Is The POTUS Playing Political Chicken Wih the Economic Future Of All Americans?

[Just Win]

Link to full story = http://politics.usnews.com/news/blogs/washington-whispers/2010/12/2/delaying-tax-vote-could-crash-stock-market.html




Sec. of the Treasury Timmy Geithner, voted by People magazine as one of the
most beautiful people on the planet, listens as President Obama  unveils yet
another governmental spending program to jump start the economy. Geithner failed
to file his Federal tax returns for five consecutive years saying his employer at the time,
The World Bank, informed him he was not required to pay taxes and the Turbo Tax
software he was using contained errors indicating his income was tax free. 
 

Failure by Congress to extend the Bush tax cuts, especially locking in the 15 percent capital gains tax rate, will spark a stock market sell off starting December 15 as investors move to lock in gains at a lower rate than the 20 percent it would jump to next year, warn analysts. [See who gets the most money from the financial industry.]

While it is unclear how bad the sell off could be, it could wipe out the year's gains, they warn.

"Capital gains tax rate will increase from 15 to 20 percent if the tax cuts are not extended. The last time the capital gains tax rate increased--on Jan. 1, 1987 from 20 to 28 percent--investors realized their gains at the lower tax rate," said Daniel Clifton at a Washington partner at Strategas Research Partners. "We would expect a similar effect this time around as investors see the tax rate going up and choose to realize their gains and incur the 15 percent tax."

[LTC]

HEY ANUS CAVITY!!! WE HAD THOSE TAX CUTS FOR EIGHT YEARS ALL WE GOT WAS AN UNMANAGEABLE DEFICIT!!!  THE HOUSE HAS PASSED TAX CUTS FOR MOST AMERICANS. BUT THOSE DISPICABLE HEROES OF YOURS WILL FIGHT THIS IN ORDER TO PROTECT THEIR DONATIONS FROM THE RICH!!!

Hopefully the world will now understand that the Republicans are holding middle-class tax cuts and unemployment benefits hostage to protect breaks for the wealthy. The income of the wealthy went up 300% over the last ten years while the middle class income has been stagnant!! NO MORE!! Help the non-rich for a change!!!! 

What the ignorant public  does not understand about the tax cuts(and your ilk won't admit) is that EVERYONE...even the rich get the cuts for NET INCOME UNDER $250,000....only that NET income over $250Gs is taxed at the higher (3 FRICKING %) rate! Three %??? Please!!!!!

Republicans want to gut the middle class...cut benefits of the unemployed that costs $50 billion in a (wink, wink) effort to lower the deficit....but save $700 BILLION by letting rich folk pay 3% more?? OH HELL NO!!!

[NCVol]

Let's put some numbers to this draconian tax increase and the effect on after tax returns

Investor bought stock at 1,000
It's now gone up a whole 25% and is worth 1250
At the old rate, the investor sells and realizes after tax proceeds of $1,212
At the new, horribly high rate, investor sells and gets.....$1,200
Difference in after tax proceeds...  $12, or about 1% of the selling price. 

So, the investor will sell, to get an extra 1% in after tax proceeds.  And he'll do this even though he will make more money by holding that stock and it continuing to rise all the way to $1,265, a 1.2% increase from the old price.

If the stock had gone up by FIFTY percent, the difference in after tax proceeds is 1.75% ($25) and the stock has to rise all the way from 1,500 to $1,531 for the investor to be better off holding the stock and paying the horrible extra tax. 

In other words, the rational investor is better off holding the stock, and paying the extra tax, if he believes the stock will go up an extra ONE WHOLE PERCENT from current values.  But, this investment analyst says they'll sell to lock in gains at the lower rate, while ignoring the future potential of the stock to rise.

This is called dumbshiate analysis on the part of investors and terrible advice from the idiot investment advisor.  And what I'm told is investors are rational.  I don't see it, sorry.  If you think the stock does not have a potential to rise 1%-2% from current values, sell now.  Forget taxes.  If you think stocks are cheap and have more room on the upside, hold.  Forget taxes. 

[Jeremy Roenick]

In other words, the rational investor is better off holding the stock, and paying the extra tax, if he believes the stock will go up an extra ONE WHOLE PERCENT from current values.

