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Fairfax Underground
Welcome to Fairfax Underground, a project site designed to improve communication among residents of Fairfax County, VA. Feel free to post anything Northern Virginia residents would find interesting.
Welcome to Fairfax Underground, a project site designed to improve communication among residents of Fairfax County, VA. Feel free to post anything Northern Virginia residents would find interesting.
The Overseas Profits Elephant in the Room
Posted by:
mcsmack
()
Date: October 19, 2010 07:43PM
By JOHN CHAMBERS AND SAFRA CATZ
During last year's "Jobs Summit," President Obama said he was open to any good idea to get the economy moving again. Today he should be especially so, since Washington's many monetary and fiscal policy decisions have not been able to spur the robust growth or job expansion that we all would like. And yet there is a simple idea—the trillion-dollar elephant in the room—that has apparently been dismissed for no good reason.
One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.
But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.
http://online.wsj.com/article/SB10001424052748704469004575533880328930598.html?mod=WSJ_Opinion_LEADTop
During last year's "Jobs Summit," President Obama said he was open to any good idea to get the economy moving again. Today he should be especially so, since Washington's many monetary and fiscal policy decisions have not been able to spur the robust growth or job expansion that we all would like. And yet there is a simple idea—the trillion-dollar elephant in the room—that has apparently been dismissed for no good reason.
One trillion dollars is roughly the amount of earnings that American companies have in their foreign operations—and that they could repatriate to the United States. That money, in turn, could be invested in U.S. jobs, capital assets, research and development, and more.
But for U.S companies such repatriation of earnings carries a significant penalty: a federal tax of up to 35%. This means that U.S. companies can, without significant consequence, use their foreign earnings to invest in any country in the world—except here.
http://online.wsj.com/article/SB10001424052748704469004575533880328930598.html?mod=WSJ_Opinion_LEADTop
Re: The Overseas Profits Elephant in the Room
Posted by:
pas'ion
()
Date: October 19, 2010 07:57PM
President George W. Bush had pushed through two big tax cuts - one in 2001 because the government was supposedly taking in too much money, the second in 2003 to stimulate investment. But the economy tanked anyway. The latest tax-cut screed, the Republican Party's Pledge to America, has no meaningful numbers, proposes no changes in programs like Social Security, Medicare and defense, and asks no sacrifices of anyone, yet it says it can balance the budget. Good luck with that.
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/17/AR2010101700019_3.html?nav=hcmoduletmv
One proposed solution is to jump-start the economy with deep and permanent tax cuts. That's more than a little problematic, given that the Great Recession began in 2007, when tax rates, especially on investment income, were about the lowest in modern times and there were no "Obama tax increases" on the horizon.
Edited 1 time(s). Last edit at 10/19/2010 07:57PM by pas'ion.
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/17/AR2010101700019_3.html?nav=hcmoduletmv
One proposed solution is to jump-start the economy with deep and permanent tax cuts. That's more than a little problematic, given that the Great Recession began in 2007, when tax rates, especially on investment income, were about the lowest in modern times and there were no "Obama tax increases" on the horizon.
Edited 1 time(s). Last edit at 10/19/2010 07:57PM by pas'ion.
Re: The Overseas Profits Elephant in the Room
Posted by:
WingNut
()
Date: October 19, 2010 08:04PM
Tax cuts didn't tank the economy. Lending and credit idiocy did.
Lowered tax rates would not have been enough to prevent the recession, what came due was a long troubling practice of unrealistic loans.
The economy sucks now. Lowering tax rates may add to the deficit, but so will more stimulus spending and bailouts. But one puts money in the hands of the people, one trusts the government.
Lowered tax rates would not have been enough to prevent the recession, what came due was a long troubling practice of unrealistic loans.
The economy sucks now. Lowering tax rates may add to the deficit, but so will more stimulus spending and bailouts. But one puts money in the hands of the people, one trusts the government.
idontlikebeingrightaboutshitlikethisbutiam
Edited 21 time(s). Last edit at 5/31/1967 05:57AM by WingNut.
Last edit at 11/30/2015 01:37PM Last edit at 5/14/2015 03:52PM Last edit at 1/28/2014 05:57AM Last edit at 11/29/2015 01:10PM Last edit at 3/14/2011 11:52PM Last edit at 7/20/2012 04:07AM
Last edit at 6/29/2013 11:18PM Last edit at 3/19/2011 01:02PM Last edit at 3/26/2012 09:07PM
Re: The Overseas Profits Elephant in the Room
Posted by:
WingNut
()
Date: October 19, 2010 08:04PM
ANd the economy was pretty fucking good until 07 or 08 actually.
idontlikebeingrightaboutshitlikethisbutiam
Edited 21 time(s). Last edit at 5/31/1967 05:57AM by WingNut.
