The Economy and Stock Market

[Brentastic]

I'm still pumping my 401k money into high risk/reward funds, if that's your question. I thought about bailing on Sunday but just recouped five figures today so it's as well I didn't.

 

I still think you are overstating the case and forgetting a few things too. There are few that profit from a bear market of the type you are touting and therefore there is far greater incentive for the hugh majority of investors and other players to work in the opposite direction. I also consider it likely that if things did transpire the way you think they will, we'll all have a crapload more than our 401k values to worry about because the exchange levels you foresee will usher in societal breakdown on a monumental scale.

Fair enough, you make a solid point. But regarding your 2nd point, remember, we did get down to 6500 just last March. The next could be similar, but instead of bouncing off that level, we should hover and then dip lower yet over a 5 year span. So while our quantity of life will decrease, we could escape complete chaos. There will be riots etc... to be sure, but quite possibly contained to limited occurrences.

[Brentastic]

Typically I believe the US funds roughly 20% of the IMF, if that is the case then we are paying roughly $60 Billion so that their government employees don't have to take pay cuts, and can continue to get paid for 54 week a year. Don't you love world government.

According to this article: http://www.todayonline.com/Hotnews/EDC1005...illion-lifeline

The mighty Federal Reserve will offer unlimited funds

 

The United States Federal Reserve providing unlimited US dollar funds to Europe's central banks.

Edited May 11, 2010 by Brentastic

[Avernus]

According to this article: http://www.todayonline.com/Hotnews/EDC1005...illion-lifeline

The mighty Federal Reserve will offer unlimited funds

 

 

they could offer unlimited funds....in theory anyways...

 

it'll all be distributed in debit transaction...

[Brentastic]

they could offer unlimited funds....in theory anyways...

 

it'll all be distributed in debit transaction...

Of course it will be an electronic transaction with no real money being transferred anywhere - all at the expense of the real dollar earners. This market is b a r e l y holding up under the weight of all this credit.

[Ursa Majoris]

Typically I believe the US funds roughly 20% of the IMF, if that is the case then we are paying roughly $60 Billion so that their government employees don't have to take pay cuts, and can continue to get paid for 54 week a year. Don't you love world government.

Actually, the Greek public sector workers do better than that. They get paid 14 months per year, so it's nine weeks extra wages, not two. Tax evasion is rampant too. I think they will take some actions to reduce their lunatic spending but they may default anyway. Certainly the entire mess is the fault of the Euro "leaders" who turned a blind eye to the blatant lies and cooked books the Greeks put forward when begging for entry to the Euro.

[bpwallace49]

Greece Grapples With Tax Evasion

Country's shadow economy hurts attempts to rein in huge budget shortfall; a €50 receipt for a €40 taxicab ride.

By SEBASTIAN MOFFETT And ALKMAN GRANITSAS

 

ATHENS—Greece has one apparently simple option for reining in a budget deficit that has roiled financial markets: Clamp down on widespread tax evasion, which costs the country an estimated €15 billion ($20.5 billion) a year, an amount that would pay off a big chunk of the budget deficit.

 

The trouble is, tax evasion in this Mediterranean country is extremely difficult to eradicate.

 

Trying to cope with its budget problems, Greece announced new austerity measures Tuesday.

 

Greek Finance Minister George Papaconstantinou at a news conference in Athens on Tuesday after the country outlined new austerity measures.

.Finance Minister George Papaconstantinou said public-sector salaries would be frozen and supplemental incomes for civil servants cut by an average of 10%. Salaries and bonuses for the prime minister, senior government officials and officials at state-owned enterprises will be frozen, and under some conditions reduced. The measures would save some €850 million this year, said Mr. Papaconstantinou.

 

The government also announced a higher marginal tax rate of 38% on people earning more than €40,000 a year, up from about 25%.

 

In addition, dozens of tax loopholes and special rebates will be eliminated, and taxes will be increased on dividends and offshore companies. The tax measures would yield some €1.2 billion in revenue this year, the government said.

 

 

.The Greek shadow economy, which is made up of unreported income, was 25.1% of gross domestic product in 2007, according to Friedrich Schneider, a professor at Johannes Kepler University in Linz, Austria. The shadow economies of Spain, Portugal and Italy were all around a fifth of GDP. That compared with just 11.8% for France and 7.2% for the U.S., he said.

