The Long Cold Winter

[can't sit still]

I'm back to the "big picture" stuff. Here's some quotes from a good paper that points out that Obummer's policies have been a total failure;
" We must stop spending before we talk about VAT taxes or taxing Americans more, we need to get spending under control. The ratings of congress are the lowest they have been in historyâ€

[can't sit still]

Martin Armstrong is the god and guru of economic movements. You should read up on his accomplishments and punishments. Like Kondratieff, he was / is punished for being right about the economy. Here is the latest. It's really impressive. He claims that we are seeing the death of socialism.
http://www.martinarmstrong.org/files/Ar ... -20-10.pdf

[geekster]

The worst year of this is going to be 2012. Next year will be much worse than this year has been and probably worse than 2008 but 2012 will be the crunch year. That is the year that the crazy-assed adjustable reverse-am and interest only short-term ARMs finally reset. Those will be the mortgages that were let at the very peak of the market, in 2007.

People will not be able to sell and they will not be able to refinance. They are just going to have to walk out on the property.

Look at this graph:



2011 and 2012 are brutal for mortgage resets. The good news is that once they get past the middle of 2012, things start looking *much* better because that is 5 years after the bottom started to fall out of the market and lenders stopped the stupidity.

But there will be other forces in play at that time. The repeal of the Bush tax cuts and idiotic things like the proposed 1% "financial transaction tax" that is in the "Deficit Reduction Act" are going to suck the life out of the economy. For example, where I currently work, our CFO is now on the warpath getting as much business as possible pulled into 2010 because of regulation changes taking effect January 1, 2011. We are buying stuff now we hadn't planned on buying for a year or so out. Know what happens in 2011? We stop buying shit. So do thousands of other businesses just like ours because we bought all the shit we are going to need for a long time already. It is like what the "cash for clunkers" program did for car sales, but for the entire economy.

So the bottom will fall out of the general economy, the people who make the shit we all buy are going to be out of work, and bazillions more underwater ARMs will be coming due. The impact will be cumulative. More and more of these homes will reset, more and more of these homes are going to go onto the market unless we go into some kind of major expansion of "extend and pretend".

We are currently in a bit if a breathing period, just as we had between 1929 and 1931. Obama is doing everything possible to make 2011 and 2012 absolutely horrible. Maybe he thinks he can blame a Republican Congress for it but this is clearly the result of policy decisions of this Congress and this administration. Simply making the Bush tax cuts permanent would ease a lot of this but they just can't get rid of anything with the name "Bush" attached to it fast enough, even things that are actually beneficial. They are blinded by politics and ideology. "Rules for radicals' isn't going to help him out of this mess. This man is going to destroy a lot of families.

California is going to be among the worst hit. There were a lot of 1 million dollar mortgages let for 50 year old tract homes with reverse-am mortgages that are now way under water set to reset in the next two years. These are people with great jobs. But they won't be able to sell and won't be able to refinance. They will be left no choice but to walk.

[can't sit still]

RE is going to do what RE is going to do.
D.R. "Mark Hanson of M. Hanson Advisors does great work on the details behind the headline foreclosure and housing price statistics - the kind of granular research that's scarce on Wall Street. Hanson estimates, using data from the Mortgage Bankers Association, that there are 8 million mortgage loans in the "distressed" category, with and estimated 6.4 million headed for liquidation (foreclosure, short sale, or deed-in- lieu). April saw a record 92,500 foreclosures. At that pace, it would take the market over 8 years to work through the estimated foreclosure backlog."

GOV debt, on the other hand is going to crash. From the Daily Reckoning;
"Barely 9 months into the current financial year, the US this week passed the $1 trillion annual deficit mark. Though marginally smaller than last year’s total at this point, such a figure is hardly cause for celebration. The world’s most indebted economy – on a gross basis – is also notching up a worrying tally of single day records.

