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Friday's Top 10 with NZ Mint: America's Big Six non taxpayers; Central bankers flick hospital pass to politicians; The financial guns of August; Totally Clarke and Dawe; Dilbert

Friday's Top 10 with NZ Mint: America's Big Six non taxpayers; Central bankers flick hospital pass to politicians; The financial guns of August; Totally Clarke and Dawe; Dilbert

Here's my Top 10 links from around the Internet at 5 pm today in association with NZ Mint.

We welcome your additions in the comments below or via email to bernard.hickey@interest.co.nz.

See all previous Top 10s here.

My must reads today is #7 and #8, both of which talk a lot of sense about the Euro crisis and any solutions.

1. 'Those mad Americans' - Reuters reports in detail from Inland Revenue Service records on 6 families in America that paid no federal income tax despite making more than US$200 million each in income.

This sort of thing explains this chart below. Yet still the Tea Party Republicans in Congress are arguing for tax cuts for the rich and benefit cuts for the poor.

Now all this money is accumulating in the hands of the few, who are hoarding it in government bonds.

There is a problem with this sort of capitalism. Resources such as labour, housing and offices are left empty while trillions of dollars sits on the sidelines. That cash needs to be deployed to put those resources together to get people back to work.

What's wrong with these people?

The annual report (link.reuters.com/vec68s), which the IRS typically releases with a two-year delay, covers the 400 tax returns reporting the highest incomes in 2009. These families reported an average income of $202.4 million, down for the second year as the Great Recession slashed their capital gains.

In addition to the six who paid no tax, another 110 families paid 15 percent or less in federal income taxes. That's the same federal tax rate as a single worker who made $61,500 in 2009.

Overall, the top 400 paid an average income tax rate of 19.9 percent, the same rate paid by a single worker who made $110,000 in 2009. The top 400 earned five times that much every day.

2. Not so much hoarding? - Aside from the individuals and families sitting on cash hoards, there is plenty sitting in corporate bank accounts un-deployed.

However, WSJ reports from Federal Reserve figures that the cash pile may not be as big as first thought.

To be sure, companies are still holding onto an unprecedented amount of cash. As of the end of March, nonfinancial corporations had $1.74 trillion in liquid assets on their balance sheets, $12.6 billion more than at the end of the year. A decade ago they had barely $1 trillion on hand.

3. 'Don't look at us' - David Weidner writes at Wall St Journal about why those expecting the central bank cavalry to save the world from financial armageddon may be putting too much hope in the powers of monetary policy.

Central Bankers seem keen to flick the hospital pass back to politicians.

This is one very hot potato/grenade they are tossing between each other.

"Monetary policy is not a panacea," Mr. Bernanke told Congress Thursday. "I would be much more comfortable if Congress would take some of this burden from us," he said, almost begging lawmakers to act soon to cancel across-the-board spending cuts and tax increases due to hit at year-end and to agree to a longer-term deficit-reduction scheme.

Mr. Draghi, pressed by reporters Wednesday, argued, "I do not think it would be right for monetary policy to compensate for other institutions' lack of action."

Yet with the global economy slowing to the point where unemployment is likely to rise and with little developed-country inflation in sight, several private economists say central banks can and should do more. "I think they should [take action], although not necessarily in equal measure," said Bruce Kasman of J. P. Morgan Chase. "But I don't think you can look at central banks as having the kind of ammunition to turn this around."

In the past when global growth was so slow, he said, central banks have cut short-term interest rates by about two full percentage points. With ECB rates at 1% and U.S. and Japanese rates near zero, that's now impossible.

4. Watch out for China's shadow banks - Reuters reports on fears Dallas Federal Reserve President Richard Fisher has about China's financial system.

During the recent credit boom fueled by the 4-trillion-yuan fiscal stimulus, off-balance-sheet lending by banks and private loans by nonbanks exploded. This shadow-banking lending activity accounted for an estimated 20 percent of China’s total loans in 2011.

