Enough with the Bernie/Hillary Jabs at Wall Street

Throughout their political campaigns, both Hillary Clinton and Bernie Sanders have laid blame for the 2008 financial crisis on Wall Street; as if the six 'too-big-to-fail' banks that had to be bailed out were somehow representative of thousands of companies who have allowed their stocks to be publicly traded.

Hillary says she's not going to allow "Wall Street to bring down Main Street" ever again. Bernie wants to tax Wall Street; breakup the big banks; and reinstate Glass-Steagall which prevented banks from investment activities on Wall Street.

First of all, both these people act as if nothing was done following the financial crisis.  They seem to forget that, in 2010, both Houses of Congress -- both controlled by Democrats -- and Barack Obama passed the Dodd–Frank Wall Street Reform and Consumer Protection Act into law to, supposedly, stop the 2008 crisis from ever happening again.  So, why is this an issue all over, again?

Also understand, Wall Street IS Main Street. According to Gallup polling, 55% of those surveyed said they were invested in the stock market.  While down from 62% before the financial crisis, that 55% is climbing back from a low of 52% in 2013.  So, I suppose that 55% of this country's households aren't "Main Street" enough for Hillary Clinton.  Or, for Bernie, the lie that only millionaires and billionaires -- of which there are only a little over 10 million in a country of 320 million -- only benefit from Wall Street.

Lastly, the financial crisis that followed the housing bubble was primarily a result of two things.  

• The first was the expanded use and enforcement of the Jimmy Carter passed law known as the Community Reinvestment Act (CRA) by Bill Clinton while he was President. Basically, that Democrat-written law forced banks to lower their lending requirements and increase the number of mortgages for otherwise non-eligible, low-income borrowers.  Thus, banks did get involved with forms of predatory lending in order to comply with the law. In hearings following the financial crisis, the CEO of Bank America said that, while CRA loans only made up 7% of that bank's mortgage portfolio, they resulted in 29% of their losses during the housing meltdown.  Another CEO of a mid-sized bank said that about 20% of all his CRA loans would be in arrears in the first year and 7% would fall into foreclosure.  Democrats have always tried to shift blame away from the CRA because they were responsible for it.  Thus, Wall Street and big banks have become their diversionary targets for those who are uniformed.
• In addition, Glass-Steagall, which Bernie Sanders wants to reinstate, was repealed by none other than Bill Clinton when he signed the Gramm, Leach, Bliley Act which allowed banks to participate in investment banking in the stock market.

The reality is that Bernie and Hillary, as Democrats, should be looking in the mirror when they talk about blaming someone for the financial crisis.   And, by the way.  The best analysis of the financial meltdown is given by two writers from the liberal New York Times titled "Reckless Endangerment".  See below for an excellent video summation of that book by Rush Limbaugh.

References:

Bernie Sanders on Financial Regulation: http://feelthebern.org/bernie-sanders-on-financial-regulation/

Community Reinvestment Act: 

Dodd–Frank Wall Street Reform and Consumer Protection Act: https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act

Little Change in Percentage of Americans Who Own Stocks: http://www.gallup.com/poll/182816/little-change-percentage-americans-invested-market.aspx

More millionaires than ever are living in the US: http://www.cnbc.com/2015/03/09/more-millionaires-than-ever-are-living-in-the-us.html

Gramm–Leach–Bliley Act - Wikipedia, the free encyclopedia: https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act

Video: Subprime Disaster - President Clinton Takes Credit for Community Reinvestment Act Loans: https://www.youtube.com/watch?v=WTZIB6Sika4

Video:  Rush Limbaugh on 'Reckless Endangerment': https://www.youtube.com/watch?v=MG7U2g9MFKg

The Occupy Movement Is Alive and Well For Bernie Sanders and Hillary Clinton

In 2011, the news was filled with coverage of protests by the "Occupy Wall Street" movement driven by the concept of income inequality. The demonstrations were directed towards the top one percent of income earners.  Since then and recently, there has been nary a word about "Occupy".  That is until Hillary and Bernie began running for President. While not actually declaring themselves members of "Occupy", their words say otherwise.  Bernie, the consummate socialist, would tax the top one percent at 90%.   Hillary, after seeing the following chart by the far left Economic Policy Institute, said that top one percent should be "toppled":

Click on Chart to Enlarge

Of course, what Hillary Clinton was aghast at was that, since 1979, the income of this country's top one percent grew by 153.6%, while those at the the bottom only saw a growth of 17.1%.  Thus, she is implying that the wealthy got that way by suppressing the wages of the working poor.

Now a few points about that chart.