The Washington Times reports:

The one-day increase for June 30 totaled $165,931,038,264.30 - bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every US household, or more than 10 times the median daily household income."
This is a DAILY figure

There's a very slim chance that America will continue to service the debt. We are 3 % of the world's population. We've lost the lead in many areas. The multi-nationals have left for more productive places;

D.R.
"Fortune 500 companies are happy to set up brainy shops in emerging markets. They already have 98 R&D facilities in China and 63 in India. GE has a vast R&D facility in Bangalore, its biggest in the world. Cisco is spending $1 billion on a second HQ, also in Bangalore. Accenture has a quarter of its work force in India. Microsoft's biggest R&D center, outside of Redmond, is in Beijing.

And they are enjoying tremendous success. For example, GE's Bangalore laboratory invented a new hand-held electrocardiogram that sells for $800, instead of the usual $2,000. The cost per test is only $1 per patient.

As The Economist put it, emerging markets have become a "fizzing cocktail of creativity." Moreover, it's not just Western companies doing the creative work. (Huawei, a Chinese telecom giant, is now the world's fourth largest patent applicant.) Companies in China, India and other places outside the US are inventing game-changing technologies. A few of the stories The Economist highlights in its report are simply amazing.

In Chennai, a Tata company created a water purifier that uses rice husks - a common waste product. A family can enjoy bacteria-free water for the grand price of $24. New filters every few months will cost $4. It's cheap and portable and will make a big impact on the poor the world over, most of whom lack access to clean water.

Another Indian manufacturer concocted a $70 fridge that runs on batteries! A Chinese company, Mindray, makes a lithium battery for $12, compared with $40 previously. Bharti Airtel, an Indian company, has the lowest cell phone fees in the world - 2 cents a minute and nationwide coverage. The company is worth $30 billion.

One of the most startling tales was that of Devi Shetty. He is applying Henry Ford's assembly-line techniques to hospitals. Shetty's flagship hospital in Bangalore has 1,000 beds. (The average American hospital has only 160.) His team of 40-some cardiologists cranks out 600 operations a week. Open-heart surgery costs about $2,000 - compared with $20,000-$100,000 in an American hospital. Shetty and his team have performed tens of thousands of such operations with results as good as the best of American hospitals. Incredibly, these hospitals even make money! According to The Economist, "Dr Shetty's family-owned hospital group reports a 7.7% profit after taxes, compared with 6.9% in American private hospitals."

The U.S. is pissing away it's wealth trying to revive moribund institutions. We pull forward future earnings to support the failures of today. We're spending down our wealth and the bond market knows this. We can print money but, we can't print wealth.
We're going to get "austerity" with a vengeance. John Embry says that austerity is a "Pipe Dream" . Chances are that the financial markets will bring austerity if GOV does not;
http://www.sprott.com/Docs/InvestorsDig ... 204Emb.pdf

[geekster]

Well, I posit that RE is the cause and is what is preventing recovery and that is due to US policy. As long as 8 trillion dollars of US consumer wealth is locked up in underwater mortgages, the economy isn't going to recover.

Look at Canada who didn't go on a giant porkulus binge. Here is a graph of Canadian employment over this "global recession":





Canadian employment is nearly back to where it was at its peak in 2008. Canada did have a "V-shaped" recession. Their consumers don't have their life savings wiped out by now owning a home that is worth less than they paid for it. Their government doesn't use their RE market for social engineering.

In 1929 everyone and their brother were borrowing money to buy stock on margin. This inflated stock prices and created a market bubble. When that bubble burst, everyone's margin accounts were "under water" and the banks started calling in those loans. People's life savings were wiped out. People needed to liquidate all of their assets. There was a run on the banks.

In 2008 the government was getting everyone and their brother into the real estate market buying houses on "margin". The government enabled this behavior by promising to make the loans "riskless" and guaranteeing the mortgages. The government set quotas on lenders to force them to give more and more loans to more and more marginal borrowers. This created an artificial bubble in the market. Now it was not a market crash that precipitated the fall in this case. What happened was that interest rates went up. People who could barely pay their loans at the current interest rate could not pay the mortgage at the new rate. Mortgages began to default prompting more inventory on the market which depressed prices. Then what happened is people who CAN afford the payments found that when their ARM expired, their house was under water. They either had to pony up a lot of cash or the lose their house. This resulted in a cascade effect where even more homes were placed on the market depressing prices even more. Now we had banks wiping out their reserves on mortgage loans, the default insurer went broke, people have lost their life's savings.

