The Economy

[aiw]

I wonder what the Irish and British are thinking with the new American corporate tax rate.

I bet it's something like, "Oh shit."

Consider everything Eichenwald says with a grain of salt and I haven’t had a chance to look into this further, but here ya go.

 

[aiw]

Trickle down economics should work this time around.

When has it not?

Almost ever? Certainly not in an environment like this. When marginal rates are confiscatory - like they were in the 50s, 60s and 70s - releasing capital sometimes works. But they were 70-90% then as opposed to 39% now. These cuts are simply a big Keynesian stimulus when we don't need one. Balance/reduce the damn budget/deficit when the economy is growing....like now....and go with the deficit spending when it needs a goose. Which it probably will. Soon. And we'll be out of powder.

As far as how capitalism works, you seem to have no clue. If beneficence of the rich is required for capitalism to work, I guess all the poor countries are fucked, they should just go commie. Capitalism works when free actors create value though ideas and efficiencies. The greatest capitalists in our history - Vanderbilt, Carnegie, Ford, Rockefeller, Gates, Bezos - didn't rely on the patronage of the rich. They went out and generated wealth through their creative brilliance, managerial brilliance, focus and hard work.

I'm not against tax cuts in general, and me and my company will benefit tremendously with the new law, but this is the absolute wrong thing at the wrong time. No tax reform is worth a flying fuck unless it abolishes the abhorrent carried interest loophole, and the fact this one doesn't shows that it is simply a give away rather than a serious piece of legislation. I'll be richer than I otherwise would have next year, but I won't being doing a damn thing for the economy. Probably pocket the proceeds and maybe go on a nicer trip to Europe.

Right, and the day after Trump tweets that we need new infrastructure prior to any condolences after the train derailment. This is all pretext to give the rich more money and then claim we can’t afford things like Medicare/Medicaid and SS. Paul Ryan said as much. Gonna be weird to campaign on that in a few months.

Anyway, companies have already said they will use this windfall to buy back stock, not “trickle down” via jobs and wages.

 

[aiw]

Yes. The typical American family.

 

[deeyoukayeee]

Trickle down economics should work this time around.

When has it not?

As far as how capitalism works, you seem to have no clue. If beneficence of the rich is required for capitalism to work, I guess all the poor countries are fucked, they should just go commie. Capitalism works when free actors create value though ideas and efficiencies. The greatest capitalists in our history - Vanderbilt, Carnegie, Ford, Rockefeller, Gates, Bezos - didn't rely on the patronage of the rich. They went out and generated wealth through their creative brilliance, managerial brilliance, focus and hard work.

No, the poor countries are not fucked. Why would they go commie? They should exploit their competitive/natural advantages and focus on making themselves attractive for foreign investment.

Did Microsoft use venture capital? Did Amazon? Did either go public?

The answer to all of those is the same: yes.

Ford was an innovator but he doesn't start Ford Motor without investors.

Vanderbilt, Carnegie, and Rockefeller are great stories, but they absolutely relied on trickle down. How else would they have acquired capital to invest? How would Vanderbilt acquire his initial boat to go from Staten Island to Manhattan? By working for someone richer than he was at the time. Rockefeller made money by working for richer people before he got into oil.

Mike Bloomberg doesn't start Bloomberg LP without a $10 million severance from Salomon Brothers.

Ideas are an absolutely crucial part of the equation but an idea without financial backing is worthless.

Conflating credit with 'trickle down' is absurd. VCs and PEGs have 5x as much money as they can possible invest right which is already leading to absurd valuation multiples. I have banks throwing millions at me to buy shit I don't need. Last thing the investment market needs is more capital.

If you think the next Vanderbilt, Gates or Ford is somehow dependent on the extra $10mm that some real estate developer will save in taxes next year, you are hopelessly out of touch with how our economy is functioning. Fiscal policy =/= monetary policy.

And I picked those particular titans because their start-ups/initial ventures required very modest amounts of initial capital. Their ideas and industriousness dwarfed the relative need for money.