Last edit at 11/30/2015 01:37PM Last edit at 5/14/2015 03:52PM Last edit at 1/28/2014 05:57AM Last edit at 11/29/2015 01:10PM Last edit at 3/14/2011 11:52PM Last edit at 7/20/2012 04:07AM
Last edit at 6/29/2013 11:18PM Last edit at 3/19/2011 01:02PM Last edit at 3/26/2012 09:07PM
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 19, 2010 08:07PM
pas'ion Wrote:
-------------------------------------------------------
> President George W. Bush had pushed through two
> big tax cuts - one in 2001 because the government
> was supposedly taking in too much money, the
> second in 2003 to stimulate investment. But the
> economy tanked anyway. The latest tax-cut screed,
> the Republican Party's Pledge to America, has no
> meaningful numbers, proposes no changes in
> programs like Social Security, Medicare and
> defense, and asks no sacrifices of anyone, yet it
> says it can balance the budget. Good luck with
> that.
>
>
> http://www.washingtonpost.com/wp-dyn/content/artic
> le/2010/10/17/AR2010101700019_3.html?nav=hcmodulet
> mv
>
>
> One proposed solution is to jump-start the economy
> with deep and permanent tax cuts. That's more than
> a little problematic, given that the Great
> Recession began in 2007, when tax rates,
> especially on investment income, were about the
> lowest in modern times and there were no "Obama
> tax increases" on the horizon.
Yes, the article is very interesting if you read past your short but meaningless highlight:
...What about having the Treasury engage in a massive stimulus program to put money in people's pockets and have them spend it, ginning up economic activity and restoring confidence? But stimulus money has to come from somewhere - and it doesn't seem possible for the Treasury to raise a few trillion more stimulus bucks without dire consequences to interest rates and the dollar's value.
It doesn't help that the administration wrongly predicted that its stimulus package would hold unemployment to 8 percent; the rate soared to 10 percent and still hangs stubbornly in the mid-nines.
Other institutions, such as the Fed and the Social Security Administration, both nonpartisan, also underestimated our economic problems. But the administration's mistake, which seems to have been an honest one, has undermined its credibility.
The fact that stimulus programs seemed designed to favor unionized workers, a core Democratic constituency, didn't help. Nor did the fact that Cash for Clunkers and the $8,000 credit for first-time home buyers caused one-time spikes in new-car and house sales that fell off sharply after the programs expired. ...
Yeah, but that has nothing to do with the point of his topic either. The point basically is this - the money is there, and it isn't going to come back to the US under current conditions. If they threaten to pass legislation to somehow tax it, then they will just spend the money elsewhere. Best bet, offer incentives to get them to invest the money back here in the US. And um - very few people are really embracing the 'deep cuts' mentality - other than for a short term stimulus. Many folks would like to make portions of the Bush tax cuts permanent, and the majority of Americans would probably agree on increasing taxes (a bit) on folks making over $500K a year. Our taxes here in the US though are much different than overseas - we have income taxes at Federal and State levels, we require businesses to pay not only employment taxes on their workers, but then also taxes on their earnings. Additionally we then tax 'passive' earnings such as the earnings on savings which could hardly be argued as real 'income' - but whatever.
But yeah, being stubborn always works - especially with other people's money.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
-------------------------------------------------------
> President George W. Bush had pushed through two
> big tax cuts - one in 2001 because the government
> was supposedly taking in too much money, the
> second in 2003 to stimulate investment. But the
> economy tanked anyway. The latest tax-cut screed,
> the Republican Party's Pledge to America, has no
> meaningful numbers, proposes no changes in
> programs like Social Security, Medicare and
> defense, and asks no sacrifices of anyone, yet it
> says it can balance the budget. Good luck with
> that.
>
>
> http://www.washingtonpost.com/wp-dyn/content/artic
> le/2010/10/17/AR2010101700019_3.html?nav=hcmodulet
> mv
>
>
> One proposed solution is to jump-start the economy
> with deep and permanent tax cuts. That's more than
> a little problematic, given that the Great
> Recession began in 2007, when tax rates,
> especially on investment income, were about the
> lowest in modern times and there were no "Obama
> tax increases" on the horizon.
Yes, the article is very interesting if you read past your short but meaningless highlight:
...What about having the Treasury engage in a massive stimulus program to put money in people's pockets and have them spend it, ginning up economic activity and restoring confidence? But stimulus money has to come from somewhere - and it doesn't seem possible for the Treasury to raise a few trillion more stimulus bucks without dire consequences to interest rates and the dollar's value.
It doesn't help that the administration wrongly predicted that its stimulus package would hold unemployment to 8 percent; the rate soared to 10 percent and still hangs stubbornly in the mid-nines.
Other institutions, such as the Fed and the Social Security Administration, both nonpartisan, also underestimated our economic problems. But the administration's mistake, which seems to have been an honest one, has undermined its credibility.
The fact that stimulus programs seemed designed to favor unionized workers, a core Democratic constituency, didn't help. Nor did the fact that Cash for Clunkers and the $8,000 credit for first-time home buyers caused one-time spikes in new-car and house sales that fell off sharply after the programs expired. ...
