Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
|
Last |
Change |
Percent |
|
|
S&P Futures |
1414.5 |
-1.5 |
-0.11% |
|
Eurostoxx Index |
2578.6 |
-22.8 |
-0.88% |
|
Oil (WTI) |
86.63 |
0.7 |
0.81% |
|
LIBOR |
0.311 |
0.001 |
0.32% |
|
US Dollar Index (DXY) |
80.35 |
-0.062 |
-0.08% |
|
10 Year Govt Bond Yield |
1.61% |
-0.01% |
|
|
RPX Composite Real Estate Index |
190.5 |
-0.4 |
|
Markets are mixed this morning as optimism on the fiscal cliff is overshadowed by European events. Mario Monti is resigning, creating an opening for Silvio Berlusconi to return. Italian bond yields are up 31 basis points to 4.83%. Japan is officially in a recession again (its third in the last four years) as 3Q GDP shrank at a 3.5% annualized rate. Bonds and MBS are up small.
Generally, we have a data-light week coming up, with inflation numbers dominating. The FOMC rate decision is Dec 12.
The details of a deal on the cliff are taking shape. On the revenue side, either a “split the difference” between the current top rate and 39.6%, or a redefinition of what is considered “rich,” to 375k – 500k. Entitlement cuts will be part of the package. Ezra Klein reported Friday that the deal will probably be an increase in the top rate to 37% and an increase of the Medicare eligibility age to 67. Both sides seem to be inching closer together, and we’ll see if Boehner can pull his caucus together when they meet on Wed.
Ever since the financial crisis began, “uncertainty” has become the buzzword thrown out to explain why the economy continues to limp along. Two professors from Chicago and Stanford tested the hypothesis that uncertainty is driving the economy by regressing economic variables against the number of times the word “uncertainty” was mentioned in the press. They found a statistical relationship between the two, and estimate that the upturn in uncertainty caused a 16% drop in private investment and 2.3 million jobs. Of course there is a big risk of confusing correlation and causation. Does uncertainty cause a bad economy, or does a bad economy increase the risk that government will do something (either good or bad) in an attempt to fix the economy?
New lawsuits continue to be filed against the banks for the sins of the subprime crisis. Some in the banking industry fear the cost could reach $300 billion. Investors are now suing the trust banks for failing to police issuers. This is a new front, as the trust banks merely hold the securities and collect / disburse payments for a nominal fee. Servicers, are you next?
Filed under: Morning Report |
All Things in Moderation 
“a redefinition of what is considered “rich,” to 375k – 500k.”
I’ve no insight, but it seems to be that POTUS would have a hard time with that. I could see 200k for singles, 400k for families. the 200 single, 250 families just doesn’t make sense. and i’m sure all the D congressmen from the close-in suburbs are telling him that.
i’d wouldn’t touch the medicare age in isolation, but as part of broader medicare reform. or even broader entitlement reform.
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Does uncertainty cause a bad economy, or does a bad economy increase the risk that government will do something (either good or bad) in an attempt to fix the economy?
The Nyitray uncertainty principle!
Oil prices level, but gas prices going down (at least in Tampa). The aftereffects of Sandy still? Not that I’m complaining …
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Good piece by Steve Pearlstein on the trade-offs associated with exporting shale gas.
http://www.washingtonpost.com/business/with-a-natural-gas-tax-everyone-can-benefit/2012/12/07/6c678b8a-3cd7-11e2-ae43-cf491b837f7b_story.html
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http://www.washingtonpost.com/local/backyard-rink-gets-icy-reception-in-nw/2012/12/09/6cf94f04-40a9-11e2-a2d9-822f58ac9fd5_story.html
i love a good neighborhood fight over what someone does with their property.
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$250K hits a lot of affluent two-income families. Think The Cosby Show. Nobody would call them rich as the class warriors see it. I’ve never understood why the married brackets aren’t double the single bracket all the way up. Yet another hidden marriage tax.
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There should be no joint filing. Everyone should file as an individual.
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There should be no joint filing.