With the cooling of the real estate market and with slower economic growth likely in the near term, a large share of these loans could turn bad. And because these loans took place outside the view of regulators, the effect of a sudden disruption in repayment is virtually impossible to predict.

5. The financial guns of August - John Quiggan writes at Foreign Policy that Europe's financial and political systems seem to have created a doomsday machine that is ticking down to disaster. He compares the current Euro-zone mess to August of 1914...

In Europe, as in the United States, the problem underlying the crisis was an excessive buildup of debt, partly public, but mostly private. The rub is that whereas the United States was able to resolve the most critical problems through quantitative easing (large-scale purchases of public debt by the U.S. Federal Reserve), this option has been closed off in Europe because the ECB refuses to buy government bonds and remains fixated on controlling inflation.

In retrospect, the ECB's creation looks like a repetition of the systems of military mobilization built up before 1914, or of the doomsday switches built into the MAD system. The ECB's design reflected the policy preoccupations of the 1990s, most notably the belief that low inflation would ensure macroeconomic instability, and fears that a common currency would encourage national profligacy. These preoccupations produced an institution carefully insulated from any kind of democratic control and explicitly precluded from any action that could sustain fiscal stimulus. As long as the ECB remains on its current course, disaster is inevitable.

But even in 1914, there were a few weeks between the assassination of Archduke Franz Ferdinand in June and the general mobilization at the end of July, during which determined action could have prevented war. The time is similarly short today, and there are few signs of hope. But there is still time for European leaders to act to save themselves.

6. 'Our best students end up in finance' - Professor Joseph Stiglitz talks about the numbers of researchers and bright young kids who get sucked into the financial sector.

7.' It wos not the rat wot did it' - Simon Jenkins at The Guardian compares the Euro to the black rat in the Plagues of the Middle Ages in Europe.

The coming of the Black Death to 14th-century Europe meant the church needed someone to blame. Since God was exonerated ex officio, the obvious culprit was human sin, though some theologians favoured Mongol hordes, the waning power of Rome, not enough austerity and the alarming junction of Mars and Saturn in Aquarius. No one thought it was just a plague.

The same is true of today's Black Death: the euro crisis. Pundits attribute its woes to wicked debt, insufficient austerity and the need for more power to Brussels. Were Geoffrey de Meaux alive today he would also blame Venus's transit of the sun. As in the 14th century, these wiseacres assure us that redemption will come from giving more control to superior authority and from a more drastic austerity than any yet attempted. National self-flagellation is also much recommended.

As for the euro, like the black rat it gets off scot-free. It survives every debacle as that apogee of dogma, a "good idea in principle". A generation of European politicians have worshipped at its shrine and they are now too old to recant. To be "for" the euro was to be progressive, international, indulgent of the rich and munificent to the poor. It was a symbol of futurist sophistication, waved like a holy rood in the face of crabby, narrow-minded Eurosceptics.

8. A whole lotta sense - Economist Jeffrey Sachs has written a useful piece in the FT which, surprisingly (and successfully) criticises both the Krugmanesque Keynesianism and the Laissez Fairesque approach of the Germans and Brits.

Here's his view, which I agree with:

First, the US (and Europe) needs a new source of long-term growth, not a short-term Keynesian bridge to consumer-led growth.

Second, the highest social returns can be achieved by bringing the new technologies – information, communications, transportation, materials, and genomics – to bear on the problems of sustainability and the quality of life. Long-term growth (and quality of life) should be based on an investment-led transition to a low-carbon, low-pollution, and high-amenity built environment, drawing upon the cutting-edge advances of science and engineering.

Third, the transition to sustainability requires a mix of public and private investments. As one example, private investments in low-carbon energy (wind, solar, nuclear) need to be linked to public investments in long-distance transmission grids. Similarly, the transition to smart electric-powered urban mobility will require a mix of private investments and public infrastructure. The public investments should be financed in part through long-term borrowing backed by dedicated future revenue streams (e.g. public-sector tariffs and gradually rising carbon taxes).