Yeah, but that has nothing to do with the point of his topic either. The point basically is this - the money is there, and it isn't going to come back to the US under current conditions. If they threaten to pass legislation to somehow tax it, then they will just spend the money elsewhere. Best bet, offer incentives to get them to invest the money back here in the US. And um - very few people are really embracing the 'deep cuts' mentality - other than for a short term stimulus. Many folks would like to make portions of the Bush tax cuts permanent, and the majority of Americans would probably agree on increasing taxes (a bit) on folks making over $500K a year. Our taxes here in the US though are much different than overseas - we have income taxes at Federal and State levels, we require businesses to pay not only employment taxes on their workers, but then also taxes on their earnings. Additionally we then tax 'passive' earnings such as the earnings on savings which could hardly be argued as real 'income' - but whatever.
But yeah, being stubborn always works - especially with other people's money.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Re: The Overseas Profits Elephant in the Room
Posted by:
pas'ion
()
Date: October 19, 2010 08:33PM
Cash-rich corporations are issuing billions of dollars of cheap debt for purposes such as buying back stock rather than expanding and creating new jobs. Corporations have record cash on hand but aren't using it to expand in the United States.
Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms' coffers.
Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?
U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of "uncertainty," which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.
The White House countered that companies are wary of hiring not because of new regulations but because they're still waiting for consumer demand to return.
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/14/AR2010071405960.html
Nonfinancial companies are sitting on $1.8 trillion in cash, roughly one-quarter more than at the beginning of the recession. And as several major firms report impressive earnings this week, the money continues to flow into firms' coffers.
Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?
U.S. Chamber of Commerce, which held a jobs summit Wednesday and accused the Obama administration of dumping onerous regulations on businesses. That has created an environment of "uncertainty," which is causing firms to hold back on hiring as the unemployment rate has hovered near 10 percent, the Chamber said.
The White House countered that companies are wary of hiring not because of new regulations but because they're still waiting for consumer demand to return.
http://www.washingtonpost.com/wp-dyn/content/article/2010/07/14/AR2010071405960.html
Re: The Overseas Profits Elephant in the Room
Posted by:
pas'ion
()
Date: October 19, 2010 08:44PM
"There's not a whole lot that you could do to entice companies to hire," he added. "You could cut taxes on them, but they're not going to hire just because they have the extra cash, because they already have the extra cash."
Zachary Karabell, president of River Twice Research.
Zachary Karabell, president of River Twice Research.
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 19, 2010 08:48PM
How about the big DUH in the room. Like how much will health care really cost?
If I ran a big business right now, I wouldn't be in mind to hire folks in the US right now either. It really is a no brainer, but as usual the Democrats want to try and paint big business as the bad guy (yet another in their litany of 'bad guys').
Ah yes, this must be how Hugo Chavez deals with his day-to-day justifications of seizing businesses. Obviously they are evil, keeping things from the loyal masses of comrades - so he must seize them to make them give their products more cheaply to everyone, and so he can control all their profits.... which then dry up, and the government loses massive revenue as people hoard goods. He keeps looking past the part where - business = jobs, and if he encourages job growth that means more tax revenues. To do that he needs to foster an environment where businesses don't feel that they will have confiscatory measures used against them. In Venezuela, it is outright take over by the government. In the (supposed) free-market US, it is taxes, and the threat of increased taxes in the form of new health care, and energy policies. So yeah, it really isn't hard to see what is up - unless you are reading the WAPO, or the HuffPo, or some other left-leaning, business bashing publication. Doesn't mean there should be NO taxes - quite the contrary. Just at some point either you set the rules so they aren't in quicksand for a bit, or you can just sit and wonder why these guys keep holding their money.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
If I ran a big business right now, I wouldn't be in mind to hire folks in the US right now either. It really is a no brainer, but as usual the Democrats want to try and paint big business as the bad guy (yet another in their litany of 'bad guys').
Ah yes, this must be how Hugo Chavez deals with his day-to-day justifications of seizing businesses. Obviously they are evil, keeping things from the loyal masses of comrades - so he must seize them to make them give their products more cheaply to everyone, and so he can control all their profits.... which then dry up, and the government loses massive revenue as people hoard goods. He keeps looking past the part where - business = jobs, and if he encourages job growth that means more tax revenues. To do that he needs to foster an environment where businesses don't feel that they will have confiscatory measures used against them. In Venezuela, it is outright take over by the government. In the (supposed) free-market US, it is taxes, and the threat of increased taxes in the form of new health care, and energy policies. So yeah, it really isn't hard to see what is up - unless you are reading the WAPO, or the HuffPo, or some other left-leaning, business bashing publication. Doesn't mean there should be NO taxes - quite the contrary. Just at some point either you set the rules so they aren't in quicksand for a bit, or you can just sit and wonder why these guys keep holding their money.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Re: The Overseas Profits Elephant in the Room
Posted by:
pas'ion
()
Date: October 19, 2010 08:51PM
The old "i wouldnt hire people because of health care right now cough cough ObamaCare" Doesnt hold water either.
"The trend of companies holding more cash is not new. Between 1980 and 2006, the average cash-to-assets ratio for U.S. industrial firms more than doubled," according to research by finance professors.