That didn't happen in Canada.

This recession is directly caused by US government manipulation of the real estate market. We will not recover until the real estate market recovers or until consumers again build net positive equity in something else.

[can't sit still]

This is an excellent article on debt Vs GDP;
http://market-ticker.denninger.net/arch ... Truth.html
"In this case we're now to the point where restoring fiscal balance across the credit system requires a roughly 60% contraction in both outstanding credit and the size of the Federal Government (in terms of dollars.) That in turn will contract GDP by 40%."
"Once we accept the math - and the damage - we must demand that credit and monetary aggregates be strictly tied to GDP in the future to prevent this from happening again. "

There's no discipline in GOV,,, gee, what a surprise. There's no shortage of runaway greed on the part of the bankers,,, another big surprise,,, to anyone who is unfamiliar with history.

[geekster]

"Once we accept the math - and the damage - we must demand that credit and monetary aggregates be strictly tied to GDP in the future to prevent this from happening again. "

Milton Friedman was making that same argument 20 years ago.

So for all of the examples you've cited here in the last few moments, for a young person who is looking at how society is organized and trying to get this in his or her mind, you're saying that governmental interference in the economy and management of things necessarily leads to vested interests?

Milton Friedman: No. [It] is necessarily controlled by vested interests. There's a pot of money there in every one of these cases and just as bees will go to honey, people will go to a pot of money. And the people who will be most effective in getting control of that pot of money are people who are trying to grab it for themselves rather than people who are trying to spend it on behalf of somebody else.

Everybody wants to spend somebody else's money. And nobody spends somebody else's money as carefully as he spends his own. And that's a fundamental principle.

There's only one way in my opinion in which you can exercise control over this process and that's by effective constitutional limitation backed by public opinion.

If it's not backed by public opinion, it will do no good.

Put this limitation on spending?

Milton Friedman: No, much broader than limitation on spending. Limitation on spending would be one step. But a much broader limitation -- we have free speech because of the First Amendment of the Constitution.

In our book, "Free to Chose" we listed the amendments we would like to save to the Constitution. They're much broader than that. Such as, Congress shall make no laws prohibiting any trades between consenting individuals with respect to goods that it's legal to trade. Now, that would eliminate all tariffs. It would eliminate the sugar quota, that you may not see off-hand that it would. But it would if you think about it a little because individuals includes foreign individuals and not only domestic individuals.

His proposed limit on spending was a percentage of GDP and is described in depth in the book he mentions.

There's no discipline in GOV

See the above quote on spending other people's money. That is always a lot easier than spending your own.

I would suggest reading all 7 pages of this interview:

http://www.achievement.org/autodoc/page/fri0int-1

and then buying both Free to Choose and the earlier Capitalism and Freedom.

[can't sit still]

Interesting interview. It proves that even someone like Friedman can be quite WRONG. Not in all areas, of course.

[geekster]

One reason why it is always easier to increase taxes than it is to decrease spending is that one action is dispersed in its impact while the other is concentrated.

If you increase a tax bracket by 1%, then a lot of people pay a little more. If you eliminate a government department, several people lose their entire income.

The problem with the political left globally is that it does not understand that when you increase taxes, you decrease revenues. You can not tax your way out of debt. Also, government spending is neutral in its impact at best. Government does not produce anything. If it takes 100 units of capital from the economy in the form of taxes, the best it can do is return 100 units of capital to the economy. But the problem is worse. They attempt to engineer the economy using taxes. The problem is that the redistribution of wealth is done in a way that results in exactly the opposite of what they claim they want to do.

Redistribution could be effective if the least efficient producers were taxed and the money distributed to the more efficient producers. So if government workers were taxed at double the rate of private employees and the proceeds given in the form or research or other grants and loans to efficient small businesses, economic activity would increase, people people would get jobs, things would get better.

Instead, government taxes the most efficient producers and gives the money to the least efficient. Rather than using the money for concrete and steel, they end up using it for beer and cigarettes. Then when they increase unemployment benefits, you are expected to be overjoyed when you should be asking why you are unemployed in the first place.