Fourth, rather high levels of taxation as a share of national income (as in the highly successful economies of northern Europe) are needed to keep budget deficits low while also ensuring adequate public revenues for universal coverage of high-quality public services and human capital investments that span early childhood through public education, apprenticeships, and job training.

While there are absolutely urgent short-term matters to face — notably putting out the fire of bank runs in the eurozone — the deep solution to the crisis of the high-income countries lies in a long-term vision of sustainable development, one that promotes a mix of complementary public and private investments. To get there, we need to move beyond the stale US political debate pitting short-run Keynesian stimulus on one side versus trickle-down economics on the other.

9. What the locusts ate - Thomas Friedman is in good from at the New York Times in usual sweeping style: this time on the global financial crisis.

The truth, alas, is that four of the pillars of today’s global economy — Europe, America, China and the Arab world — have, each in their own way, squandered huge dividends they enjoyed in recent decades, and now they have to dig out of their respective holes with fewer resources, less time and, almost certainly, more pain. There is no easy way out. But, as confronting these hard truths becomes unavoidable, I think we’re likely to see some wild, angry and destabilizing politics that could make the economic recovery even more difficult. Deep holes and weak leaders are a bad combination.

10. Totally Clarke and Dawe - They're totally excited about the Jubilee...and the rain...dampening the celebrations....

Pun alert Gummy!

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47 Comments

"8. A whole lotta sense - Economist Jeffrey Sachs has written a useful piece in the FT which, surprisingly (and successfully) criticises both the Krugmanesque Keynesianism and the Laissez Fairesque approach of the Germans and Brits."

i didn't read it like that.  I read it more about what to do (Keynes) and how to do it (Sachs) .  That makes real sense instead of the "Laissez Fairesque approach" being practiced now by all in Europe, and I might add our own Govt.

 
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Any politician with more commonsense than a rice pudding , should assume that there'll be no " growth "  for the near future , and plan the country's finances accordingly ......

 

...... my money's on the rice puddings to win this battle of the wits !

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Patricia

 I read the difference between Krugman and Sachs is Sachs' emphasis on borrowing for investment, rather than just borrowing for consumption.

cheers

bernard

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Bernard - you are not, I think, a silly man.

 

Nonetheless, 1 and 8, your comments to, suggest that you still don't understand what 'growth' means.

 

Money - even hard cash - is all an expectation that it can be exchanged for goods and/or services in the future. It is therefore nothing more than a proxy, and value-less if there are no goods/services to be had.

 

Debt is the same - an expectation that someone will trade in real goods/services until they've paid it off. Still an expectation that the future will deliver.

 

The overrun is many orders of magnitude beyond the underwrite, and blaming 'the 1%', or bankers, or anyone else, is ignoring the issue. It's not who has the lifejackets, it's the sinking.

 

You are in a position, to lead the debate, Bernard. We need, societally, to get to a steady-state physical existence, which inevitably means a steady-state 'economy'.

 

?

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"Steady as she goes...mind that iceberg"

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1 "What's wrong with these people?"

 

They are right wingers, how else would you expect them to behave?

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Here we go again the old "cash on the sidelines" myth. There is no such thing as cash on the sidelines! If the existing holder of the cash spends or invests it someone else ends up holding it. Unless the cash physically ceases to exist someone has to hold it.  John Hussman has written at length about this and I have posted comments previously. 

What is required is for the velocity (ie the amount of times the cash changes  hands to increase). The downside however is that as velocity increases inflation is likely to rear it's head. 

 

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Unless the cash physically ceases to exist someone has to hold it.

How does this relate to the monetary fact, that all money is also a debt, I wonder? I think its probably correct to assume that the basis for all investment is basically borrowing the invested money into existance some how. The difference with investing earned money, like investing your savings, is that you didn't personally borrow it into existance, someone else did.