One explanation, said finance professor René Stulz at Ohio State University, is that as competition has become more global, it's become harder for individual companies to survive, and so they hold on to more cash to be safe. He added that companies have also increased their cash holdings in the wake of the financial crisis, particularly since the bankruptcy of Lehman Brothers in September 2008, as the banking system has become more fragile and credit has become scarce.
"The trend of companies holding more cash is not new. Between 1980 and 2006, the average cash-to-assets ratio for U.S. industrial firms more than doubled," according to research by finance professors.
One explanation, said finance professor René Stulz at Ohio State University, is that as competition has become more global, it's become harder for individual companies to survive, and so they hold on to more cash to be safe. He added that companies have also increased their cash holdings in the wake of the financial crisis, particularly since the bankruptcy of Lehman Brothers in September 2008, as the banking system has become more fragile and credit has become scarce.
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 19, 2010 08:54PM
You obviously follow how business works huh? Most businesses don't like to hold large cash reserves - it makes them a target for takeovers. All that money sitting in banks is an easy target, and if it was as obvious as they are trying to paint it, folks like Berkshire-Hathaway or maybe the Gates foundation would buy these places up, gut them, and move on. Have you even worked for anything other than a government job there pas'ion? Because seriously, you surely don't have a clue, other than what you are fed by WAPO and HuffPo.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Re: The Overseas Profits Elephant in the Room
Posted by:
pas'ion
()
Date: October 19, 2010 08:59PM
why do you believe this pipe dream that if the corporations magically got all these lower taxes and brought money back from overseas that they would suddenly start hiring and investing in US jobs products and sales? They already have large cash reserves and are sitting on them till at least 2012 or they see signs the economy is rebounding. Or till an administration is back in power that will be more amenable to giving them more power.
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 19, 2010 09:14PM
pas'ion Wrote:
-------------------------------------------------------
> why do you believe this pipe dream that if the
> corporations magically got all these lower taxes
> and brought money back from overseas that they
> would suddenly start hiring and investing in US
> jobs products and sales? They already have large
> cash reserves and are sitting on them till at
> least 2012 or they see signs the economy is
> rebounding. Or till an administration is back in
> power that will be more amenable to giving them
> more power.
I guess that just means Unions suck, huh? You obviously need to figure out which one is coming first - the cart or the horse. Rebound = ? Since it isn't like they are saying consumers are sitting on all this wealth. How will consumers get money to spend? Magical printing presses?
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
-------------------------------------------------------
> why do you believe this pipe dream that if the
> corporations magically got all these lower taxes
> and brought money back from overseas that they
> would suddenly start hiring and investing in US
> jobs products and sales? They already have large
> cash reserves and are sitting on them till at
> least 2012 or they see signs the economy is
> rebounding. Or till an administration is back in
> power that will be more amenable to giving them
> more power.
I guess that just means Unions suck, huh? You obviously need to figure out which one is coming first - the cart or the horse. Rebound = ? Since it isn't like they are saying consumers are sitting on all this wealth. How will consumers get money to spend? Magical printing presses?
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Re: The Overseas Profits Elephant in the Room
Posted by:
Aqua Buddha
()
Date: October 19, 2010 09:28PM
Registered Voter Wrote:
-------------------------------------------------------
> pas'ion Wrote:
> --------------------------------------------------
> -----
> > why do you believe this pipe dream that if the
> > corporations magically got all these lower
> taxes
> > and brought money back from overseas that they
> > would suddenly start hiring and investing in US
> > jobs products and sales? They already have
> large
> > cash reserves and are sitting on them till at
> > least 2012 or they see signs the economy is
> > rebounding. Or till an administration is back
> in
> > power that will be more amenable to giving them
> > more power.
>
> I guess that just means Unions suck, huh? You
> obviously need to figure out which one is coming
> first - the cart or the horse. Rebound = ? Since
> it isn't like they are saying consumers are
> sitting on all this wealth. How will consumers get
> money to spend? Magical printing presses?
Thats exactly the problem. Companies are sitting on large cash reserves and have stated they ARE NOT HIRING. Thus people are not working and not spending. It s a vicious circle but People cant spend money they dont have. Corporations could hire and employ and invest in their own business but are choosing NOT to. The power lies with the corporations making the decision NOT to hire. You can pay all the Union dues you want but when Layoffs come around that doesnt help you very much now does it?
-------------------------------------------------------
> pas'ion Wrote:
> --------------------------------------------------
> -----
> > why do you believe this pipe dream that if the
> > corporations magically got all these lower
> taxes
> > and brought money back from overseas that they
> > would suddenly start hiring and investing in US
> > jobs products and sales? They already have
> large
> > cash reserves and are sitting on them till at
> > least 2012 or they see signs the economy is
> > rebounding. Or till an administration is back
> in
> > power that will be more amenable to giving them
> > more power.
>
> I guess that just means Unions suck, huh? You
> obviously need to figure out which one is coming
> first - the cart or the horse. Rebound = ? Since
> it isn't like they are saying consumers are
> sitting on all this wealth. How will consumers get
> money to spend? Magical printing presses?