 

Trying to explain the rampant tax evasion, Prof. Schneider says countries like Spain, Portugal and Greece have had continuous democracies only since the 1970s, and people aren't used to governments representing the public interest.

 

"In most of these countries, what matters is your family. … There is less of a sense of duty towards the state," says Alberto Alesina, a professor of political economy at Harvard. "Evading taxes is something you can freely talk about—and be proud of—at a dinner party in these countries."

 

Media reports are rife with accounts of corruption among tax officials. Ethnos, a newspaper, reported in mid-December that a 51-year-old Athens tax official had been arrested on suspicion of taking €1,000 from a pet-shop owner in exchange for not imposing a €3,000 penalty on the pet shop.

 

Meanwhile, in a government survey last year of 150 doctors in Kolonaki, an upmarket Athens neighborhood, half of the doctors said they were paid less than €30,000 a year. Thirty said they made less than €10,000.

 

"It is not possible for a taxpayer to declare an income of €15,000 while at the same time maintaining a big house, a big car, a recreational boat and sending his kids to private school," Mr. Papaconstantinou said Tuesday.

 

Repeated requests for comment on the survey of Athens doctors were unanswered by the Athens doctors association.

 

A taxi driver last week offered a business traveler a €50 receipt for a €40 ride, to enable the traveler to overclaim expenses to his company.

 

The condition was that this receipt be scribbled on a piece of paper and not a printed receipt from his meter, which would result in the payment being registered.

 

Dimitris Mavrogiannis, who owns an auto-paint shop in the New Kosmos district of Athens, says he usually issues receipts, especially as a lot of his work is for insurance companies, who insist on them. But he says he makes exceptions.

 

"In the majority of cases, I do issue receipts," says Mr. Mavrogiannis, 58. "But sometimes people ask for a discount on the VAT tax and I say, 'OK.' "

 

Such tax dodging is a problem now, as Greece's budget deficit was likely around 13% of GDP in 2009. which led to a selloff of Greek government debt and boosted the interest rate the government has to pay.

 

Economists say there is no overnight fix, and the only way to solve Greece's tax problems is through incremental measures. Greeks say they would like a fairer system.

 

"I work for a large Greek construction company … but of course, I have also done my own jobs on the side off the books," says Alexandros Foukis, 27, a building contractor. "What the government needs to do is provide incentives to people to issue a receipt."

 

Tax evasion as a way of life among upper income wage earners . . . brilliant.

[The Holy Roller]

Tax evasion as a way of life among upper income wage earners . . . brilliant.

 

I got no problem with that.

[Perchoutofwater]

Tax evasion as a way of life among upper income wage earners . . . brilliant.

 

Well it takes high taxes to run a quasi-socialist government, and when taxes are real high, tax evasion is real high. Yes, I know their income tax rates are only slightly higher than ours (which are too high), but they also have a property tax that is anything but fair. It only taxes residences over 200 square meters. So while I don't agree with it, I can certainly understand it.

[bpwallace49]

Well it takes high taxes to run a quasi-socialist government, and when taxes are real high, tax evasion is real high. Yes, I know their income tax rates are only slightly higher than ours (which are too high), but they also have a property tax that is anything but fair. It only taxes residences over 200 square meters. So while I don't agree with it, I can certainly understand it.

 

Perch . . their very culture has graft, evading the law and bribery as standard operating procedure. You REALLY condone that? Arent you the guy that goes nuts over something as small as food stamp fraud, but when it is 25 % of their GDP . .. you "can certainly understand it"?? You would rather the US and the IMF bail out Greece to protect their wealthy that decide they dont want to pay taxes?

 

[Perchoutofwater]

Perch . . their very culture has graft, evading the law and bribery as standard operating procedure. You REALLY condone that? Arent you the guy that goes nuts over something as small as food stamp fraud, but when it is 25 % of their GDP . .. you "can certainly understand it"?? You would rather the US and the IMF bail out Greece to protect their wealthy that decide they dont want to pay taxes?