It is like the fireman who sets fires. He collects praise for risking himself to douse a fire or maybe save a life but he himself set the fire. In a perfect leftist world, he would never actually put the fire out but simply "manage" it forever to keep it from spreading. As long as it never is actually out, people want the fireman to remain on the job. But if the fire actually goes out, there is no longer any need for him. So Democrats create "fires" and then manage them in perpetuity to justify the existence of the programs.

In the meantime, the money from these programs flows to family and cronies.

Managed economies DO NOT WORK. People want to talk about externalizing costs, that is all government does. Every dollar of capital absorbed by taxation is a dollar of capital removed from the other parts of the economy that might have been put to productive use. Paying someone to sit on their ass with unemployment benefits is NOT a productive use. Leaving that money in the economy stands a better chance of stimulating business which will make it less likely the person will be unemployed in the first place.

[geekster]

I don't know about being quite wrong. I see as vindicated in practically everything he has said. What did you find "WRONG"?

[can't sit still]

Good post !
Mankind took a"million" years to go from-hunter-gatherer to an agrarian lifestyle. He's trying to change from Agrarian to industrial in just a couple hundred years. He's mucking it up because he can't get his exchange rates figured out equitably. The manipulators are always trying to take too much for themselves. The producers get squeezed. It's going to take more time to work this out.
Wake me up in a century

[can't sit still]

GOV has a few words on the debt;
"This debt is like a cancer," Bowles said in a sober presentation nonetheless lightened by humorous asides between him and Simpson. "It is truly going to destroy the country from within."
http://news.yahoo.com/s/ap/us_governors_debt_commission
Let's hear it for clarity.

[geekster]

Looks like the financial media has picked up on that huge gold trade last week:

http://www.telegraph.co.uk/finance/mark ... arket.html

Someone is selling off spectacularly large amounts of gold. Maybe someone smells a deflationary economy ahead? Nah, the trade is too large to be speculative.

[can't sit still]

There's more than just a "smell" of deflation;
http://www.calculatedriskblog.com/2010/ ... t=My+Yahoo
Here's a good quote from that page;
"If the trend towards deflation continues, I think the FOMC - based on Bernanke's speech - might set "explicit ceilings for yields on longer-maturity Treasury debt". "
Fucking boneheads think that the central banks have the last word. The BOND market will set the rates or ceilings for ALL debt. What do you call a massive combination of hubris and stupidity?
Deflation is baked-in-the-cake;
http://www.safehaven.com/article/17456/ ... omic-trend

The central banks know that deflation will bring more default;
http://thedailybell.com/1201/Central-Ba ... ntrol.html
Austerity will bring deflation. GOV has quite convincingly proved that they have no ability whatsoever to create jobs. Without jobs, there is no possibility of mood change or credit growth. The banks were hoping to 'grow" their way out of insolvency. They're fast running out of time;
http://www.nytimes.com/2010/07/12/busin ... .html?_r=1

If you look at the amount that is coming due and the rate at which the banks are raising cash, there is NO possibility of them meeting commitments to their bondholders.
GOV is vacuuming up almost all the available credit,, the economy NEEDS this credit. The banks NEED this credit. Commercial RE NEEDS this credit.

China has proved that it has a sense of humor. It downgraded our debt;
"And now China has slipped a shiv between the ribs of the almighty Dollar."
http://jessescrossroadscafe.blogspot.co ... -debt.html
Does Big Bad Bald Ben Bernanke think that Asian leaders don't pay attention to what China does? Yield ceilings,,, my ass.

Our leaders are such fucking stupid boneheads. We spend $ trillions to steal the oil from the East. China just signed a 10 year agreement with Brazil to guarantee oil supplies.
The more stability that is shown by BRIC, the more that investors will move funds there.

The funding needs of GOV, banks, RE, etc is something like $ 12 trillion,, roughly. The rest of the world can see that we're going down the same road as Japan. NO future there. That's why all our bond sales are short maturity. Nobody will risk a cent on a long-term investment in America.