Thats exactly the problem. Companies are sitting on large cash reserves and have stated they ARE NOT HIRING. Thus people are not working and not spending. It s a vicious circle but People cant spend money they dont have. Corporations could hire and employ and invest in their own business but are choosing NOT to. The power lies with the corporations making the decision NOT to hire. You can pay all the Union dues you want but when Layoffs come around that doesnt help you very much now does it?
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 19, 2010 09:32PM
No - therein lies the problem. Obama and company made it clear they were willing to hand over corporations to the unions (big auto takeovers). Then they cut deals for their union buddies with stimulus money, etc. Now you have Obamacare sitting there like a huge ugly duck quacking in the middle of the road, and there are still threats of having the EPA pass tighter greenhouse emission mandates, and cap and trade. I am guessing at this point they are going to let the election run its course, then once Congress gets out of lame duck, they will start hiring - in particular as long as the Democrats don't pass some BS legislation during the lame duck session.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Re: The Overseas Profits Elephant in the Room
Posted by:
pas'ion
()
Date: October 19, 2010 09:47PM
You are wrong again. The Government does not have this so called power over the economy. The FED can try to stimulate business but does not have as much power as the president or the voters would like.
"It's endemic in our type of society that we always think there's a person who holds the magic wand," says Sen. Judd Gregg (R-N.H.), a fiscal conservative who isn't running for reelection, so he can, well, be blunt. "But this society and this economy are far too complex to be susceptible to magic wands."
the Great Recession ended 16 months ago, according to the business-cycle arbiters at the National Bureau of Economic Research, that only means that the economy started to grow in June 2009. It doesn't mean that the economy has healed. It certainly doesn't mean that the recession's victims have healed. Tens of millions of people are still economically wounded from declines in their home values and investment accounts. Worse, despite some modest employment growth we're down almost 8 million jobs from the end of 2007, when the Great Recession officially began.
But the Great Recession was different. It was triggered by a financial meltdown brought on by excessive lending, reckless risk-taking, the implosion of an unregulated shadow banking system that assumed that short-term money would always be available - and ignorant and careless borrowing by people and institutions. The recession's genesis is why things are still sluggish even though the Fed has cut short-term rates, which it controls, to virtually zero and has forced down long-term rates, which it doesn't control, by buying more than $1 trillion of securities in the open market and letting it be known that it and other central banks will buy more.
By Allan Sloan, Tory Newmyer and Doris Burke
Fortune
Sunday, October 17, 2010; 2:32 AM
"It's endemic in our type of society that we always think there's a person who holds the magic wand," says Sen. Judd Gregg (R-N.H.), a fiscal conservative who isn't running for reelection, so he can, well, be blunt. "But this society and this economy are far too complex to be susceptible to magic wands."
the Great Recession ended 16 months ago, according to the business-cycle arbiters at the National Bureau of Economic Research, that only means that the economy started to grow in June 2009. It doesn't mean that the economy has healed. It certainly doesn't mean that the recession's victims have healed. Tens of millions of people are still economically wounded from declines in their home values and investment accounts. Worse, despite some modest employment growth we're down almost 8 million jobs from the end of 2007, when the Great Recession officially began.
But the Great Recession was different. It was triggered by a financial meltdown brought on by excessive lending, reckless risk-taking, the implosion of an unregulated shadow banking system that assumed that short-term money would always be available - and ignorant and careless borrowing by people and institutions. The recession's genesis is why things are still sluggish even though the Fed has cut short-term rates, which it controls, to virtually zero and has forced down long-term rates, which it doesn't control, by buying more than $1 trillion of securities in the open market and letting it be known that it and other central banks will buy more.
By Allan Sloan, Tory Newmyer and Doris Burke
Fortune
Sunday, October 17, 2010; 2:32 AM
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 20, 2010 02:56AM
pas'ion Wrote:
-------------------------------------------------------
> You are wrong again. The Government does not have
> this so called power over the economy. The FED
> can try to stimulate business but does not have as
> much power as the president or the voters would
> like.
>
Sorry? Use your brain much? The FED is driving us into the ground right now. This mass printing of dollars is not helping the situation - as a matter of fact it is likely to cause more problems if they are not careful. The only reason the DOLLAR is worth anything is because of the 'perceived' value behind that DOLLAR. Well, it doesn't take a genius to figure out that when you print a gazillion dollars, and have nothing new as a commodity behind them to back them up (as a matter of fact, the commodity values are obviously fucked with housing values being decimated as an example), the perceived value drops enormously. Even with gold on the rise, We would never have enough in reserves to back up the amount of DOLLARS being pushed into the economy.
Congress has the power to set the stage - to determine what the rules of the playing field are. Right now Congress is basically tossing over every apple cart they can in the market place, and making business owners very wary of trying to do much business. And why should they? Just because a bunch of people are out of work, they have no obligation to go out and hire anyone as long as they are doing business and earning enough to keep their business in operation and making a profit.