 

 

Saying I understand why people do something is far from condoning it. I understand why some people will always suck on the government teat, but that doesn't mean I condone that either. There is a very big difference from understanding the thought processes that people have in their justifying them doing or not doing something, and actually justifying, agreeing, or condoning it. So, please do not put words in my mouth, or take things out of context like you did above omitting where I said "I don't agree with it" right before (in the same sentence) the portion you quoted out of context. And, no I'd rather the US give Greece and the IMF the finger.

Edited May 11, 2010 by Perchoutofwater

[gbpfan1231]

Perch . . their very culture has graft, evading the law and bribery as standard operating procedure. You REALLY condone that? Arent you the guy that goes nuts over something as small as food stamp fraud, but when it is 25 % of their GDP . .. you "can certainly understand it"?? You would rather the US and the IMF bail out Greece to protect their wealthy that decide they dont want to pay taxes?

 

Nice try. YOu seriously read his post and that is what you took from it? WOW.

[Ursa Majoris]

Nice try. YOu seriously read his post and that is what you took from it? WOW.

 

I think the salient point is that Perch has a tendency to not understand people fiddling $25 of food stamps but understands Greek shipping billionaires evading taxes all too well.

 

BPW is exactly right that Greece needs to put it's house in order starting with draconian (how appropriate for Greece) tax evasion penalties.

[Perchoutofwater]

I think the salient point is that Perch has a tendency to not understand people fiddling $25 of food stamps but understands Greek shipping billionaires evading taxes all too well.

 

BPW is exactly right that Greece needs to put it's house in order starting with draconian (how appropriate for Greece) tax evasion penalties.

 

Show me where I've ever supported tax evasion? I don't and you know it. I understand why some people do it, just like you and me both understand why some people continually suck on the government teat. I don't support either, and have been outspoken against both. Tax evasion legal and illegal is one the reasons I want a consumption tax instead of an income tax, or at the very least a flat tax without deductions. BP made a dumb ass comment, and now you are trying to justify it for him.

[Ursa Majoris]

I understand why some people do it

It's this that is the point. See, I don't understand it. Never have, never will.

[Perchoutofwater]

It's this that is the point. See, I don't understand it. Never have, never will.

 

Maybe if you were paying considerably more for considerably fewer services you would. Or maybe if you could just look at it honestly. I can certainly understand why some people continue to want to suck on the government teat rather than improve their plight, that doesn't necessarily mean I've been there or have to have been there to understand their perspective.

[bpwallace49]

Greece needs to seriously crack down on the people that ARENT paying what they should in taxes as well as SEVERLY cut their benefits that gubmnet enmployees receive. Only way they can start digging themselves out.

 

Perch . . 25% in GDP is lost because of tax evasion. Not because they are flag waving patriots (like you make yourself and everyone else in TEA parties out to be) but because their system has graft and corruption as part of thyeir "culture" and way of doing business. It is cheaper for them to pay a bribe and not pay taxes. because they are patriots of Greece? Because they are greedy seems more likely . . .

 

Their gubmnet needs severe curtailing, which will be difficult with their ridiculous benefit system combined with their lack of integrity when it comes to collecting taxes. Their taxes dont need to raised to cover their shortfall . . . they just need to be collected.

[Perchoutofwater]

Greece needs to seriously crack down on the people that ARENT paying what they should in taxes as well as SEVERLY cut their benefits that gubmnet enmployees receive. Only way they can start digging themselves out.

 

Perch . . 25% in GDP is lost because of tax evasion. Not because they are flag waving patriots (like you make yourself and everyone else in TEA parties out to be) but because their system has graft and corruption as part of thyeir "culture" and way of doing business. It is cheaper for them to pay a bribe and not pay taxes. because they are patriots of Greece? Because they are greedy seems more likely . . .

 

Their gubmnet needs severe curtailing, which will be difficult with their ridiculous benefit system combined with their lack of integrity when it comes to collecting taxes. Their taxes dont need to raised to cover their shortfall . . . they just need to be collected.

 

BP, I agree with you on all points, and don't know why you would think otherwise. I've always said people should pay their taxes. As screwed up as I think our tax system is, and as much as I think our government over reaches, I've never been a proponent of tax evasion. I've been a proponent of changing the system.

[bpwallace49]

BP, I agree with you on all points, and don't know why you would think otherwise. I've always said people should pay their taxes. As screwed up as I think our tax system is, and as much as I think our government over reaches, I've never been a proponent of tax evasion. I've been a proponent of changing the system.