[can't sit still]

Here's a very interesting paper on money;
http://pair.offshore.ai/38yearcycle/
He has a couple of interesting predictions along with his very-good analysis;
"We would like to have an estimate for how much the dollar will be devalued. The 1933 trouble resulted in about a factor of 2 devaluation. The 1971 trouble caused about a factor of 4 devaluation. In the 1985 Plaza Accord about $10 billion was enough to get the dollar to drop by a factor of 2 or 3. Now the US is printing over $1 trillion per year and other countries have several trillion they probably want to get rid of. My rough guess is that international commodity prices, like oil and gold, could go up by a factor of 8+ over the next few years. "
That will put a big crimp in my traveling.

[geekster]

The BOND market will set the rates or ceilings for ALL debt.

Not really. The central banks have the last word. They can simply roll the presses and print cash. That will generate inflation. And they are fully prepared to do it.

Earnings news is going to be really great this quarter and next. My advice is to hold any equity positions you have and bail out of them in mid October.

Gold is going to take a beating if we see more of it being sold to raise cash.

[geekster]

Now the US is printing over $1 trillion per year

Well, yes and no. They are printing the money but it isn't going anywhere. It is simply sitting in bank vaults as reserves against mortgages that are going to default over the next two years. Now if the real estate market were to suddenly turn around and all those mortgages would go back above water, the fed would have to scramble to get all that money BACK from the banks in a hurry because if the banks start lending that money out, yeah, the dollar is going to inflate like nothing you have ever seen before. It will take off like a rocket. ( drop like a rock relative to other currencies ... but inflation taking off like a rocket, as in a cup of coffee costing $20 and interest rates at 25%)

But what is more likely to happen is that the banks will continue to see defaults will will slowly deplete those reserves. The fed is making a bet. They are betting that there are sufficient reserves to cover the worst of the mortgage defaults which ends in about the middle of 2012. They are also betting that they have the number right. They are betting that the amount in reserve is about what the banks are going to see from defaults and won't have much left over and hopefully (from the standpoint of the fed) might be just a little short and require a small injection of capital toward the end of the cycle.

That money sitting in the bank vaults is sort of like economic nitroglycerin. As long as it just sits there in the vault is removed little by little as each mortgage defaults, it isn't a problem. But if the banks get in a position to let it all out at once, kaboom!

[can't sit still]

We see things differently. The bond markets are the final deciders. It's far too big a market for the central bankers to control it.
"As of year-end 2009, there were $34.7 trillion of U.S. government, corporate, municipal, and other bonds outstanding"
I had a good graph showing that the FED interest rates follow the bond actions. can't find it at the moment.

There isn't a chance of a snowball in hell that the jobs are going to come back. There isn't a chance in hell that housing will recover if aggregate wages don't go way up. The possibility of a trurnaround in the RE market does NOT exist.

There have been previous bond crashes. They were caused by investors, NOT central banks;
http://jutiagroup.com/2010/05/03/the-gr ... nd-profit/ Martin Weiss knows his stuff.

[geekster]

Hoyer says they are now working on a bill to extend the Bush tax cuts. The House Ways and Means committee is "hammering out the details" which is a pretty scary thought as all they would have to do is simply extend them. There really should be a lot of detail to "hammer out". What this means is that they are dicking with it. Probably going to make sure they end up passing something that they can claim is an extension while really increasing taxes anyway.

They have to get the bill properly loaded with doublespeak before passage.

[can't sit still]

Orzag quit. I guess that the choice was; raise taxes and kill the economy OR don't raise taxes and have GOV even more insolvent. David Walker left, Greenspan bailed out.
Who's next?

GOV is hoping for stability and good vibes in the economy. Problem is a small shock could set off a big reaction. Everyone is speculating what that shock will be. Many claim that it won't be something that we're expecting.

Gold is being held up artificially so that Fiat currency doesn't look so bad. Also, gold and oil have traded on a par for a long time. Should gold go up, the Saudis will want oil to go up too. An oil-shock would be just TOO much for the economy.
Here's an excellent article on silver;
http://dailyreckoning.com/staggering-st ... er-supply/
It seems that we are running out of silver. Silver is a very important industrial commodity. Should there be a failure-of-delivery from COMEX or a Fund like SLV, that could very cause a run on physical metal of all sorts.
“to put it another way, 3% of the world’s silver inventory disappeared in just seven weeks!"
If nervous investors decide that it is time to run for the door, it could all happen very quickly At a recent hearing with the Commodities Future Trading Commission, it was admitted that gold was traded as a "money" and NOT a commodity. The big bullion people admitted to Chairman Gensler that they trade at 100 -- 1 leverage.
It's pretty much out in the open now. As more silver bears see shortages, more will demand delivery. There have already been failures / delays at several mints.
Even the U.S. mint can get enough silver to strike all the coins that people want to buy.