The analysis on that article is still off - the big problem right now is that banks STILL have bad loans on their books (just look at the BofA filing today where they are being sued to re-purchase $48B in mortgage backed securities from their investors). That situation was setup by the FED - who forced BofA to buy up Merill Lynch and also Countrywide. In any case, the banks are still stuck with a LOT of bad mortgages, and they are REQUIRED to keep a large percentage of their liquid assets in reserve to offset any potential losses by the FED. So in reality, yes, the FED has a lot of power in shaping what the market will do. In addition you still have this huge trade imbalance - since the US doesn't produce much of anything of worth that can be exported on any level even close to the things we import. We would almost be better off lifting export restrictions on technology firms and let them go hog wild selling to third world dictatorships. At least then we would have a lot of product to move.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
-------------------------------------------------------
> You are wrong again. The Government does not have
> this so called power over the economy. The FED
> can try to stimulate business but does not have as
> much power as the president or the voters would
> like.
>
Sorry? Use your brain much? The FED is driving us into the ground right now. This mass printing of dollars is not helping the situation - as a matter of fact it is likely to cause more problems if they are not careful. The only reason the DOLLAR is worth anything is because of the 'perceived' value behind that DOLLAR. Well, it doesn't take a genius to figure out that when you print a gazillion dollars, and have nothing new as a commodity behind them to back them up (as a matter of fact, the commodity values are obviously fucked with housing values being decimated as an example), the perceived value drops enormously. Even with gold on the rise, We would never have enough in reserves to back up the amount of DOLLARS being pushed into the economy.
Congress has the power to set the stage - to determine what the rules of the playing field are. Right now Congress is basically tossing over every apple cart they can in the market place, and making business owners very wary of trying to do much business. And why should they? Just because a bunch of people are out of work, they have no obligation to go out and hire anyone as long as they are doing business and earning enough to keep their business in operation and making a profit.
The analysis on that article is still off - the big problem right now is that banks STILL have bad loans on their books (just look at the BofA filing today where they are being sued to re-purchase $48B in mortgage backed securities from their investors). That situation was setup by the FED - who forced BofA to buy up Merill Lynch and also Countrywide. In any case, the banks are still stuck with a LOT of bad mortgages, and they are REQUIRED to keep a large percentage of their liquid assets in reserve to offset any potential losses by the FED. So in reality, yes, the FED has a lot of power in shaping what the market will do. In addition you still have this huge trade imbalance - since the US doesn't produce much of anything of worth that can be exported on any level even close to the things we import. We would almost be better off lifting export restrictions on technology firms and let them go hog wild selling to third world dictatorships. At least then we would have a lot of product to move.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Re: The Overseas Profits Elephant in the Room
Posted by:
Mr. Misery
()
Date: October 20, 2010 03:00AM
I want Registered Voter to stop posting here.
---------------------------------------------------------------------
I apologize to those I unfairly hurt. To Harry Tuttle in particular.
Attachments:
---------------------------------------------------------------------
I apologize to those I unfairly hurt. To Harry Tuttle in particular.
Attachments:
Re: The Overseas Profits Elephant in the Room
Posted by:
Troll@AOL
()
Date: October 20, 2010 03:02AM
Keep staring @ him like some sort of Pedo, and he just might stop.
.
==================================================================================
"Why don't you LOSERS just pack your flower print DOUCHE BAGS
and get your stoopid @$$#$ THE FUCK OFF MY INTERNETZ!"
- 'philscamms' (the YT Watchdog) ; internet & YouTube® extraordinaire.
.
==================================================================================
"Why don't you LOSERS just pack your flower print DOUCHE BAGS
and get your stoopid @$$#$ THE FUCK OFF MY INTERNETZ!"
- 'philscamms' (the YT Watchdog) ; internet & YouTube® extraordinaire.
Re: The Overseas Profits Elephant in the Room
Posted by:
gosh
()
Date: October 20, 2010 09:22AM
pas'ion - you don't understand. registered voter knows his stuff. as a teller at not one, but two banks, he's handled all kinds of cash in his glory days. this makes him knowledgable about profits and markets and elephants and stuff.
Re: The Overseas Profits Elephant in the Room
Posted by:
Gravis
()
Date: October 20, 2010 11:46AM
WingNut Wrote:
-------------------------------------------------------
> Tax cuts didn't tank the economy. Lending and
> credit idiocy did.
>
> Lowered tax rates would not have been enough to
> prevent the recession, what came due was a long
> troubling practice of unrealistic loans.
+1
"the wisdom of the wise will perish, the intelligence of the intelligent will vanish."
-------------------------------------------------------
> Tax cuts didn't tank the economy. Lending and
> credit idiocy did.
>
> Lowered tax rates would not have been enough to
> prevent the recession, what came due was a long
> troubling practice of unrealistic loans.
+1
"the wisdom of the wise will perish, the intelligence of the intelligent will vanish."
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 20, 2010 12:20PM
gosh Wrote:
-------------------------------------------------------
> pas'ion - you don't understand. registered voter
> knows his stuff. as a teller at not one, but two
> banks, he's handled all kinds of cash in his glory
> days. this makes him knowledgable about profits
> and markets and elephants and stuff.