Most of the growth in the top one percent's earnings occurred in the years that Hillary's husband, Bill Clinton, was President (January 1993 to January 2001).  Since his leaving, that group has basically saw-toothed its way sideways; being significantly hurt in 2000 and 2008 by recessions. Also, the recovery to the 150% mark was much faster under Obama than it was under Bush.  Clearly, the top once percent seem to benefit from Democrat Presidents.

But, who are these so-called one percenters and why have their incomes grown so rapidly.

Most people seem to think that the one-percent crowd is made up of millionaires and billionaires.  But understand that this country has about 10 million people whose net worth is over a million dollars; or, about 3 percent of the population.  We have approximately 1745 billionaires; representing just 2 one-thousandths of a percent of our population.

The reality is that, according to the IRS, the top one percent are individuals or families with incomes just over $380,000; and, the average pay of all the one percenters is less than $1 million at $717,000.  Just 235,000 tax returns in 2009 were for people and families making over a million dollars a year.  8,274 returns were for those making $10 million and above.  There really aren't a lot of extremely rich tax returns being filed.

So, why has the one percent's incomes grow so rapidly?

Well, we have a lot of people that are being paid drastically increasing annual incomes over the last few decades.  The average NFL player in 1969 was making just $25,000.  If adjusted for inflation, that would be a little above $156,000 today.  Yet, the average NFL salary is now $1.9 million dollars.  An average NBA player is at $5.15 million.  A major league baseball player: $3.2 million. Rapper Jay-Z has an annual income of $56 million. Kanye West $30 million.  Both Celine Dion and Britney Spears earned $15 million a year each from just their Las Vegas shows.  The 31 year-old Mark Zuckerberg is worth $41.7 billion for creating a premier social media site called Facebook.  Bill Gates is the richest man in the world with a net worth of almost $80 billion for co-founding Microsoft.  And the list goes on.

The growth of wealth spans all areas of the economy.  At the same time, tax policies, government regulations, and a decline in education has driven the high paying jobs off- shore.

References:

Average America vs the One Percent - Forbes: http://www.forbes.com/sites/moneywisewomen/2012/03/21/average-america-vs-the-one-percent/

How Much Money Do The Top Income Earners Make?: http://www.financialsamurai.com/how-much-money-do-the-top-income-earners-make-percent/

Average Pro Player Salary: https://www.google.com/search?q=average+pro+player+salary&ie=utf-8&oe=utf-8
 

The Liberal Myths Being Told About Wal-Mart

On Black Friday, liberals and unions were out in force protesting Wal-Mart's pay practices; arguing that this mega-retailing giant should pay at least $15 an hour. Of course, most of the protestors were union personnel who don't work at Wal-Mart, and who want them to unionize so their dues collection will increase and then they can help Democrats get elected.

One spokesperson for the protestors claimed that Wal-Mart can afford to pay better wages because the Walton's are billionaires; claiming they collectively are worth $150 billion.  Of course, while he was speaking, you could see a number of bobble-heads in the background nodding in agreement.

Yes, the Walton family is worth billions, but that extraordinary net worth has more to do with the fact that they own stock (51%) in the company and less to do with company profits. In other words, their wealth is separate from Wal-Mart's profits.  This in the same way Bill Gates -- who no longer works for Microsoft -- is worth $81 billion.  Giving workers a raise to $15/hour, will not diminish the Walton Family's wealth one iota.  All it would do is raise prices for the over 100 million people who shop at this retail giant each year.  They are the ones, many with low incomes, that will be hurt the most by this supposed minimum wage hike.

Then there's this;  Wal-Mart, as a company, only makes a modest profit of a little over 3%.  Compare that to every liberal's darling, Apple, who returns profits in excess of 20%.  So, when you buy that iPhone or iPad for, hypothetically, $400, you wind up paying Apple $80 for the privilege of owning their products.  If Apple was Wal-Mart, that same product would only cost you $330; based on a 3% profit margin or a profit of $10 on a product that costs $320 to make.*  Of course, no liberals seems to want to protest at Apple about the fact that about 170,000 underpaid and overworked Chinese are used to help them achieve that very hefty 20% profit margin.

The savings that Wal-Mart offers is what that company is all about.

In this country, we have 48 million people in poverty.  What Wal-Mart gives them is the ability to buy many things that they could not otherwise afford.  At the same time, the average salary at Wal-Mart is $12.94 per hour, which is substantially higher than the President's proposed $10.10 minimum wage.  And, that $12.94 is equivalent to nearly $27,000  on an annualized basis.  A salary that is significantly higher than the $20,600 which the average Mississippian makes in a year; and not far from the $28,000 that the average American makes.