I mean I don't believe in cash on the sidelines either, but I think the reason is that you need somebody to get into debt for this cash to even exist. So in more positive economy it becomes easier to find somebody who is borrowing, but in a more negative economy its hard to come by this.

 

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@ Curious

If you are holding $100 then you bank it the bank now holds the $100 as you say.

Now say i borrow that $100 then i am the holder. Then i spend it at the shop so the shop is the holder.

Then the shop banks the $100 and so it has done a complete cycle. I accept it may travel a bit further but this is for simplicity.

So now the bank holds the $100 and at this point the bank owes you $100 but it also owes this same $100 to the shop. That is fractional reserve banking as the bank only holds 50% of your money and 50% of the shops money.

Or put another way the bank has your $100 but the shop is dealing in credit not money.

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Artifice springs to mind.

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Economist Shane Oliver has posited that towards the end of 2012 , when financial markets settle down , some of this gigantic stash of cash on the sidelines will slosh back into equity markets , driving share prices higher . The outlook for 2013 is bullish .

 

....... even in Australia , there's estimates of up to $A 1 trillion of lazy money in term deposits , bonds , and other cash instruments ......

 

When the fear factor subsizes gold will plummet in one direction , and cash will go to work in equity , driving share prices up in the other direction .....

 

...... altogether an amazing quantity of cash sitting on the sidelines , currently .

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GBH just how do  you suppose this lazy money will find it's way into shares? In order for some of this lazy money to buy a share someone else has to sell that share and will take ownership of the lazy money. Net cash position totally unchanged.

The only thing that will drivr share prices higher is a change in sentiment with more demand from buyers than from sellers.

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....... ummm , they call it " lazy money " because it'll take a taxi to the stockmarket ...... rather than walk ?

 

Either / or , it'll get there eventually .

 

..... and when those sentimental buyers start demanding hot stocks , the sellers will let 'em have it ...... as company earnings are fairly strong , a case can be made for driving share prices higher ...... cash earns sweet bugger all ...... divvies & capital gains will bring the punters back into the Stockmarket Casino ....

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Taxi or no taxi there still has to be a seller for every buyer thus no change in the amount of cash only a change in the share price.

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..... I'm OK with that !

 

:-)

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......oops! should have read the conversation...comment irrelivant.

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...... I'm OK with that , too !

 

:-)

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The point is Christov that even with an IPO someone still ends up holding the cash. In the case of Facebook it was Zuck, Bono and the other facebook shareholders. Net cash position exactly the same.

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Flip side of that is maybe they're waiting/expecting another crash, due to situation in Europe etc, and will have cash to swoop on discounted assets. Applies to #1 & #2. As they say, cash is king in those times.

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Typical scientists, obviously malthusian nutcases! Best to ignore them.

 

/sarcasm off.

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The French elected a financial idiot to be president!http://globaleconomicanalysis.blogspot.co.nz/

I wonder whether Shearer will learn anything from this socialist experiment about to destroy France....probably not.

 

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Just as well John Key knows what he's doing then ;-)

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Oh 'Sir' John's way ahead of the pack mandalay..got himself a bolthole in Hawaii long ago now...paid too much for it but we needed the laugh...and he makes sure he has a minister or three between himself and the teachers...who next after Hekia!

Shearer is in a bind...he has to accept the role of financial idiot and promise to splurge..or hand the election to Sir  in 014....don't panic   DON"T PANIC.

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"EU state-aid rules, designed to stop government subsidies distorting competition, give the commission sweeping powers to impose restructuring conditions on bank bailouts or even to block the rescue.
 

Over the past two years, the rules have been interpreted generously to allow government bank bailouts to go ahead in return for commitments to restructure failing financial institutions but the mood in Brussels has hardened since the initial credit crunch of 2009.
 

