, last time I checked, sovereigns presiding over even remotely functioning economies cannot be insolvent, full stop. And if the economy isn't even remotely functioning, what's the chance that private pension plans are solvent anyway?

Now, here's an idea: What about y'all confiscate all the 401(k)s and all future revenues going into them, and set up an equitable public pension scheme instead? If that's insolvent, then sure as Hell the 401(k)s are insolvent. And if it's not, then what's all the squealing about public pension plan insolvency about?

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 12:49:56 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

What is the public pension insolvency crisis?

A right wing meme straight out of the "Think tanks," the last time I checked. As J. Edgar Hoover used to say: "The wish is father of the thought." The wealthy conservatives were only too happy to let their budget deficits be papered over by excess contributions to SS and Medicare starting in the early 80s, but now they fear that these programs might start costing them some small pittance.

I fear that too many of the Democrats are unwilling to take it on because they need contributions from the same people who are financing and benefiting from the work of these "think tanks." That is why campaign finance reform needs to be rammed through before they start on the really difficult stuff.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Tue Mar 3rd, 2009 at 02:13:03 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 3)

I fear he will become Tony Blair and that the Democrats will become NuLab.

I (unfortunately) refer you to many similar comments made by UK posters before the election.

If you're not part of the solution, you're part of the precipitate.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Mar 3rd, 2009 at 12:48:07 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

Well, hopefully sans the creepy, fundagelical messiah complex... We've had quite enough such POTUSes for the time being, thankyouverymuch.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 12:51:26 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

I believe ET had come to this consensus before I started following it almost exactly a year ago. Someone else acquainted me with some aspect of that discussion last summer. There seems to be a real danger that our mutual fears will be realized. The greatest countervailing factor is the simple fact that going along with the Wall Street consensus, or continuing to be guided by those subject to Krugman's "regulatory cognitive disfunction" is taking us over the falls in a barrel. There is at least some hope that Obama will pull back before it is too late, but....

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Tue Mar 3rd, 2009 at 02:04:37 PM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

well as long as the financial crisis isn't his equivalent of Blairs 'Iraq moment'

If you're not part of the solution, you're part of the precipitate.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Mar 3rd, 2009 at 03:29:20 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

What I hope for is the inverse, a "big banks=black holes and lets pull back before we cross the event horizon" moment. Blair underwent a conversion to the dark side, Obama is currently a captive of the dark and needs a conversion to the light. (Might as well go full-on Manichean Mode here!)

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Tue Mar 3rd, 2009 at 03:53:53 PM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

I would suggest a policy of intervention a la FDIC plus a "bad bank" to work out vehicles that may in time recover. For individuals with IRA and 401k investments in impaired institutions that are to be dissolved, offer a reimbursement with a limit, of say $30K-$50K, that will not be paid until they have reached 65 years of age. People have been repeatedly told to diversify their investments to protect against institution risk and there should be some consequence for their decisions to do otherwise.

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Tue Mar 3rd, 2009 at 12:28:19 PM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

You really have to step back and almost admire the level of stupid. "Impressive" isn't even the right word, because it was so much more than that.

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Tue Mar 3rd, 2009 at 07:53:21 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

Are you saying then that the originating bank doesn't even have a the note underlying the mortgage?

The note has been sold half a billion times, and, in the process, a lot of these notes have been lost or even destroyed.

I understand that there is slicing and dicing, but I'd think that the originating bank actually has the note.

But the actual banks -- as Krugman calls them, the "big marble buildings that we think of when we say 'bank'" -- had very little to do with giving out mortgages. They were buying and selling mortgage-backed securities, but I believe the money for the actual mortgages, especially the high-risk ones, was coming from investors, brokers and other elements of the shadow banking system.

After all, who needs real banks when you have Angelo Mozilo?

(facepalm)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Tue Mar 3rd, 2009 at 07:45:46 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 0)

Who taught these people about banking???