Everybody knows that the bullion markets don't have all the unallocated silver that they claim. If naked shorts appear in silver, people will rush to take delivery of their gold.
The language of SLV says that all claims can be settled in paper. You can bet that they'll settle for the phantom price, NOT the actual physical price. GLD has different language.
Recently, investors who wanted physical delivery at LBMA were offered 25 % premium to accept cash instead of metal. The smart ones took 125 % of their money and went somewhere else to get the actual physical.
If paper silver blows all to hell, it could cause the same in paper gold.

[can't sit still]

This page has a great graph that compares property to mortgage balance. Property value has fallen 34 %. Mortgage value has fallen 2 %.
http://theautomaticearth.blogspot.com/2 ... storm.html
It also has some great info on bank losses.
"To summarize, all US banks would have lost money last year if it hadn't been for your taxpayer dollars, and, indeed, all but the 6 biggest did. They received many trillions in public funds, all of which are a loss to you, who have also lost those $7 trillion on your home values. The balance sheets of the big banks, however, still wouldn't look good even with all your funds"
This would seem to indicate that the bailout won't save the big banks. When mortgage value corrects to track property value, the losses will be quite large.

[can't sit still]

OK , it seems pretty clear that barky was elected by the banks. Nobody else had that kind of money. What do they get in return?
First, look at the debt.
"You may have noticed that the National Debt has gone up by $1.293 TRILLION in 9 months"
Then look at employment;
"The number of Americans employed in January 2009 totaled 142,099,000. As of June 2010 there are 139,119,000 Americans employed. By my math, we have lost 2,980,000 jobs since Obama promised to add 3 million jobs. I guess a 6 million deviation is just a rounding error in Washington DC"
http://theburningplatform.com/blog/2010 ... n-dollars/

OK, so barky is in the process of gutting social services. He needs to prove to the banking sector that America has enough of a revenue stream to keep servicing the bonds. We borrowed $ trillions to make the world a safer place for israel. The bill has come due and "we" need to gut the safety net to pay for the wars.
America will get crushing austerity to direct the revenue stream to the bankers. The bond market won't collapse immediately.
With massive unemployment, how long will America be able to generate this revenue stream?
With GOV money diverted from the productive economy and safety net to the banks, what can we expect in the way of employment? velocity of money?
The looming huge tax increases will extract that much more money. GOV says to SPEND !!! http://www.thedailybell.com/1214/Dont-Y ... -Save.html
They know that velocity of money is critical.
After 9/11, Bush said to go out and spend money. I suggest the opposite
Just put the money under your mattress. When your money is nothing but pixels, it seems to disappear very inconveniently.

The whole American revenue stream will be diverted to the banks. GOV/Banks demand austerity. They don't want a default. I believe that we should take them at their word and do,,, the opposite.
Japan proves quite clearly that we aren't going to exit this EVER. With the parasites in place, we just keep working to support them.
We might as well work to crash the system. I believe that we're better off with one big crash that writes off much of the debt rather than a couple decades of crushing poverty.
Buy just the basics. Save currency of precious metals. Help those who deserve help.

[geekster]

"Japan proves quite clearly that we aren't going to exit this EVER."

I don't think Japan proves anything for the US for a couple of reasons. First of all, Japan has a much worse demographic problem than we have. Their retired to working ratio is a lot more lopsided than ours is and it is getting worse.

Secondly, they are generally more to the left than we are. Leftist economic policy is generally strangulation to business development, innovation, expansion. I think Japan learned that lesson with the kook they just threw out of office but they haven't changed parties yet. Kan will have no better luck than Hatoyama did unless he can pump some reality up the asses of his party.