You make the mistake NC of thinking the "rational investor" drives the stock market.  You know better than that.  The big mega banks, hedge funds and very large investors drive the stock market.  When they see capital gains increase, they're going to flock to the exits to lock in their profits which for these folks could run into the millions and millions each.

Don't be so coy.  This market isn't linked to anything rational.  It's a manipulated market that behaves straight in the face of anything fundamental.  And over the years of history when we could rely on certain assets or stocks mirroring each other or being tied somehow, those things have become de-coupled.

This market is ripe for a huge plunge, and this news could start a precipitous drop.  Well, it might as well come sooner or later.  Right now the DOW is about the biggest bubble we have since everything else is still contracting.

[NCVol]

I agree with most all of that. 

This market is ripe for a huge plunge, and this news could start a precipitous drop.  Well, it might as well come sooner or later.  Right now the DOW is about the biggest bubble we have since everything else is still contracting.

Exactly, the tax rates might be the nominal reason for a selloff, but the underlying cause is the markets are in a bubble, not that the tax rate change actually affects someone's rational expectation of after tax returns on their investment.  Any investment advisor that says, "Sell, rates are going up" is either stupid, or he's really advising his clients to GAMBLE on price changes in an irrational market and hoping to get his clients out before the market reflects actual value, which is much lower than where we sit now.  It's short term trading versus investing, and the tax rate change might very well affect speculators who trade short term, but I can't see it have much effect on actual investors. 

The bottom line is after a tax rate change, there might be a small shift in stock prices to reflect the change in taxes, but all the other forces that affect share values DWARF the tax effects, make them irrelevant to investors.  Heck, we saw the Dow in recent years go from 14,000 to 7,000, and back to the current 11,000 without any change at all in rates.  At the beginning of the Bush administration, stocks were at about the same level as today.  We got a huge rate cut on capital, including dividends, and in nearly a decade, NO CHANGE at all in stock prices, although inflation has eaten away about 30% of the value of the market.  Clearly tax rates are simply not what drives stock prices.  Those forces that DO drive stock prices are what investors should worry about, not whether they have to pay 15% or 20% on their GAINS. 

[Jeremy Roenick]

Hey NC, at the end of the whole mess what it really amounts to is a huge correction (assuming a mid-Dec sell off) where profits will be collected and the manipulators will dive right back in after the wounded have been bayoneted (the average investor) and buy stocks on the cheap.  Ready for the next irrational climb in the markets based on absolutely nothing fundamental.

It's really criminal once you break it down.  It's the prime reason why I got out of the markets a few years ago.  I realized that the forces driving prices were way over my head and I wasn't "in" on their strategy sessions.

[MRM]

Sec. of the Treasury Timmy Geithner, voted by People magazine as one of the
most beautiful people on the planet

Is that a joke? He looks like a Keebler elf.

[The One Man Gang]

[plumbervol]

Most of you folks don't have a pot to piss in or a window to toss it out but you insist on kissing the of the rich. The rich in the congress are holding the middle class tax cuts hostage. They preach the need to cut the deficit but insist that the rich get tax cuts while cutting off unemployment benefits for the weakest as they suffer the effects of the George Bush Depression....

If you want to kiss a rich man be my guest, just dont make me have to pay his damn bills.

[Just Win]

Most of you folks don't have a pot to piss in or a window to toss it out but you insist on kissing the of the rich. The rich in the congress are holding the middle class tax cuts hostage. They preach the need to cut the deficit but insist that the rich get tax cuts while cutting off unemployment benefits for the weakest as they suffer the effects of the George Bush Depression....

If you want to kiss a rich man be my guest, just dont make me have to pay his damn bills.

I have a pot for sure. That is not the problem. The problem is the people in the photo below want my pot and then some. They keep telling me that if they can tax the rich it will make me feel better that they have taken my pot and then some. My only question is will it bring down the deficit and lower the sky high unemployment?

[plumbervol]

I will not feel better but I would know that the deadbeats were paying their way. Those folks are expensive to keep up, and their trust fund payouts or salries do not fuel job production.

[Sasquatch]

When will it become the Obama economy? Will it ever?

No end in sight to U.S. economic crisis as 'scariest jobs chart ever' shows post-recession unemployment is at its worst since World War Two



Read more: http://www.dailymail.co.uk/news/article-1336078/Post-recession-unemployment-scariest-job-chart-worst-WW2.html#ixzz17Lfeh5Zx