Most economists teach a theoretical framework that has been shown to be fundamentally useless. -- James K. Galbraith

by Migeru (migeru at eurotrib dot com) on Tue Mar 3rd, 2009 at 08:04:08 AM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 2)

People who believe that The Market Is Always Right, that the business cycle has been arbitraged away, that this time it's different and that it's OK to gamble as long as you only do it with other people's money.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 08:09:20 AM EST
[ Parent ]

Re: Simple answers to simple questions (none / 1)

You're surprised by this after Katrina and Iraq?

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (myfriends@thisispancakes.com) on Tue Mar 3rd, 2009 at 08:09:51 AM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 5)

...the bank had been unable to produce evidence that the original lender had assigned the note,....

I like that one. Maybe everyone should take the banks to court and make them prove ownership of the mortgage note.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Mon Mar 2nd, 2009 at 01:56:42 PM EST
[ Parent ]

Re: Simple answers to simple questions (4.00 / 6)

Maybe everyone should take the banks to court and make them prove ownership of the mortgage note.

That is exactly what Dr. Ellen Brown of Global Research has been advising. Seems that that approach works. Oh, what to do now?!

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Mar 2nd, 2009 at 03:33:11 PM EST
[ Parent ]

Re: Why do the rich pay almost all the taxes? (4.00 / 5)

The Elizabeth Warren video is a good one. She demonstrates with graphs and government derived stats what has become very obvious. The middle class has taken it on the chin for the last 30 years. The truth is that Americans have not been foolishly spending all their incomes on luxury goods and electronics at the expense of savings.

I often wondered how my father, who earned less than $12K at the height of his working career, could put two kids through college, pay off a house, buy his cars with cash, and accumulate more money in savings (CDs of course) than both my brother and I (plus our working wives) combined. This explains one part of the mystery. (By the way, I never buy a new car before my old one is at least 12 years old, bought my last television set over 30 years ago, and lived 30 miles away from work where houses were more affordable.)

The other part is explained by the fact that my father and my mother came from self sufficient farming families who knew how to live off food and products they produced themselves and little else. While they left farming when even that couldn't produce a living, they retained many of their frugal habits.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Mon Mar 2nd, 2009 at 02:22:44 PM EST

Re: Why do the rich pay almost all the taxes? (4.00 / 3)

Don't forget also that credit (debt) industry and the you-must-consume ad industries are synergistic.

This is at the very least convenient for the ownership class.

It's a three way squeeze - cut down the amount of ready cash from income, pump up consumer desire to frenetic levels, and then offer cheap credit to make those exotic dreams possible.

If you count the bailouts it's a four way squeeze, because the bailouts are effectively another massive tax cut and rebate for the ultra-rich.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 2nd, 2009 at 02:30:06 PM EST
[ Parent ]

Re: Why do the rich pay almost all the taxes? (4.00 / 2)

Don't forget also that credit (debt) industry and the you-must-consume ad industries are synergistic.

True.

I can swear there ain't no heaven but I pray there ain't no hell. _ Blood Sweat & Tears

by Gringo (stargazing camel at aoldotcom) on Mon Mar 2nd, 2009 at 02:59:42 PM EST
[ Parent ]

Re: Why do the rich pay almost all the taxes? (none / 1)

do you know whther she on board of some banks? I became suspicious of all professors of economics after I realized that many are on board of various investment banks like Merrill Lynch and Goldman Sachs. They invented derivatives and now claimed they thought they are selling wonderful products reducing risks.

by FarEasterner (avdavydov@yandex.ru) on Mon Mar 2nd, 2009 at 09:06:43 PM EST
[ Parent ]

Re: Why do the rich pay almost all the taxes? (4.00 / 3)

She isn't an economist. She's a law professor specializing in bankruptcy law. She's been talking about this stuff for a while now, and was the academic point person in the (failed) fight against bankruptcy 'reform' demanded by the banks. She and a couple of her students used to blog over at TPM Cafe, then at the Credit Slips blog. She's been very, very critical of the financial industry and calling for much stricter regulation.

