This week's signs of the apocalypse

LaBron James says race was a factor in the public backlash over the way he left Cleveland for the Miami.

Gap sells acid-washed, pre-faded blue jeans for toddlers. "This staple is both put-together and fun!"

The guy who invented the Segway died when his Segway rolled off a cliff. (This is so horrible it isn't even funny and does not belong in this silly post).

A story appeared in a major political publication with the subheadline: Ring legend Mick Foley explains how Tori Amos changed his life.

President Obama, in a fawning interview with Jann Wenner in this month's Rolling Stone, kinda sorta admits that his job involves more than just doing the opposite of whatever George W. Bush did; and in so doing reveals that he may have been the least thoughtful presidential nominee in history:

What has surprised you the most about these first two years in office? What advice would you give your successor about the first two years?

Over the past two years, what I probably anticipated but you don't fully appreciate until you're in the job, is something I said earlier, which is if a problem is easy, it doesn't hit my desk. If there's an obvious solution, it never arrives here — somebody else has solved it a long time ago. The issues that cross my desk are hard and complicated, and oftentimes involve the clash not of right and wrong, but of two rights. And you're having to balance and reconcile against competing values that are equally legitimate.

Oh, the irony

"Finding $700 billion is not easy." - President Obama, Wednesday September 29, 2010

Seriously? Since when has he had problems finding $700 billion? He's really killing it at these town hall events.

Thatcherism

A Margaret Thatcher quote referenced in Claire Berlinksi's new book, There Is No Alternative: Why Margaret Thatcher Matters.

We must not focus our attention exclusively on the material, because though important, it is not the main issue. The economic success of the Western World is a product of its moral philosophy and practice. Economic results are better because the moral philosophy is superior. It is superior, because it starts with the individual, with his uniqueness, his responsibility, and his capacity to choose.... Choice is the essence of ethics.... Good and evil have meaning only insofar as man is free to choose."

There is no sales tax provision in Obamacare

There is a misleading email going around that is getting people riled up regarding the health care bill. While I am generally in favor of getting people riled up in support of a good cause, there is a problem with this one.

The email says the following:

Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 (presumably after obama's re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff makes your November and 2012 votes more important? Oh, you weren't aware this was in the obamacare bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either (result of clandestine midnight voting for huge bills they've never read). AND, there are a few other surprises lurking.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book.

People have the right to know the truth because an election is coming in November!

First of all, there is no sales tax provision. Yes, there is a 3.8% Medicare surtax on investment income, and yes investment income can include capital gains from the sale of real estate. But it is not a tax on gross proceeds, which would be like a sales tax.

Second, even if a person does have some capital gains from the sale of a property, if the particular piece of real estate happens to be a "qualified personal residence", the first $500K (married)/$250K (single) in capital gains is exempt from all tax, including this new tax.

And third, the 3.8% Medicare surtax only applies to those making more than $250K (married)/$200k (single) in income.

But I do believe that the 3.8% Medicare surtax on investment income in general is a big problem. It’s a tax on capital and will encourage those people who have capital to spend more time and effort trying to avoid taxes rather than putting their capital toward its most profitable and productive use.

And even more troubling, the $250K/$200K threshold is UNINDEXED, meaning there is no inflation adjustment. So it’s going to impact more and more people over time. Eventually everyone.

Wall Street is shrinking

Yesterday, the headline on Yahoo Finance was Get Ready For The Fixed Income Bloodbath. The short article described the increasingly dire employment situation on fixed income trading and brokerage desks throughout Wall Street.

Fixed income desks are going to be subject to severe layoffs, according to a highly placed Wall Street insider with information about the plans of his firm and the plans of rivals. "It's going to be a blood bath. Volume is down for everything except Treasuries and Munis. These guys aren't making money and soon they'll be out of their jobs."

Today, Andy Kessler, a frequent columnist at WSJ writes:

“In my estimation, there are too many traders, bankers and salesmen to support the new level of business. Wall Street firms also have too much capital that they scramble to generate returns on. Both need to shrink over the next five years."

