Hawk4value

...why in the world new money should not be taxed at the same rate as average Joe income tax?Just because new money is not earned by doing physical work?.... Thats the crux of the issue isn't. I believe that the most important "work" is the efforts made investing capital. Risking your capital in new business ventures to create jobs and entire industries is far more important than an average joe earning a wage in a mine. Remember if risk capital was not invested to develop the mine joe would not have a job. We have a middle class because of invested risk capital not the other way around. Therefore society should maximize the incentive to invest. Now regarding your idea: people will not not invest because of a 20% or 30% Cap Gain Tax. Well I am of the opinion that the higher the cap gain tax the less risk investors will take because returns are reduced. Again I want to maximize the incentive to invest.

...Europe is asking it to join them in imposing a tax on what is mainly investor speculation... I agree conceptually with some form of transaction tax, and also any tax which will disincentivize speculative, casino like behavior. Also hedge fund, or asset mgrs, etc., who make a living managing money need to pay income tax on their earnings not a capital gains tax. This is the biggest rip off of all.

...Now we are talking about rich who makes millions but don't really work for it. They get millions every year with capital gains or dividend.... You have to be kidding??? How do you think these people got the money to invest in the first place. They worked for it, they saved, they lived within their means, and yes they paid income taxes on it. Now they have a pool of capital accumulated after years of hard work. What can they do with this pool of capital: they can spend it on all kinds of nonsense like most people do; or they can carefully and studiously risk this precious capital in businesses that create jobs for the people down at Occupy Wall Street. I say that the government needs to specifically incentivize intelligent people to invest, i.e. minimum or 0% capital gains tax. Letting the government continually tax this money year after year (after the initial income tax) is sending the proceeds down a rat hole.

Unfortunately human beings don't operate this way. Humans want to make money, we want to accumulate wealth, we want to follow our dreams unencumbered. The best system that brings out our full potential is not Soviet style, its not a non-profit style, its not socialist, its capitalism. If we operated under a non-profit sytem we would still be making campfires in caves.

I think we need to be clear about something. To compare the Tea Party movement with Occupy Wall Street is nonsensical. The Tea Party knows what they want (will not go into it here), they have a specific agenda, they are organized and have leaders, and they have already made and are making a difference. Have we forgotten the results of the 2010 elections so soon??? Also issues like deficit reduction, flat tax, lower tax rates, etc, issues that everyone now are talking about: Where did they come from??? The Tea Party.

If capital is taxed away at a higher rates that is obviously a hinderance to capital going into start-ups and capital injections into existing companies. It also affects the relative pricing of entrepeneuring: if stocks and bonds are higher priced due to more available capital, then entrepeneurship gets more attractive in relative risk-reward. Again Invert, could not have said it better myself. There is a direct connection between the pool of passive capital (savings and investment monies) and the ability of entreprenuers to fund their businesses. Responsible gov'ts want to encourage this pool to become as large as possible, and ever growing. Every dollar the gov't takes from this pool in taxes is that much less that can be compounded ad infinitum. Also, lets remember that this money has already been taxed as earned income. To repeatedly tax the same money annually over and over again is conceptually abhorent to me. Also let me be clear, reasoning that a higher or lower or zero capital gains tax will not neccessarily deter entreprenuers from starting businesses misses the whole point. Wealth generation comes from people using risk capital to follow their dreams, start businesses, create jobs, etc. Society should jealously guard this capital and keep it out of gov't hands where inefficiency and waste squanders it. The first $800mil stimulous package was a prime example. I say zero tax on passive income from savings and investments forever.

Eric, When you talk about demand and output what is your reference point?? Is your reference point the demand and output that existed between 2004 and 2007???? If so, this was a debt fueled frenzy that had no basis in reality. Why, because it collapsed!! It was what I like to call a fictitious prosperity. What I am interested in is a sustainable prosperity that is fueled by long term savings and investment, not debt. Now, humans being what they are, want to be gratified today not tomorrow, sooo we must dampen debt fueled consumption urges by incentivizing responsible behavior.

Lowering capital gains taxes does not help people who are not investing and I don't think it was ever intended to help these individuals. It is to incentivize people and companies to invest in new ideas and companies which should create more jobs and build a better economy. It keeps a larger float of money in the system recylcing from investment to investment. Tax the money, and the float decreases. Amen Junto. Could'nt have said it better myself. Unfortunately people look at this issue on the micro level instead of a macro level. The idea is for society to encourage savings and investment from people that have the means to do it. If you do not have discretionary monies for savings or investment than you have to work hard, live within your means, limit your debt, buy a used car instead of a brand new one, rent an apt instead of buying a house, cook at home instead of eating out, etc, etc and so on. Until you scrape up enough money to take advantage of the savings/investment incentives. In the last number of years the US incentivized consumption and debt-----Result: Big Trouble. Now I am suggesting the US needs to incentivize savings and investment. Therefore Warren, God love him, is as wrong as he can be.