 

[sjsj2448]

Consider everything Eichenwald says with a grain of salt and I haven’t had a chance to look into this further, but here ya go.

Yeah, that makes no sense, as I've been reading about the GILTI tax and the base erosion tax, which are both in the bill. This bill does nothing but further incentivize corporations to stay in America, IMO. Eichenwald should stick to looking up tentacle porn (nothing against tentacle porn, to be sure, but don't get embarrassed and make hilarious excuses about it)

The Euro finance ministers are very angry! Hahaha.

http://www.dw.com/en/us-tax-reform-breaks-global-rules-eu-says/a-41862318

 

[Topher]

 

[bdotling]

I'm not saying JML is wrong, but I am saying I don't think he fully understands interest rates or the Fed

 

[sjsj2448]

This guy gets it.

 

[physicsfactor]

That guy can’t even decide what his own fucking name is.

 

[bdotling]

Fair take on the tax bill

https://www.linkedin.com/pulse/tax-changes-dont-do-whats-needed-ray-dalio

 

[sjsj2448]

Fair take on the tax bill

https://www.linkedin.com/pulse/tax-changes-dont-do-whats-needed-ray-dalio

So his first paragraph says "inequality" is holding back the American economy. There is still ferocious debate among top economists about that. I am not a top economist but it is worth mentioning.

And I am not opposed at all to investment in education and infrastructure. I love both of those things. We should have the best- we clearly have the best education system in the world, but our infrastrucure is aging (I won't exaggerate and say it's crumbling)

But the fact is you can't have it all. I doubt China spends a trillion in American $ on healthcare costs.

Just some things to consider.

 

[bdotling]

Lol at you not exaggerating.

Did you read the first article I posted yet? That breaks out the stats around the bottom 60% and top 40% quite clearly.

Also your citation of US spend on healthcare costs demonstrate you do not understand healthcare costs.

 

[bdotling]

The reason folks don’t respond well to you Axe is because you make sweeping exaggerated statements that demonstrate either a lack of curiosity to dig into those statements or critical thinking about why those statements may or may not back up your initial argument.

I do not pretend to know everything or what will happen and I try not to make arguments in subject areas I don’t understand well unlike JML who believes this tax bill will lead to even higher Pharma prices(the leaps in logic there are mind blowing).

So for instance, you calling out the amount of $ spent on healthcare in the US as something to hold over China. This is from 2014, by the article I posted in the News thread US life expectancy has actually dropped the past two years. Much of it most likely due to what you quoted as “inequality” as those in the poorer bracket are getting more and more addicted to opioids or committing suicide as they see no opportunities to progress. Surely a lot of lost human potential, the US should be a country of equal opportunity above all else; it is very sad.

There are some caveats to this graph for sure but not enough to account the massive amounts of waste in our healthcare system. More spend doesn’t equate to better in healthcare.

 

[bdotling]

Oh also I would take Ray Dalio’s take over economists. Economists have zero skin in the game. They can say anything they want and have no consequence. Dalio has run one of the most successful hedge funds ever with real money at stake. He gets it right more than he gets it wrong because he has to for his compensation and livelihood.

 

[sjsj2448]

Lol at you not exaggerating.

Did you read the first article I posted yet? That breaks out the stats around the bottom 60% and top 40% quite clearly.

Also your citation of US spend on healthcare costs demonstrate you do not understand healthcare costs.

I think you are misunderstanding what I said, or I didn't say it clearly.

I simply said I doubt China is paying $1 trillion in healthcare costs, which means they would not be hamstrung in the amount of infrastructure in which they could invest. I never said anything about quality or value, and your response is suggesting I did.

Is what I said about Chinese healthcare costs not accurate? Do you have the Chinese federal budget on hand?

 

[sjsj2448]

Also- speaking of that chart you posted- it is no surprise to me.

Highest GDP per capita in the world for a large country = massive amount of food, most of which is unhealthy.