The simple fact is that union personnel want to lower the savings that more than 100 million shoppers receive by shopping at Wal-Mart.  Savings that allows them to buy other products and services from other retail outlets.  In doing so, jobs are being created elsewhere in our economy, but liberals (especially like Senator Elizabeth Warren) would rather that this economic benefit be stopped. Mostly hurting the lower class and the poor; yes, the people they always talk about helping.

*Disclaimer: The profit example is a hypothetical that assumes that both Apple and Wal-Mart are both the manufacturer and the direct sellers of an identical product; and, that, in manufacturing their own products their costs would be the same.  It also assumes that for every product they produce, the profit margins are equal; which is never the case.

References:

Walmart hit with protests on Black Friday: http://money.cnn.com/2014/11/28/news/companies/walmart-black-friday-protests/

America's Richest Families: http://www.forbes.com/families/

Bill Gates Net Worth: https://www.google.com/search?q=net+worth+billl+gates&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&channel=sb

Wal-Mart Stores Profit Margin (Quarterly): 3.12% for Oct. 31, 2014: http://ycharts.com/companies/WMT/profit_margin

Apple Profit Margin (Quarterly): 20.10% for Sept. 30, 2014: http://ycharts.com/companies/AAPL/profit_margin


Quick Facts: Mississippi Versus U.S. Averages: http://quickfacts.census.gov/qfd/states/28000.html

Apple's Chinese Employee Problems: http://www.forbes.com/sites/connieguglielmo/2013/12/12/apples-labor-practices-in-china-scrutinized-after-foxconn-pegatron-reviewed/

Warren puts pressure on Wal-Mart | TheHill: http://thehill.com/policy/finance/224535-warren-puts-pressure-on-walmart

Laughably, At Davos, The World's Richest Want To Solve The World's Income Inequality

Every year,  in Davos, Switzerland the world's most powerful meet to kick around issues confronting society in what is known as the World Economic Forum (WEF).  Last year, the Wall Street Journal noted that, of the 2500 attendees, 70 were billionaires, and the rest were mere millionaires and other extremely powerful people.

So, it is interesting that one of the reports coming out of the WEF reveals the fact that just 85 billionaires hold as much wealth as does the bottom half of all humans who live on this planet; arguing that income inequality is a growing and damaging problem.  I'd just love to be a fly on the wall and listen to what the world's richest think the solution to that problem is.

References:

85 richest people own as much as bottom half of population, report say: http://www.latimes.com/business/money/la-fi-mo-oxfam-world-economic-forum-income-inequality-20140120,0,7080817.story#axzz2qxEXoTZW

Wall Street Journal: The 70 Billionaires at Davos: http://blogs.wsj.com/wealth/2012/01/25/the-70-billionaires-at-davos/

Under Obama's Tax Plan, True Millionaires Still Get A Break

Right now, if you are making $200,000, individually, or $250,000, married filing jointly, your effective income tax rate is 33%.  If you make a million dollars, the effective rate is only 2 percentage points higher than that at 35%.

Under Obama's proposed rate changes, those in the $200,000 and $250,000 or more categories will be hit with a new rate of 36.9%; a 20% increase in taxes from 33% to 39.6%.  If you're making a million dollars or higher, that increase to 36.9% is only a 13% increase in your taxes; up from 35% to 39.6%. 

Even when Obama claims that millionaires should pay their fair share by paying more, he gets it wrong. That's because the millionaires still get better treatment than those below them under Obama's proposed tax rates.  The percentage of increase is far less.  All this is so much political theater and ideological B.S and not hardly some concept of fairness.

--- Federal Tax Tables: Moneychimp.com: http://www.moneychimp.com/features/tax_brackets.htm

Obama's Buffett Rule Denounced By Buffett

In his tax-the-rich/debt-reduction speech a couple of weeks ago, President Obama introduced what he called the "Buffett Rule" whereby the rich could no longer avoid paying high tax rates. In Obama's own words, he said the rich would have to pay "their fair share." Then, once again, he defined the rich as being those singles making $200,000 a year and any couples making more than $250,000.

In outlining the Buffett Rule, he implied that Warren Buffett, himself, actually authored that rule. But as I had previously indicated in my blog entry titled Obama's Rich and Warren Buffett's Rich Are Two Different Animals, Warren Buffett was only talking about the super rich who were being "coddled" by certain aspects of our tax codes. Yet, Obama continues to invoke Buffett's name in his socialist-minded justification for taxing people who aren't even millionaires or billionaires.