If I had ONLY been a teller, as you would like to fantasize about - it is doubtful I would be posting here. But keep fantasizing Fairy wannabee.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
-------------------------------------------------------
> pas'ion - you don't understand. registered voter
> knows his stuff. as a teller at not one, but two
> banks, he's handled all kinds of cash in his glory
> days. this makes him knowledgable about profits
> and markets and elephants and stuff.
If I had ONLY been a teller, as you would like to fantasize about - it is doubtful I would be posting here. But keep fantasizing Fairy wannabee.
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 20, 2010 12:23PM
This is the future if we continue to try and have the government act as an 'everything blanket' to the masses. If the Republicans come in and do some cost cutting now, it will be nowhere near as traumatic as what Europe is going through now. Thankfully we DON'T have entrenched government-wide labor unions (yet).
Spending Review: Osborne wields axe
http://www.bbc.co.uk/news/uk-politics-11579979
...The main new welfare savings come from abolishing Employment and Support Allowance, which replaces incapacity benefit, for some categories of claimant after one year, raising £2bn.
Universal benefits for pensioners will be retained as budgeted for by the previous government and the temporary increase in the cold weather payment will be made permanent.
But a planned rise in the state pension age for men and women to 66 will start in 2020, six years earlier than planned.
In other measures, rail fares will be allowed to increase by 3% above RPI inflation from 2012, higher education spending will be cut by 40%, flood defences by 15% and sport England and UK Sport cut by 30%.
Up to 500,000 public sector jobs could go by 2014-15 as a result of the cuts programme, according to the Office for Budgetary Responsibility.
Mr Osborne has not set out in detail where the jobs will go but he admitted there will be some redundancies in the public sector, which he said were unavoidable when the country had run out of money.
He has set out extensive cuts to the budgets of individual government departments including:
* Home Office - 6% cuts, with central government police funding down 20% over four years
* Foreign Office - 24% cut through reduction in the number of Whitehall-based diplomats and back office costs
* HM Revenue and Customs - 15% through the better use of new technology and greater efficiency
* Justice - 6%, with 3,000 fewer prison places in four years time
* Cabinet Office - 35% including selling off properties and reduction in support to prime minister
The Department for International Development's budget will rise to £11.5bn over the next four years, reaching 0.7% of national income in 2013.
The science budget will be ringfenced and the increase for the NHS over the whole spending period has been confirmed as 0.4%, or 0.1% a year.
The schools budget will rise from £35bn to £39bn and, overall, the Department for Education will be required to find resource savings of just 1% a year...
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Edited 1 time(s). Last edit at 10/20/2010 12:24PM by Registered Voter.
Spending Review: Osborne wields axe
http://www.bbc.co.uk/news/uk-politics-11579979
...The main new welfare savings come from abolishing Employment and Support Allowance, which replaces incapacity benefit, for some categories of claimant after one year, raising £2bn.
Universal benefits for pensioners will be retained as budgeted for by the previous government and the temporary increase in the cold weather payment will be made permanent.
But a planned rise in the state pension age for men and women to 66 will start in 2020, six years earlier than planned.
In other measures, rail fares will be allowed to increase by 3% above RPI inflation from 2012, higher education spending will be cut by 40%, flood defences by 15% and sport England and UK Sport cut by 30%.
Up to 500,000 public sector jobs could go by 2014-15 as a result of the cuts programme, according to the Office for Budgetary Responsibility.
Mr Osborne has not set out in detail where the jobs will go but he admitted there will be some redundancies in the public sector, which he said were unavoidable when the country had run out of money.
He has set out extensive cuts to the budgets of individual government departments including:
* Home Office - 6% cuts, with central government police funding down 20% over four years
* Foreign Office - 24% cut through reduction in the number of Whitehall-based diplomats and back office costs
* HM Revenue and Customs - 15% through the better use of new technology and greater efficiency
* Justice - 6%, with 3,000 fewer prison places in four years time
* Cabinet Office - 35% including selling off properties and reduction in support to prime minister
The Department for International Development's budget will rise to £11.5bn over the next four years, reaching 0.7% of national income in 2013.
The science budget will be ringfenced and the increase for the NHS over the whole spending period has been confirmed as 0.4%, or 0.1% a year.
The schools budget will rise from £35bn to £39bn and, overall, the Department for Education will be required to find resource savings of just 1% a year...
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Edited 1 time(s). Last edit at 10/20/2010 12:24PM by Registered Voter.
Re: The Overseas Profits Elephant in the Room
Posted by:
Jimmy Onyx
()
Date: October 20, 2010 12:25PM
Registered Voter works as a scuba diver for Roto-Rooter.
gosh Wrote:
-------------------------------------------------------
> pas'ion - you don't understand. registered voter
> knows his stuff. as a teller at not one, but two
> banks, he's handled all kinds of cash in his glory
> days. this makes him knowledgable about profits
> and markets and elephants and stuff.
gosh Wrote:
-------------------------------------------------------
> pas'ion - you don't understand. registered voter
> knows his stuff. as a teller at not one, but two
> banks, he's handled all kinds of cash in his glory
> days. this makes him knowledgable about profits
> and markets and elephants and stuff.