”We are moving into a new phase with Greece, Portugal and Spain,” an EU official told Reuters. “Some banks are going to be squeezed. Some are going to be closed down.”

 

http://www.telegraph.co.uk/finance/financialcrisis/9319416/Debt-crisis-EC-plot-to-use-competition-rules-to-close-down-eurozone-banks.html

If you can read this..so too can European savers foolish enough to have left their loot in a bank in Spain, Portgual, Greece, Ireland and Italy....probably France as well...the smart money escaped long ago and is safe inside a Swiss bank or has become a can of gold coins hidden in the house..

Stand back and watch as the run on the european banks kicks off Monday morning.

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The data suggests the run has been underway a while....

regards

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True enough and some of it has run all the way to help pork the Auckland property bubble, along with asian loot doing a scoot.

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Wolly, its a bit of read, but getting past the RBA wordsmithing worth it:

http://www.rba.gov.au/speeches/2012/sp-gov-080612.html

 

But it is very unusual in history for people to save as little from current income as they were doing by the mid 2000s. And it is very unusual, historically, for real assets per person to rise at 6 per cent or more per annum. It is also very unusual for households actually to withdraw equity from their houses, to use for other purposes, but for a few years in the mid 2000s that seemed to have been occurring.

 

There were several parts of the economy that benefited from that earlier period, and that are finding the going much tougher now. Retailing was obviously one, but so was banking. Banks and other financial institutions enjoyed rapid balance sheet and profit expansion as they lent to households and some businesses. But they can see that period has now finished. Businesses that serviced rapid turnover in the dwelling stock (such as real estate agents, mortgage brokers) are seeing those revenue streams considerably reduced, and are having to adjust their strategies and capacity to suit changed conditions.

 

You don’t have to be a believer in bubbles to think that a return to sizeable price increases and higher household gearing from still reasonably high current levels would be a risky approach. It would surely be a false basis for confidence. The intended effect of recent policy actions is certainly not to pump up speculative demand for assets.[6] As it happens, our judgement is that the risk of re-igniting a boom in borrowing and prices is not very high, and this was a key consideration in decisions to lower interest rates over the past eight months.

 

The Australian community has understood that we can’t base growth persistently on falling saving and rising debt and that is forcing changes to business models. But it has to be said that the return of a certain degree of thrift actually strengthens our medium-term position. If we can marry that to a focus on incrementally improving the way we do things – lifting productivity – there is actually a lot to look forward to.

 

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Don't hold your breath in anticipation of prudent financial govt policies being the order of the day in aus Henry...or this side of the ditch. Shearer will go for broke...that is he will go for policy promises that send you broke and see him in the Beehive wallowing in the money bath with his made in China plastic steamboat.

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just like the decline of Toad Hall story, but with no badger character on the horizon...

 

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That'll be the name for that building next to Parliament..."Toad Hall"....haha

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A big call Wolly and one I'll be watching! Blooming worry if it does indeed happen!

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Could be there is not much left to run mandalay....!...and no where left to run to. Violence just a stones throw away now....no doubt the 'police' will be in training to deal with the peasants who continue to believe they live in democracies.

 

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Somewhere back in there was mentioned "trickle down economics". Is someone seriously suggesting that this is theory has any kudos whatsoever. It is about time that one was put where it belongs, in the bin, it does not work, at all

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Maggie Thatcher / RR era and classic voodoo economics....and yes long ago in the bin....even the right whingers dont spout that one anymore...

regards

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Trickle down was being talked about well before the Thatcher and Ronnie the Rat era as Hiram Minsky has this in his book John Maynard Keynes, published in 1975:

Instead of a strategy in which the income of workers and the poor improves as a result of "trickle downward" from growth of income of the affluent, an alternative strategy should be adopted in which the income of the poor is sustained and increased directly, and the affluent take their chances.

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Then one should also throw the multiplier effect from govt spending theory in the bin along with it, by your reasoning.