According to Arnold Kling over at Econlog, this is what the financial crisis was largely about. In other words, it was the market's way of shouting "the financial sector is too big and it needs to shrink". In the midst of the financial crisis back in September 2008, Kling wrote in an open letter to Ben Bernanke:

Today, it is clear that the U.S. financial sector needs to shrink. As another one of your former classmates, Ken Rogoff, has pointed out, the financial sector has accounted for an unusually large share of corporate profits in recent years. It is time for this country to shift talent and capital elsewhere. In order for that to happen, some firms in the industry need to tighten their belts, some weaker firms need to merge with stronger firms, and the weakest firms need to fail.

I also recall around that time one of the regulars on CNBC's Fast Money saying something to the effect of: "For too long, we have had way too much financial engineering and not enough real engineering. That's going to change."

So maybe that is what is happening. Despite TARP and despite 0% Fed Funds rates that usually ensure bank profits, profits and stock prices are down on Wall Street, which is the market's way of telling us that Wall Street still needs to downsize. And it looks like it may be happening. But fortunately for those in the cross-hairs, it's just happening very slowly thanks to TARP and 0% Fed Funds rates.

The Blaze.com: "Chris Christie's greatest hits mix"

As with any greatest hits collection, some fans may be disappointed to discover that one of their favorite tracks has been left off. For me, it's the track entitled "You punch them? I punch you.":

The tax issue is about property rights

I mentioned that here, and here is a post from John Hood making a similar point:

I know it’s been said before, but it merits repeating: the debate about taxes in general, and about extending the Bush tax cuts in particular, only sounds like the issue in question is fiscal. It’s not. The Right and Left differ on tax policy primarily because of a difference in values.

Broadly speaking, the Right believes that your stuff is yours. The Left believes your stuff doesn’t really become your stuff until the government says it is. So the Right sees taxes as a way to pay for necessary government services. The Left sees taxes as an instrument of social control and redistributive justice.

...

I agree with the supply-side argument that virtually all Americans benefit from the growth effects of keeping marginal tax rates low. But the most important reason to extend the tax cuts for everyone is that it is wrong for the government to steal and redistribute income.

Chris Christie on Squawk Box

Chris Christie spent yesterday morning on CNBC's Squawk Box and was fantastic as usual. Watch this segment where he discusses the idea of tax policy and uncertainty. When the Wall Street econ geek makes the argument that there was uncertainty during the Reagan years because taxes were cut more than people thought they were going to be, Christie responds:

That is such a false, fake argument. I mean seriously...The uncertainty of lower taxes is something people can deal with. The uncertainty of not knowing if you can meet your payroll, the uncertainty of not knowing what health care is going to cost, brings paralysis.

My favorite quote from Christie on yesterday's show was his response to the question about his manner and his tell-it-like-it-is approach: "My mom's Sicilian, so I don't know any other way to act."

"It's an important distinction"

Here is Chris Matthews commenting on the President saying that tax cuts are gifts.

He talked today for example about people getting a check from the government in the form of a tax cut. That's not the way it works!

Obama: Tax cuts are "gifts"

The President brought up this idea that tax cuts need to be paid for today, but he also said something even more revealing and outrageous. When discussing the idea of extending the tax cuts for those making more than $250K (married)/$200K (single), he said that "we can't give $700 billion away to some of America's wealthiest people."

So not only do lower taxes need to be "paid for", we really should look at any tax cut as a gift. It really does sound to me like he believes that all income and wealth produced in an economy is by default property of the government.

Which brings me to another point. Many on our side are pointing out that raising taxes in a recession is bad economic policy. It is, but is that really the point? Doesn't that imply that it is okay to raise taxes when times are good?

This discussion and debate needs to be framed not it terms of "not raising taxes in a recession", it needs to be framed in terms of property rights. If there was ever a time the American people might be willing to hear such an argument, it might be now.