Re: The Overseas Profits Elephant in the Room
Posted by:
Registered Voter
()
Date: October 21, 2010 01:13PM
Maybe if they got rid of rules like these, we would see things even out more. It seems it isn't ALL about shifting business overseas - just the profits.
Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html
...Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax.
The earnings wind up in island havens that levy no corporate income taxes at all. Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.
Countless Companies
Google, the third-largest U.S. technology company by market capitalization, hasn’t been accused of breaking tax laws. “Google’s practices are very similar to those at countless other global companies operating across a wide range of industries,†said Jane Penner, a spokeswoman for the Mountain View, California-based company. Penner declined to address the particulars of its tax strategies.
Facebook, the world’s biggest social network, is preparing a structure similar to Google’s that will send earnings from Ireland to the Cayman Islands, according to the company’s filings in Ireland and the Caymans and to a person familiar with its plans. A spokesman for the Palo Alto, California-based company declined to comment.
Transfer Pricing
The tactics of Google and Facebook depend on “transfer pricing,†paper transactions among corporate subsidiaries that allow for allocating income to tax havens while attributing expenses to higher-tax countries. Such income shifting costs the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon.
U.S. Representative Dave Camp of Michigan, the ranking Republican on the House Ways and Means Committee, and other politicians say the 35 percent U.S. statutory rate is too high relative to foreign countries. International income-shifting, which helped cut Google’s overall effective tax rate to 22.2 percent last year, shows one way that loopholes undermine that top U.S. rate.
Two thousand U.S. companies paid a median effective cash rate of 28.3 percent in federal, state and foreign income taxes in a 2005 study by academics at the University of Michigan and the University of North Carolina. The combined national-local statutory rate is 34.4 percent in France, 30.2 percent in Germany and 39.5 percent in Japan, according to the Paris-based Organization for Economic Cooperation and Development.
The Double Irish
As a strategy for limiting taxes, the Double Irish method is “very common at the moment, particularly with companies with intellectual property,†said Richard Murphy, director of U.K.- based Tax Research LLP. Murphy, who has worked on similar transactions, estimates that hundreds of multinationals use some version of the method.
The high corporate tax rate in the U.S. motivates companies to move activities and related income to lower-tax countries, said Irving H. Plotkin, a senior managing director at PricewaterhouseCoopers LLP’s national tax practice in Boston. He delivered a presentation in Washington, D.C. this year titled “Transfer Pricing is Not a Four Letter Word.†...
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University
Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes
http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html
...Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax.
The earnings wind up in island havens that levy no corporate income taxes at all. Companies that use the Double Irish arrangement avoid taxes at home and abroad as the U.S. government struggles to close a projected $1.4 trillion budget gap and European Union countries face a collective projected deficit of 868 billion euros.
Countless Companies
Google, the third-largest U.S. technology company by market capitalization, hasn’t been accused of breaking tax laws. “Google’s practices are very similar to those at countless other global companies operating across a wide range of industries,†said Jane Penner, a spokeswoman for the Mountain View, California-based company. Penner declined to address the particulars of its tax strategies.
Facebook, the world’s biggest social network, is preparing a structure similar to Google’s that will send earnings from Ireland to the Cayman Islands, according to the company’s filings in Ireland and the Caymans and to a person familiar with its plans. A spokesman for the Palo Alto, California-based company declined to comment.
Transfer Pricing
The tactics of Google and Facebook depend on “transfer pricing,†paper transactions among corporate subsidiaries that allow for allocating income to tax havens while attributing expenses to higher-tax countries. Such income shifting costs the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Oregon.
U.S. Representative Dave Camp of Michigan, the ranking Republican on the House Ways and Means Committee, and other politicians say the 35 percent U.S. statutory rate is too high relative to foreign countries. International income-shifting, which helped cut Google’s overall effective tax rate to 22.2 percent last year, shows one way that loopholes undermine that top U.S. rate.
Two thousand U.S. companies paid a median effective cash rate of 28.3 percent in federal, state and foreign income taxes in a 2005 study by academics at the University of Michigan and the University of North Carolina. The combined national-local statutory rate is 34.4 percent in France, 30.2 percent in Germany and 39.5 percent in Japan, according to the Paris-based Organization for Economic Cooperation and Development.
The Double Irish
As a strategy for limiting taxes, the Double Irish method is “very common at the moment, particularly with companies with intellectual property,†said Richard Murphy, director of U.K.- based Tax Research LLP. Murphy, who has worked on similar transactions, estimates that hundreds of multinationals use some version of the method.
The high corporate tax rate in the U.S. motivates companies to move activities and related income to lower-tax countries, said Irving H. Plotkin, a senior managing director at PricewaterhouseCoopers LLP’s national tax practice in Boston. He delivered a presentation in Washington, D.C. this year titled “Transfer Pricing is Not a Four Letter Word.†...
If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University