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Since they are two totally different things, no.  The former is totally dis-credited voodoo economics of the right....what makes an economy boom is the mass of ppl spending some  $s and not the very few very rich not actually spending that much, the scale is different....and since the mass of employers of the world are really the middle class which has been gutted in the last thirty years we can see that result.   The latter would seem to be proven with research.....at about 1:1.4 ~ 1,5 is suggested in the right circumstances (a liquidity trap).

 

regards

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last of the capital expenditure.   this may be upsetting for some. One for Amanda...who has a sense of humour. As some others do here... Not like burnhard....who has no sense...of anything...of  real interest.   Why MARRY? 
 
You have two choices in life:
You can stay single and be miserable,
or get married and wish you were dead.
__________ 
 
At a cocktail party, one woman said to another,
”Aren't you wearing your wedding ring on the wrong finger?”
”Yes, I am. I married the wrong man.” 
__________ 
 
A lady inserted an ad in the classifieds:
”Husband Wanted”.
Next day she received a hundred letters.
They all said the same thing:
”You can have mine.”
__________
 
When a woman steals your husband,
there is no better revenge than to let her keep him.
__________ 
 
A woman is incomplete until she is married. Then she is finished.
__________
 
A little boy asked his father, ”Daddy, how much does it cost to get married?”
Father replied, “I don't know son, I'm still paying.”
__________
 
A young son asked, ”Is it true Dad, that in some parts of Africa a man doesn't know his wife until he marries her?”
Dad replied, “That happens in every country, son.”
__________ 
 
Then there was a woman who said,
”I never knew what real happiness was until I got married,
and by then, it was too late.”
__________ 
 
Marriage is the triumph of imagination over intelligence.
__________
 
If you want your spouse to listen and pay strict attention to every word you say –
talk in your sleep.                        
__________
 
Just think, if it weren't for marriage, men would go through life thinking they had no faults at all.
__________
 
First guy says, “My wife's an angel!”
Second guy remarks, “You're lucky, mine's still alive.”
__________ 
 
A Woman's Prayer   “Dear Lord, I pray for wisdom to understand a man; to love and to forgive him; and for patience, for his moods.  Because Lord, if I pray for strength I'll just beat him to death!!”             __________ 
 
AND NOW FOR THE FAVORITE!!! 
 
Husband and wife are waiting at the bus stop with their nine children. A blind man joins them after a few minutes.  When the bus arrives, they find it overloaded and only the wife and the nine kids are able to fit onto the bus. So the husband and the blind man decide to walk.   After a while, the husband gets irritated by the ticking of the stick of the blind man as he taps it on the sidewalk, and says to him, “Why don't you put a piece of rubber at the end of your stick? That ticking sound is driving me crazy.”
 
The blind man replies, “If you had put a rubber at the end of YOUR stick, we'd be riding the bus, so shut up!!!

 

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Alter ego

Cheers. They made me chuckle. But I won't pass them on to my wife...

And I actually have a soft behind...

;)

bernard

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No I dont pity these neo-con bozos,

http://www.stuff.co.nz/national/politics/blogs/first-reading/7046846/Pi…

Lets see them on the un-employemnt lines just like they want to see others....just to support their voodoo ideaology.

regards

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It's another case of thieving lying corrupt politicians leading the way!

”Tax evasion in Greece has reached 12 to 15 per cent of the gross national product,” he told Germany's Die Welt newspaper. “That is €40 to €45bn per year. If we could recover even half of that, Greece would have solved the problem. Our politicians have begun to understand that.”
 

Mr Lekkas expressed particular concern over 500 cases involving suspected tax evasion by Greek politicians, from different political parties and delays by banks to provide information on accounts, by which time the money “is probably gone”.