Yesterday morning, in a CNBC interview, Warren Buffett put the so-called Buffett Rule into its proper context. Instead of calling for increasing taxes on all of Obama's supposed rich, he explained that he only wants taxes increased on those 50,000, or so, super rich who pay less taxes than they should. He adamantly included himself in that category. In fact, he specifically said that a ballplayer making $50 million dollars "should not" have their taxes increased. That hardly sounds like a ringing endorsement for raising taxes on a person only making $200,000 or a family with income above $250,000. (Click here to See the Buffett Interview)

Once again, we find another serious "distortion of the facts" by Barack Obama. I just wish that, in that same interview, Buffett would have directly denounced the $200,000/$250,000 tax increase. Instead, he just danced around and avoided answering that direct question. Of course, that was to be expected since Buffett is an ideological supporter of Obama. But, I think, what he did say and how he said it and what he avoided saying was damaging enough.

Obama and the Democrats Are Distorting the Term "Loopholes"

According to Obama and the Democrats, business activities like big oil production, corporate jet ownership, and the operation of a hedge fund are taking advantage of tax "loopholes" so that they can avoid paying taxes. This is a complete distortion of the term "loopholes".

Loopholes are an ambiguity in the tax laws that allow someone to skirt paying taxes. For example, if there weren't specific conditions associated with claiming dependent children as a tax exemption, both parents, filing taxes separately, could each reduce their taxes by both claiming the same children as dependents. But, that loophole doesn't exist and only one parent can actually claim any given child as a dependent deduction.

But, the things that Obama-and-company are claiming to be so-called loopholes are not ambiguous. They are legitimate deductions and tax advantages that were intentionally written into the tax laws, over time, by both the Republicans and the Democrats of Congress. Take, for example, the accelerated depreciation for the purchase of corporate jets. Obama and many Democrats call this a loophole. But, it's not. The fact is that it is an intentional tax advantage that was signed into law, by this president, as part of the Stimulus Package with the full intent that it would spur on corporate jet ownership and thus aid the International Machinists and Aerospace Workers Union by "saving or creating" their jobs during this recession. There was nothing ambiguous about it. It was clearly spelled out in that law. But, Obama, once again, has decided to use that particular tax advantage as a form of class warfare. My guess is that both "focus group sessions" and phone polling have determined that using of the word, tax loopholes, yields a more favorable response, politically; especially for those in Obama's own political base. For sure, the word loopholes has a negative connotation and implies, to some extent, that dirty pool is afoot.

To me, using the word "loopholes" is a totally dishonest tactic against what is, in most cases, a completely honest application of the tax laws. Once again, this president is playing fast and loose with the facts to gain political advantage. So much for the supposed "most transparent administration in the history of the United States"!

Obama: Your Marxism Is Showing

Karl Marx, the communist and the social economist, often talked of the struggle among the classes. He obsessed about the class of people known as the bourgeoisie. The bourgeoisie of society were those who placed too much into the value of owning property. Today, if Marx was still alive, he might just call them corporate jet owners. At least that's what Obama referred them as in his speech at his press conference of just last week. In fact, he obsessively mentioned corporate jet owners 6 times in that speech. He also singled out the so-called billionaires and millionaires. Just another bunch of "bourgeoisie" property owners that Obama is obsessed with.

Pitting one class against another is straight out of the Marxist playbook. That's exactly how the Marxist, Hugo Chavez, got elected in Venezuela and, then, managed to literally become president (or dictator) for life. Like Obama, the Marxist Chavez is also about redistribution of wealth. Since being president in Venezuela he has taken land from the rich and given it to the poor and he has nationalized formerly private businesses. All one has to do to understand how Marxism is in Obama's heart is to go back to the 2008 campaign and recall what Obama told "Joe the Plumber": "We need to spread the wealth around.." However, spreading the wealth around takes a serious toll on any economy; usually in the form of inflation. For example, since Chavez has been in office, Venezuelans have suffered from 20+ percent annual inflation and empty grocery shelves. A fate we could see here if Obama isn't stopped in 2012.

If anyone doesn't think this President isn't a socialist/Marxist, they have got their head screwed on wrong or they are just blindly ignoring the truth in what the reporter/writer, Bernie Goldberg, calls a "Slobbering Love Affair". The economy is still in trouble because we have an anti-business President in office. His fixation is to spend and spend while hiding behind Keynesian Economics as the means of promoting wealth redistribution programs like Obamacare that will ultimately sap the economy and that will only further high unemployment. Just look at his handover of GM to the labor unions as a perfect example of Obama's application of Marxist principals. And, as for inflation? We've already seen a doubling of gasoline prices under his rule and many food products are seeing annual double-digit price hikes. Isn't Marxism lovely?