Signs Of Collapse Imminent: Fiscal Cliff, Income Cliff, Obama-care On The Horizon, Student-Loan Delinquencies Now Surpass Credit Cards, 2 Million May Lose Jobless Benefits By Next Month, And The US Dollar Is Dying
Worried About ‘Fiscal Cliff’? Look Out for ‘Income Cliff’
While everyone wonders whether we’re about to go over the “fiscal cliff,” owners of dividend-paying stocks are bracing for what some are calling an “income cliff.”
Those who have been counting on dividends as income — often retirees but also higher-end retail investors — could see their tax burden nearly triple if the worst of the “fiscal cliff” is realized.
That will happen if the warring parties in Washington fail to reach agreement on the series of tax increases and spending cuts set to take effect on Jan. 1.
For dividends, it will mean taking the current 15 percent preferential taxation rate all the way up to ordinary income, currently set at 35 percent for top earners but ready to jump to 39 percent if “cliff” talks fail. (Read More: Obama: Let’s Get Fiscal Cliff Deal Before Christmas)
Add on the 3.8 percentage point surcharge for the Obamacare health insurance expansion and those holding dividend stocks stand square in the crosshairs, in danger of getting slammed by an “income cliff.”
“Investors are very much mistaken if they think that they have the opportunity to kick the can down the road like politicians do,” said Erik Davidson, deputy chief investment officer at Wells Fargo Private Bank. “Investors, particularly wealthy ones, face a higher tax situation, no two ways about it.”
The “sticking points” for a budget deal are the president’s call for $1.6 trillion in new tax revenue and the fact that “there’ve been no serious discussions” so far on changes to entitlement programs, Bowles said.
Student-Loan Delinquencies Now Surpass Credit Cards
Even as the economy shows signs of improvement, a record share of Americans are falling behind on their student-loan payments.
The proportion of U.S. student loan balances that are in delinquency — that is, unpaid for 90 days or more — surpassed that of credit-card balances in the third quarter for the first time, according to the Federal Reserve Bank of New York.
Of the $956 billion in student-loan debt outstanding as of September, 11 percent was delinquent — up from less than 9 percent in the second quarter, and higher than the 10.5 percent of credit-card debt, which was delinquent in the third quarter. By comparison, delinquency rates on mortgages, home-equity lines of credit and auto loans stood at 5.9 percent, 4.9 percent, and 4.3 percent respectively as of September. (Read More: Debt-Free College? Yes, It Exists)
2 Million May Lose Jobless Benefits Under Fiscal Cliff
Nearly 2 million people will lose unemployment benefits next month should President Barack Obama and Capitol Hill legislators not reach a deal to avert the fiscal cliff.
Those jobless benefits, estimated at $30 billion in the coming year, are expected to expire on Dec. 29, the Los Angeles Times reports.
An additional 1 million unemployed workers are expected to lose their benefits by March.
“There’s going to be millions of us who, basically, will be out in the streets,” said Lis De Bats, 54, resident of Agoura Hills, Calif., told the Times. She was laid off in January from a job as a new-home sales manager.
The Giant Currency Superstorm That Is Coming To The Shores Of America When The Dollar Dies
By recklessly printing, borrowing and spending money, our authorities are absolutely shredding confidence in the U.S. dollar. The rest of the world is watching this nonsense, and at some point they are going to give up on the U.S. dollar and throw their hands up in the air. When that happens, it is going to be absolutely catastrophic for the U.S. economy. Right now, we export a lot of our inflation. Each year, we buy far more from the rest of the world than they buy from us, and so the rest of the world ends up with giant piles of U.S. dollars. This works out pretty well for them, because the U.S. dollar is the primary reserve currency of the world and is used in international trade far more than any other currency is. Back in 1999, the percentage of foreign exchange reserves in U.S. dollars peaked at 71 percent, and since then it has slid back to62.2 percent. But that is still an overwhelming amount.
And as I noted in a previous article, over the past few years there have been a whole host of new international currency agreements that encourage the use of national currencies over the U.S. dollar. The following are just a few examples…
1. China and Germany (See Here)
2. China and Russia (See Here)
3. China and Brazil (See Here)
4. China and Australia (See Here)
5. China and Japan (See Here)
6. India and Japan (See Here)
7. Iran and Russia (See Here)
8. China and Chile (See Here)
9. China and the United Arab Emirates (See Here)
10. China, Brazil, Russia, India and South Africa (See Here)
Will this movement soon become a stampede away from the U.S. dollar?
That is a very important question.
But you don’t hear anything about this in the U.S. media and our politicians are not talking about this at all.
Other economists paint an even gloomier picture. According to economist Niall Ferguson, the U.S. government is facing future unfunded liabilities of 238 trillion dollars.
So where are we going to get all that money?
Well, why don’t we just print more money than ever before so that the U.S. government can borrow and spend more money than ever before?
Don’t laugh. That is actually what some of the top economists in the country are actually recommending.
“the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.”
Hilarious Real Money and Real Problems
[Ed. Note: Language Alert]
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