Money

Eric Fry at the Daily Reckoning writes an article featuring the chart below that begins as follows.

"Say it ain’t so! The Dow Jones Industrial Average has slipped into the red for the day, year, decade and century…all in one day!"

He goes on in his article with an analysis of Goldman Sachs profits and bonuses some of which you can read below.

The entire article is well worth the time spent on it.

“But it is true. Thanks to tens of billions of dollars of year-end bonuses, the laborers of five major Wall Street firms will receive twice the remuneration of the ‘capitalists’ who own these firms – i.e. the shareholders. In other words, employee compensation at Goldman Sachs, Merrill Lynch, Bear Stearns, Lehman Bros. and Morgan Stanley totaled $60 billion in 2006 – double the year’s earnings of the five firms. Almost half of this compensation arrives in the form of year-end bonuses…and the largest bonuses arrive in the bank accounts of a few privileged employees. So let’s call this process, ‘Marxism with a twist.’

“As fans of Das Kapital might recall, Marx argued that ‘capitalists’ deserve no ‘surplus value’ from their investments because the capitalists contribute no labor to the production process. Since labor, alone, contributes value to production, Marx asserted, the laborers deserve the profits of the enterprise. Wall Street’s major brokerage firms seem to agree.

If ........

Everybody agrees that higher tobacco taxes lead to higher cigarette prices,

which encourages smokers to quit,

reduces the number of cigarettes smoked,

and prevents initiation among potential new users.

And .......

Tobacco consumption increases as the real cost of tobacco falls.

And ......

Revenue from increased tobacco taxes invariably fall short of expectations as higher retail prices stunt the volume of sales.

Then ......

What kind of moron would conclude that it's a good idea to raise taxes on business, jobs, work and saving?

I'm just axin.

 "In the early stages of the state, taxes are light in their incidence, but fetch in a large revenue...

As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones.

Their needs and exigencies grow...owing to the luxury in which they have been brought up.

Hence they impose fresh taxes on their subjects... sharply raise the rate of old taxes to increase their yield...

But the effects on business of this rise in taxation make themselves felt.

For business men are soon discouraged by the comparison of their profits with the burden of their taxes...

Consequently production falls off, and with it the yield of taxation."

"At a tax rate of 0 percent, the government would collect no tax revenues, no matter how large the tax base.

Likewise, at a tax rate of 100 percent, the government would also collect no tax revenues because no one would willingly work for an after-tax wage of zero (i.e., there would be no tax base).

Between these two extremes there are two tax rates that will collect the same amount of revenue: a high tax rate on a small tax base and a low tax rate on a large tax base."

The above quote links to one of the longer and tougher reads I will link to, still well worth the effort.

Maybe that pesky "Global Warming " is a good thing.

"One culprit in December's disappointing jobs report was the unusually cold weather during the week that the Bureau of Labor Statistics did its counting." Phil Izzo, WSJ 1/9/09 

The next one is sort of new. The comment up until now has been that the Chinese are fed up and are looking at replacing the dollar as the world's reserve currency with a basket of currencies that includes Gold.

The fact that this quote comes out of the editorial section of the Wall Street Journal is pretty big.

Indeed, gold is viewed by central banks the world over as a unique reserve asset. Contrary to monetary assets denominated in national currencies, its status cannot be undermined by inflation in the issuing country, nor is it subject to repudiation or default.

Which suggests that perhaps it is time to make available to the American public the sort of insurance against dollar depreciation that monetary authorities have long sought for their own portfolios. For those citizens who've become skeptical of the Fed's ability to guarantee price stability in terms more meaningful than elementary CPI statistics—or who believe the bigger threat to their personal financial security lies in a potential repeat of the last debacle — why not provide a new class of Treasury obligations that would guarantee purchasing power of the dollar in terms of Gold?  Judy Shelton, WSJ 1/8/09

Two Thousand Billion?

That's Two Trillion

A trillion here, a trillion there, pretty soon you're talking about real money.

In the last decade gold has gained 292% against the US$, 181% against the Euro, 249% against the JY, 298% against the BP, 179% against the C$, and 182% against the A$

An ounce of gold today buys 62 ounces of silver.  Historically, it is 1:15.

This stuff has been floating around for about the past week in various formats.

Annual rate of change in employment for motor vehicle and parts manufacturing ................ -6.7%