 

It is when you said "

I certainly understand it"

that was my giveaway. While I dont agree with everything our gubmnet spends money on, I realize that it isnt a buffet line where I get to pick and choose. It is part of belonging to society as a whole. You take the good with the bad in order to reap the amazing opportunites that the US provides. When certain segements of society decide to say "f it. I want the benefits of society without paying for the opportunites that provide me my wealth" the whole concept of an organized modern democracy falls down. When there is a gubmnet as corrupt as Greece and there is no faith in the system, then that system will fall. For all the piddly problems we debate in the US, we will ALWAYS have it 1000 times better than in the vast majority of the rest of the world.

 

Greece should have been allowed to fail until they make the interior choices necessary for continued survival.

 

Perch, wealthy doctors were claiming less than a part-time nursing assistant does in the US. Their system is broken from the top down.

 

You said you can understand their not paying taxes (even though you dont condone it), I cannot understand why people just dont care enough about their country to do something as basic as paying taxes. You and I agree on the concept of a flat tax for fairness. I cant understand how wealthy Grecians can purposefully hasten the downfall of their way of life by not paying taxes.

[Perchoutofwater]

I cant understand how wealthy Grecians can purposefully hasten the downfall of their way of life by not paying taxes.

 

Maybe they see their system as irrevocably broken, and that the only way to change it is to destroy it. Again I don't agree with it, but I can certainly understand where that line of thinking may come from.

[bpwallace49]

Maybe they see their system as irrevocably broken, and that the only way to change it is to destroy it. Again I don't agree with it, but I can certainly understand where that line of thinking may come from.

 

Their democracy has only been in existence for 40 years

 

Maybe this goes to show that despite our aggressive desire to spread democracy everywhere, that it just wont fit in some cultures?

[wiegie]

Maybe this goes to show that despite our aggressive desire to spread democracy everywhere, that it just wont fit in some cultures?

I must say that I find it somewhat amusing to read someone say that Greek culture is not compatible with democracy.

[bpwallace49]

I must say that I find it somewhat amusing to read someone say that Greek culture is not compatible with democracy.

 

Thr irony is pretty damn thick isnt it?

[westvirginia]

Guys, how hard is this to understand - if your family was starving and you could feed them by stealing, would you? Regardless of that answer, could you really condemn another man for doing so?

 

I'm not equating that to tax evasion, but merely to illustrate the ambivalent feelings of "I don't condone it, but I could certainly understand it."

 

Now, Greece has ridiculous taxes, NOT just an income tax. If I'm not mistaken, they have more fees, permits, property taxes, and a VAT. At what point does it go from being seedy and dishonest, to merely survival? If total taxes on your income ended up being something like 70% (that's income, sales, VAT, fees, whatever) can you not understand that the person evading such onerous redistribution might not not really be "bad", but just, well, just sick of it? If 28 of your 40 hours/week went to support things like the DMV, post office and SS administration (the surliest, most unhelpful folks in gov't I could think of), can you not see a point where people would say f##K this!?

[wiegie]

Guys, how hard is this to understand - if your family was starving and you could feed them by stealing, would you? Regardless of that answer, could you really condemn another man for doing so?

 

I'm not equating that to tax evasion, but merely to illustrate the ambivalent feelings of "I don't condone it, but I could certainly understand it."

 

Now, Greece has ridiculous taxes, NOT just an income tax. If I'm not mistaken, they have more fees, permits, property taxes, and a VAT. At what point does it go from being seedy and dishonest, to merely survival? If total taxes on your income ended up being something like 70% (that's income, sales, VAT, fees, whatever) can you not understand that the person evading such onerous redistribution might not not really be "bad", but just, well, just sick of it? If 28 of your 40 hours/week went to support things like the DMV, post office and SS administration (the surliest, most unhelpful folks in gov't I could think of), can you not see a point where people would say f##K this!?

I agree... if any of those people are not paying their taxes so that they can instead feed their starving children, then I have no problem with their tax-evasion.

[Perchoutofwater]

I agree... if any of those people are not paying their taxes so that they can instead feed their starving children, then I have no problem with their tax-evasion.

 

I'd still have a problem with it. I wouldn't condone it, but I'd certainly understand it.