Our GDP per capita is almost $20,000 higher than Japan's (a VERY wealthy and advanced society)

With 20 McDonald's nuggets costing 5 dollars a pack, that's 80,000 extra chicken nuggets per year per person. (that is a joke, but you get my point)

 

[bdotling]

I never cited China healthcare costs so not sure what you are trying to argue there.

I took your can’t have it all to mean we choose to spend a boatload on healthcare to have better healthcare and that may or may not be preferable to better infrastructure. If you now mean we choose to spend a boatload on healthcare so we can’t spend more on better infrastructure, the point I am making still holds. The healthcare spend is not efficient and probably should be reallocated elsewhere.

Lastly your argument on higher GDP per capital leading to more unhealthy food options is another massive jump in logic. There is also a shit ton of organic everything everywhere these days that people can afford despite being more expensive to produce. Who is to say an increase in wealth has led to an increase in food options and only of the unhealthy variety. It could easily be more of the health variety. Fast food chains have been around for decades. Organic, gluten free has only taken off more recently. Regardless I have no fucking clue and am not going to pretend to or introduce an argument with no information to back it up. And that’s why you hold zero credibility and piss people off on this board. But I think you enjoy doing that so hats off to you.

 

[sjsj2448]

I never cited China healthcare costs so not sure what you are trying to argue there.

I took your can’t have it all to mean we choose to spend a boatload on healthcare to have better healthcare and that may or may not be preferable to better infrastructure. If you now mean we choose to spend a boatload on healthcare so we can’t spend more on better infrastructure, the point I am making still holds. The healthcare spend is not efficient and probably should be reallocated elsewhere.

Lastly your argument on higher GDP per capital leading to more unhealthy food options is another massive jump in logic. There is also a shit ton of organic everything everywhere these days that people can afford despite being more expensive to produce. Who is to say an increase in wealth has led to an increase in food options and only of the unhealthy variety. It could easily be more of the health variety. Fast food chains have been around for decades. Organic, gluten free has only taken off more recently. Regardless I have no fucking clue and am not going to pretend to or introduce an argument with no information to back it up. And that’s why you hold zero credibility and piss people off on this board. But I think you enjoy doing that so hats off to you.

If you have information that disputes my posts, then by all means post it. I am never shy about changing my opinion at the drop of a hat. For example: I go around telling people how bad Mike Krzyzewski is at coaching defense now. A year ago, I would have said something stupid about The Master not having the players to play good defense. This board has made me better. And It may be different where you live, but the organic and gluten free stuff I see is much more expensive than the bang for the buck you're going to get from McDonald's or Burger King or other high volume, unhealthy food companies. I mean, I was at Food City yesterday (THE premier grocery destination of the Mountain South), and an organic pasta is going to cost you 5 dollars, and it's one meal. You can get a 4-pack of Chef-Boyardee for less than that. So by my experience, your point about healthy foods is not accurate at all, but I would love to be proven wrong. I would understand people getting mad at me if I were demeaning others, name calling, and acting like an ass, but I'm not. I'm just posting my thoughts and opinions- not all are correct. Nobody's are.

 

[bdotling]

Very simply I was saying your point about increased unhealthy food options because of higher GDP per capita is based off nothing.

How about instead of me looking up data to refute your points, you look up data to support your points?

Making claims to be contrarian or express a different point of view is fine but if you primarily counterargument is “prove me wrong” I just don’t think people respond well to that and if you can’t understand why that riles people up, then maybe you should think about why.

 

[bdotling]

let’s play a game where I argue the way you argue to make your points.

So what if it’s $5 for organic pasta, the country has higher GDP per capita, people should be able to afford it. Also since we are more highly educated (per your statement earlier) they should know not to eat unhealthy foods because of all the health problems we can experience. So in fact higher GDP per capita should mean more healthy food consumption not less! We are RICH and we can afford LUXURY goods!

This is what you sound like but from the other side. There are so many ridiculous statements in what I just wrote that is backed up by nothing but pure speculation.