December 19, 2012; An American Reckoning
An American Reckoning, a preview:
- Is gold manipulation a factor in price?
- 100 yrs of the Fed and 95% loss in the dollar
- Career politicians vs. true Statesmen
THE FINAL CRASH – THE END OF U.S. DOMINANCE IN 2013 – Part Two – The Economic Crash of 2013
Regardless of the outcome of a potential military crash between the forces of the United States and the Islamic Republic of Iran in the Persian Gulf, an abrupt and the total economic crash of the United States and the world economies could be expected soon thereafter! The growing process of the current economic meltdown in the United States and in the western hemisphere will not only compound but also speed up the process even more!
THE CONTINUED ECONOMIC MELTDOWN
The tragedy is that even if a military confrontation between these two nations should not take place, the U.S. economy is already heading toward an economic meltdown and disintegration by early 2013; the U.S. dollar would collapse along with the U.S. economy. A military clash could only make a dire situation even worse and lead to a total economic crash!
The dimension and gravity of this economic crash would be so gigantic that rising from it would be practically impossible, or it would take a relatively very long time and a couple of decades of hard work before a pre-collapse economy could be restored.
An economic meltdown would affect everybody! Already it is on its way to destroy the poor people and devastate middle-class Americans, but if it is not stopped very soon, the rich and the super-rich would be powerless and could do nothing but follow suit.
To understand why an economic meltdown would destroy the super-rich, one needs to know that an economic meltdown is similar to the melting of an ice block. Starting from the corners, the ice melts all around until it reaches the middle and eventually the core. At that point, the entire ice block collapses and disappears for good! In other words, the outer parts of the ice block are the poor and the middle-class, and the center part resembles the rich people. As the ice block melts away completely, the rich and the super-rich would disappear along with it, maybe later but for sure!
“It is alarming enough that our federal debt has surpassed $16 trillion. But we have actually dug a fiscal hole of more than $100 trillion when you consider our unfunded Medicare, Social Security and other retirement obligations. This amount goes up more than $100 billion a week on autopilot.”
Doubling The Tax Rates For Rich Is Not Even Enough To Close The Deficit
The US budget deficit is over $1 trillion. It has been ever since Obama took office. So his proposal would not even cover one month of deficit spending. And this is supposed to represent a “solution.”
Mathematically, the only way to cut the Federal deficit would be to either raise an additional $1.2 trillion in taxes (politically impossible, no one would go for it) or cut Federal Spending by $1.2 trillion (again, politically impossible).
Indeed, the US’s fiscal problems are so great that tackling them would require truly impossible measures. For instance, consider that the top 1% of income earners (the very folks Obama is targeting) paid $318 billion in income taxes according to the most recent data.
So, even if we doubled their taxes, we’d only raise enough money to cover about six months of the US deficit.
So, in order for us to close the deficit in the US, we’d have to both double the taxes paid by the top 1% AND cut spending by $600 BILLION. Now imagine trying to get the American people to go along with this.
Income tax will exceed 50% in California, Hawaii, and New York City
Thanks to passage of Proposition 30 last month, high-income Californians would pay the nation’s highest marginal income tax rates – nearly 52 percent — if President Barack Obama and Congress fail to make a deal to avoid the so-called “fiscal cliff,” according to a new study.
Without a fiscal cliff deal to the contrary, the Bush era tax cuts on high-income taxpayers would expire next year and rates would return to their previous levels.
Top Marginal Effective Tax Rates by State and by Source of Income, 2012 Tax Law vs. 2013 Scheduled Tax Law
“Overall, the average top METR on wage income is scheduled to increase by approximately six percentage points (41.8 percent to 47.8 perent), while taxes on dividends would increase the greatest (19.0 percent to 47.9 percent). The top METRs on wages, dividends, interest, and partnership/sole proprietor income would exceed 50 percent in California, Hawaii, and New York City.”
Any civilization that taxes it’s people more than 50% has always fallen.
Business Fleeing France as 75% Income Tax Looms
A flood of top-end properties are hitting the market as businessmen seek to leave France before stiff tax hikes hit, real estate agents and financial advisors say.
“It’s nearly a general panic. Some 400 to 500 residences worth more than one million euros ($1.3 million) have come onto the Paris market,” said managers at Daniel Feau, a real-estate broker that specialises in high-end property.
While it is not yet on the scale of the exodus of rich French after the election of Socialist president Francois Mitterrand in 1981, real estate agents said, the tax plans of France’s new Socialist President Francois Hollande are having a noticeable effect.
While the Socialists’ plan to raise the tax rate to 75 percent on income above 1.0 million euros per year has generated the most headlines, a sharp increase in taxes on capital gains from the sales of stock and company stakes is pushing most people to leave, according Didier Bugeon, head of the wealth manager Equance.
Two-thirds of millionaires left Britain to avoid 50p tax rate – Telegraph
Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.
Peter Schiff: Higher Taxes On The Rich Is Not The Solution To The Nation’s $16 Trillion Debt
While some “liberal pundits” have suggested the United States set 2013 tax rates for the rich back to the high rates of the 1950s, renowned economist Peter Schiff says that would simply result in the rich paying less than they do now.
Such prominent figures as investing guru Warren Buffett and The New York Times columnist Paul Krugman recently have made the argument that since the U.S. economy of the 1950s was booming despite high tax rates on the rich, tackling the fiscal cliff by raising taxes on the wealthy in 2013 should do no harm – and could actually help the economy.
Schiff, the CEO and chief global strategist of Euro Pacific Capital, says those who think we should adopt anything like the high 1950s-style tax rates – the top marginal rate was 91%, nearly triple today’s 35% – haven’t studied the whole picture.
“There’s a myth out there propagated by people like Warren Buffett that the rich used to pay much higher rates of tax than they do today. The truth is the opposite,” Schiff said Friday in a Daily Ticker video interview.
The markets, as most people reading this should now well know, no longer reflect in any way the true economic health of our country. If one was to measure the financial “recovery” of this nation by the strength of global stocks alone, he would probably come to the conclusion that the collapse of 2008 was a mere hiccup in the overall success of the worldwide economic system. However, electronically traded equities with little more to back their value than scraps of receipt paper and numbers on a screen have no bearing on what is going to happen to you, and to me, over the course of the coming year. The stock market is a sideshow, a popcorn movie, a façade. The real drama is going on behind the scenes and revealed in fundamentals that mainstream analysts no longer discuss…
The only advantage of a long drawn disintegration of the overall system is that as the years past, it becomes possible to discover a pattern through which we can gauge where we really stand today and will stand tomorrow, giving us a chance (a narrow chance) to limit the eventual damage. Unfortunately, the pattern now in motion suggests that the next year will be exactly what we have been predicting over the past several months: Dismal.
At the end of 2012, it is undeniable; the system is running out of steam, and not even constant fiat injections by central banks are reversing our current course.
In order to understand what is happening, I want you to imagine a quickly diminishing cycle. Imagine that in 2008, America was on the edge of a whirlpool, or a spinning vortex, and was suddenly caught in the outermost current. Today, we have circled the epicenter several times, each rotation becoming smaller and more volatile than the last. Eventually, the whirlpool will reach an end, and our economy will be sucked into the destructive funnel. One can see clear evidence of this decline in the Baltic Dry Index:
Notice how each year since 2008 there is a spike in shipping rates indicating a rise in demand for materials at the onset of the Christmas season, which is the natural progression of things. Yet, also notice that this spike in demand grows smaller with each passing year. In 2012, the increase has been almost nonexistent, meaning that we are likely very close to going down the drain.
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