by MarekNYC on Tue Mar 3rd, 2009 at 12:37:49 AM EST
[ Parent ]

Re: Why do the rich pay almost all the taxes? (none / 1)

thank you for clarification. i cannot see video because i am in internet cafe.

by FarEasterner (avdavydov@yandex.ru) on Tue Mar 3rd, 2009 at 12:48:57 AM EST
[ Parent ]

Re: Watch the Warren Video! Seriously. (4.00 / 2)

I also recommend watching the Elizabeth Warren video. I think she has it about right. Excellent confirmation of what I and most who I know have experienced over the last 40 years, driven home with statistics derived from pretty good data. She was fortunate to be able to work with the Commerce Department to get good answers to basic questions. I wonder if she has this information available in printed form.

I am very glad that she has been put in charge of monitoring the TARP expenditures. While nothing has been done to correct the problems, her reports have been scathing. From this video and what else I have seen of the lady, I have no doubts about her integrity. No one in Washington can ask "How could we have known?"

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer at eurotrib.com) on Mon Mar 2nd, 2009 at 11:45:58 PM EST
[ Parent ]

Re: Watch the Warren Video! Seriously. (none / 1)

One thing to note is that if she's using the official GDP deflator (and I assume she is) to make her inflation-adjusted earnings figures, she's understating things by some margin, because Games Have Been Played with the GDP deflator ever since Ronnie Raygun.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 04:55:08 AM EST
[ Parent ]

Re: Why do the rich pay almost all the taxes? (4.00 / 3)

Confirming my interest in the Elizabeth Warden video.
There is however a little bonus for those like me that can't resist browsing the side windows of youtube.
Under the somewhat pompous name of "the most Important video you'll ever see" there is a class by a physics professor explaining why growth will get us all killed.

He demonstrates the simple arithmetic truth: something that grows 7% a year, doubles every 10 years. During those 10 years,one consumes an amount of resources superior to those spent since we started.

by Torres on Tue Mar 3rd, 2009 at 04:43:52 AM EST
[ Parent ]

Re: Why do the rich pay almost all the taxes? (4.00 / 5)

Please do note that the Faux News ~~anchors~~ propaganda artists are playing the standard game of only counting income tax, not payroll taxes. It is simply not true that the bottom 50 % of the income distribution pay no taxes at all to the federal government in the US, although that is certainly what they wish to imply. (In point of fact, I think they wish to imply that the bottom half of the US income distribution pays no tax at all - conveniently excluding not only payroll tax, but also state-side taxes like VAT.)

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 3rd, 2009 at 04:59:45 AM EST

Re: Why do the rich pay almost all the taxes? (none / 1)

Right. Daily Kos readers immediately jumped on that.

(I crossposted at Booman Tribune as well.)

by das monde on Tue Mar 3rd, 2009 at 07:16:34 AM EST
[ Parent ]

Why do the rich pay "almost all" taxes? (none / 0)

The curve above IMO can have 3 explanations:

a) Americans work less than in the 70's
b) Labour is taxed now harder than before
c) the FIRE sector (finance, insurance, real estate) takes their money, or
d) The yields from productive capital have increased significantly and/or at the expense of labour.

by kjr63 on Wed Mar 4th, 2009 at 05:55:51 AM EST

Why do the rich pay "almost all" taxes? (none / 1)

a) Logically possible, but empirically untrue.
b) True, but IIRC the graph above is for before-tax income. At any rate, the point is covered in the Warren video at the end.
c) Again, IIRC the curve is before-tax income, so that wouldn't show up in the curve (it's true, of course, but doesn't necessarily show up in the curve).
d) Virtually the whole story.

- Jake

"Terraforming your own planet to make it uninhabitable hardly counts as epic win." - ThatBritGuy

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Mar 4th, 2009 at 07:52:53 AM EST
[ Parent ]

Why do the rich pay "almost all" taxes? | 62 comments (62 topical, 0 editorial, 0 hidden)

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