I agree in principle but our legal and financial systems are still evolving away from the concept of women as chattel and there are a lot of vestiges of that thinking still around. Once the Supreme Court rules that all marriages are unconstitutional we can start fresh with a clean slate. Until then we are stuck with the married couple as the default (if only honored in the breach) economic unit.
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Again, joint filing is a response to community property laws, at that time in 8 states. In TX, for example, a marriage is a partnership, and all money earned by each party is jointly and severally attributed to both. This is the nature of community property as opposed to English property. It is the opposite of “wife = chattel” YJ. That was English law. It is “wife = partner”. Because state property law controls within a state, the feds could not say a Texas husband earned all and wife earned none, or vice versa. Thus, for CA, TX, and six other states from 1932 – 1947, there was a huge tax advantage.
In Poe v. Seaborn, 282 U.S. 101 (1930), the Supreme Court held that a husband and wife in
a community property state were entitled to file separate returns, each treating one-half of the
couple’s community income as his or her respective income for Federal income tax purposes.
Because of progressive rate structures, the immediate effect of Poe v. Seaborn was that many married
couples with only one income earner who resided in community property states could pay
significantly less tax than their counterparts in common law states by choosing to report their income
on separate returns. The legislative history to the Revenue Act of 1948, which attempted to remedy
this disparity, states: “Since the rates applied under the income tax are steeply progressive, the same
family income divided in two halves by community property law will be taxed far less severely than
in a common-law State where the whole income is apt to be taxed to one spouse.”
You guys do not get that this is decided constitutional law that demands this result.
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Thanks for the explanation, mark. My ‘wife as chattel’ remark was largely tongue-in-cheek. But trying to even out the inequities in the tax code relating to married couples always results in some level of ‘unfairness’ depending on who ends up paying more under what circumstances. For many years it has been tilted against dual income HENRYs (my new favorite appellation) despite claims of having fixed the marriage tax.
The marriage tax is one of my snide reasons for supporting same-sex marriage. Why should gay couples (or as nova has observed, any unmarried cohabitating couple) get all the tax breaks.
looks like we’ve identified the problem.
When your only tool is a flat tax, all problems look like a nail.
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that’s a way around the marriage issue too.
those affluent families are the ones that are going to be hit the hardest with higher taxes. HENRYs — high earners, not rich yet.
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NOVA,
As a far from rich HENRY, I look back fondly on my days as a DINK (dual income, no kids). Good times, good times.
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“Once the Supreme Court rules that all marriages are unconstitutional ”
that would be a hoot. the court rules that we’ve been establishing a religion in violation of 1st amendment. any marriage not performed in front of a judge is deemed invalid.
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“Since the rates applied under the income tax are steeply progressive”
looks like we’ve identified the problem.
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“Since the rates applied under the income tax are steeply progressive”
looks like we’ve identified the problem.
Agreed.
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“You guys do not get that this is decided constitutional law that demands this result.”
Demands is a bit strong. You can repeal the married filing jointly piece and just let the chips fall where they may with regards to community property laws.
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… just let the chips fall where they may with regards to community property laws.
That would be a growth boost for CA. I guess every state could adopt community property. The United States jurisdictions which have adopted community property can be separated into five categories: (1) traditional (California, Texas, Louisiana, New Mexico,Arizona);
(2) Uniform Marital Property Act (Wisconsin);
(3) voluntary (Alaska);
(4) unique adoption (Idaho, Nevada, Washington) and
(5) entity (Puerto Rico). In ’48 there were categories 1, 4, and 5.
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“looks like we’ve identified the problem.
When your only tool is a flat tax, all problems look like a nail.”
No, just “steeply progressive” income tax rates.
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It’s a wrap folks:
“US Treasury announces sale of remaining AIG stock held by government”
http://www.washingtonpost.com/business/us-treasury-announces-sale-of-remaining-aig-stock-held-by-government/2012/12/10/f957294a-4314-11e2-8c8f-fbebf7ccab4e_story.html?hpid=z3
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Dichotomy between housing market and construction jobs?
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I gave up trying to make the link work and tried to find a google for it. Don’t think I found it.
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Huh. Wonder why the URL got deleted. It should be fixed now.
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Got it!
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