I love Warren, but I believe he is on a guilt trip which is getting the best of him. The foundation of any financial system is savings. The system recycles savings into investments, investments produce savings, and the cycle keeps repeating and mutiplying. For many years people were not saving (negative savings rate), they were spending more than they earned, and then borrowing and spending more and going into debt, so we had a credit bubble. Fictitious propsperity. Now people are being forced to save because they are deleveraging. Bottom-line: we need to incentivize saving and investments. The best way to do this is to eliminate taxes on savings and capital gains. I believe Warren is dead wrong on taxing passive income.

My 2c is the fact that these people complain about not having jobs and then rail against corporations. Well, corporations are the entities that supply the jobs. Its entirely laughable. They essentially complain and whine with no solution about how to right the ship. It will not resonate with the majority of Americans.

Sharper, I wholeheartedly concur. Another group which should be included in addition to the banks are the Unions, be they private of public. Unions pervert the free market mechanism and cause higher prices, misallocation of capital, and disfunction of the political process. Case in point are the auto workers unions. They used their political glout with the gov't to sidestep a long overdue restructuring to right size the cost structure of these bloated corporations: GM, Chrysler. Instead Union equity positions were put ahead of bondholders thereby perverting the bankruptcy process and now putting the taxpayers money at risk of ever being paid back. The phrase Government Motors (GM) is so true. Personally, I will never buy a GM product.

I have owned the Mutual European Fund (TEM1Z) for years. They are excellent value investors.

....SNS dividend deal which upstreamed significant capital to the holding company.... Do you know where I can read the details of the "dividend deal", just checked BH website and could not find it. Thanks.

Sharper, I agree with your assessment. I believe what you describe is what might be called Stagflation. Fast forward: continuous money printing evantually causes higher inflation in both asset and consumer prices triggering a substantial rise in interest rates a la late 70s, early 80s. Certainly not a good time for stocks.

...I bought some FRO a few weeks..... Prof, I have been following the collapse of the tanker industry for a while, and FRO in particular. Am doing DD. Did you have a chance to calculate the current value of its owned tanker fleet (market or scrap value) versus the market cap and debt on the books. It seems that the company has a negative net worth. It seems to me that Fredericksen has to right size the balance sheet in order to ride out the downturn: cancel newbuilds and sell some ships to reduce debt.

I agree that deflation will moderate due to Fed and ECB action, but evantually will be superseded by inflation. At that point interest rates will rise. Does it necessarily follow that stock markets then will get hit with a second leg down, or will an improving economy propel markets upward?? Or is stagflation another sceanario??

He's playing the game as the rules currently exist. Why on earth would you handicap yourself to make a point? Why??? Because his campaign for President was based on bringing the country together. Ending partisanship. Overcoming the rancor. Compromise. Doing whats right. "Change" you can believe in. In all these things Obama has been an utter failure.

Does it make sense to expect German-like behavior/culture from the Greeks, Spanish and Portugese when it comes to finances? Well, yes, you bet I do. If you want to be member of the same EU group as the Germans you had better adjust your financial/fiscal habits to the fiscally more responsible Germans and Scandinavians. If not, you will end up like the Greeks: borrowing large sums of money at artificially low EU rates of interest, something you could never have done as a stand-a-lone country. Unfortunately, this priviledge in the hands of unscrupulous, irresponsible politicians is like throwing gasoline on a fire. They use this new found "wealth" to trade for votes and power, bankrupting the country in the process.

I do not believe Rodriquez is being political in his essays. I believe he is being Rational. The reason he may sound political to some is because at this particular point in time the Right is being much more rational than the Left. As far as both Parties are concerned, they have each proven in the present and the past that their interest in getting elected and holding power trumps any desire to do whats right for the country and its citizens.

The book just came in the mail after the request was made months ago.

I mailed my request in for the book some time ago but never got it. Does anyone have the person it should go to and the address??

This is a really interesting story. The US is the principal supplier of China's $1 to 2 trillion trade surplus because of our desire to spend money we do not have by going into debt to buy every type of idiotic Chinese export like toys, clothes, ping pong paddles, etc. Then they take this money (our money) and invest it in Africa to get control of strategic commodities like oil, gas, minerals, farmland, etc. At the same time underming our efforts on the Continent. A double whammy. Gee that's pretty smart!!

As Misterstockwell said our Constitution and system does not, and should not care about luck, health, sickness, or type of Parents you have. Our system works best when everyone individually, and yes selfishly, works to the best of his ability for his own success. And yes, there are some people out there that are more talented than others. These are the entrepreneurs that create most of the jobs. These people should be praised and encouraged, not vilified. As far as taxes are concerned, 50% of the population not paying taxes is rediculous. I am all for eliminating deductions and loopholes and creating a flat tax, where everyone pays the same rate. This would broaden the tax base so everyone pays.

Given the way the gov't has botched up the mortgage/housing market before and after the crisis, I believe they should finally step aside and let the market rule. First and most important, lets go back to the rule of law: stop all the gov't anti-forclosure programs and let the banks foreclose. This will achieve 2 important objectives: people will finally be able to move on with their lives and get out of homes they cannot afford---they will go and rent like they should have done in the first place; second and critically, the banks will finally be able to get their hands on these houses, package them for cents on the dollar, and sell them in bulk to vulture investors. There is plenty of money ready to pounce if only gov't will get the hell out of the way.

Amen, and God Bless you Harvey Golub, could not have said it better myself.