 

http://www.telegraph.co.uk/finance/financialcrisis/9319799/Greek-chief-tax-inspector-says-Christine-Lagarde-right-to-criticise-evasion.html

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Regarding (1) and Bernard's tireless campaign for higher taxes and the police state needed to 'collect' it:

 

Firstly: it's shocking that the IRS publishes private information about taxpayers. That's an absolute abuse of their shock and awe power.

 

Secondly, to quote Delingpole's Only In America, and give the perspective missing from interest.co.nz:

 

Only in America could the people who pay  86% of all income taxes
be accused by the President of not paying their "fair  share" on
behalf of the people who don't pay any income taxes at  all.

 

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"..the return of my money"

Over the past year the NZ dollar has fluctuated up to 17% in value against the US$.  A swing more related to wagers than a manufacturing shop. The bigger picture is so confusing.
The best I have been able to do in surfing is explain it to myself like this.
A group of people are persuaded to accept a “promise to pay” token in exchange for real goods or services. Physical tokens - coin or notes - representing these promises are coined or printed by the government on behalf of the group and account for say about 5% of the value of all such promises. However the other 95% plus of  “promise to pay” tokens are generated by private banks arranging loans. But each of these“promise to pay” tokens generates a further “promise to pay” at rates set by the banks at say 5% per annum of the original “promise to pay” to extinguish the original promise. These ‘new’ promises can typically persist for anything up to 30 years before extinguishing the original promise. Since there is no transactional distinction between “promises to pay” once in being and no resulting increase in real goods or services as a result of the process everyone including the unborne is burdened by the extra promises. Meanwhile those who have more “promises to pay” than they need to provide real goods and services for their own requirements can loan their surplus promises to the banks and participate in promises generating yet more promises - becoming richer in promises. In fact a hallmark of this process seems to be “the rich get richer etc..”.
From time to time folk glimpse the folly of the system and refuse to enter into new loan contracts. Others seek to exchange surplus promises for real goods and services. The flow of new “promises to pay” falters and with it the exchange of real goods and services. Result depression and a witch hunt for the guilty perpetrators. Depending on the hunter the guilty might include:
those who have gained surplus promises by accident or design e.g. baby boomers;
the Government who allowed the process - to shore up the rich if right wing, to waste money on the poor if left wing or to make wasteful national investments by just being the Government;
the banks who have created extra “promise to pay” tokens out of thin air and perhaps sent lots of them to their overseas owners;
the borrowers who agreed to commit to individual promises to pay so that they enjoy goods and services they haven’t earned yet and 
.....so on.
Meanwhile the underlying issue of sustainable use of finite materials underpinning the supply of goods and services is decoupled from the process above. And I can’t find much on how the current process positively encourages innovation, invention and capital formation.
Macro solutions offered in NZ include:- exploit more natural resources, increase immigration and build demand and economic activity, keep everything the same but get each individual to require less. Sell off government assets. Encourage creation of more “promise to pay” by government. Myself  I can’t see any real solution whilst debt begets more debt and private banks can create “promise to pay” tokens understandably based on what is good for their shareholders.
What my explanation to myself doesn’t tell me is where to put any surplus “promises to pay” for the best chance of being able to afford the goods and services I and my family need into the future. I’ve read some of the the stuff here on house prices and gold but I’m not convinced so far. I read somewhere that Mark Twain said something like “I am more concerned about the return of my money than the return on my money”.

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US President Barack Obama has demanded that European leaders act “right now” google

What is it with this liar....European pollies and nannycrats have been 'acting' since the start of the crisis...!

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http://www.oftwominds.com/blogjune12/solution-is-collapse6-12.html

 

"Each ideology worships their own version of cargo-cult economics: if we wave the dead chicken over the enchanted rocks while dancing the humba-humba, prosperity and abundance will magically return and we can "grow our way out of debt."

We're like a sprawling family bickering over the inheritance: we'll keep arguing over who deserves what until the inheritance is gone. That will trigger one final outburst of finger-pointing, resentment and betrayal, and then we'll go do something else to get by".

 

Well said, that man.

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