"Give people shit" only works if you have something to give. Everything government gives must be taken from someone. "Take shit away so I can give shit away" doesn't work when the most productive portion of society is taxed and the least productive is subsidized. Following the general economic reality that you always get less of what you tax and get more of what you subsidize, then we are in for a world of hurt.

[can't sit still]

We have far more parallels than differences. Japan burned through savings rather than incurring debt. That's the main difference. Different interest load.
Japan got priced out of the world labor market. Japan is supporting lots of zombies. True, Japan's demographics are worse. Japan has to import a much higher percentage of their food and energy too. The main parallel is that Japan refuses to let market forces do their work. CRE in Tokyo has fallen 99 %. Residential in Tokyo has fallen 90 %. The banks are being propped up so they don't take the hit.
Japan has been forced to buy our bonds as an indirect cost for security,,, mostly because of N. Korea. Parallels and differences.

[geekster]

well, well, well. This is interesting. Buried in the health care "reform" bill is a provision that if you engage in a transaction of more than $600 worth of gold in pretty much any form, a 1099 must be filled out and turned in to the govt.

Passage by Congress of the national health care legislation has had an unintended consequence to the nation’s coin collectors, vest-pocket dealers who buy and sell coins, and larger dealers who are frequent buyers of coins that collectors periodically liquidate as they trade up their collections for better coins, or simply sell to take a small profit or loss.

What has happened is that effective Jan. 1, 2012, the whole system of giving and receiving Internal Revenue Service 1099 forms will be turned on its head and all persons (including corporations) who are in business will now have to give 1099 tax reporting forms for coins and other goods that they sell as well as buy.

The responsibility for issuing forms kicks in at $600 for coins or bullion – not a very high level and one that has already started sounding alarm bells. It doesn’t matter in what form payment is made, whether cash, check, credit card, or Yap stone money, the $600 threshold applies.

http://www.numismaster.com/ta/numis/Art ... leId=11843

Interesting. It was almost as if the Obamanistas saw that coming.

[geekster]

It seems that thing about a form 1099 every time one trades in more than $600 worth of gold is even worse than I thought.

The provision, buried deep in the "health care reform" bill that we couldn't read before it passed and we needed to pass in order to see what is in it ... requires a form 1099 for EVERY SINGLE ENTITY a business does more than $600 worth of business with over the course of a year.

This is going to absolutely kill small business and is NOT the purpose of form 1099. Government now wants to track every single significant purchase a business makes. So you are a roofer, buy shingles, have to fill out a 1099. Any business buying any kind of supplies will have to fill out a separate 1099 for each individual transaction if it is over $600 which most are.

This is absolutely insane.

A sole proprietor, lets say a barber or a mechanic, will now need to tally up everything they bought over the course of the entire year and cut 1099 forms for every single supplier they bought more than $600 worth of stuff from. This is an absolute paperwork nightmare for the small self-employed business person. It is going to put the self-employed out of business in some cases and criminalize a lot more who just won't be able to comply.

Only Democrats would come up with a plan that is so clearly evil and attacks the smallest of business operators. I am sure your hairdresser is going to LOVE this one.

http://www.businessweek.com/smallbiz/co ... 855178.htm

Thanks Obama, Nancy, Harry for all the change and shit.

[ygmir]

they're beyond nuts., they're evil...........

[Trishntek]

Wondering if that applies to services? Or is it only goods?

And would it be for wholesale only? Or does it apply to retail also?

[geekster]

Apparently it is goods AND services. It is for any sort of transaction. If you transact more than $600 worth of business with anyone over the course of the year, you must file a form 1099 for them. That means keeping ALL receipts for the entire year and sorting them by supplier and then totaling them up by supplier and filling out the forms and sending them a copy. For them, say they are a parts supplier or a supplier of other goods or services, it will mean an absolute blizzard of form 1099's arriving in the mail.

The IRS is going to be swamped under an absolute mountain of them on TOP of having to enforce everyone's health care premiums. I can't wait to see what forms you are going to have to fill out for that one since the IRS is going to be the enforcement agency for Obamacare.

This is just plain crazy. What other nuggets of dog shit are buried in that "health care" bill that we had to pass in order to see what is inside?

Dumbasses. This little regulation should be enough to get the Democrats thrown out of office for a century.

[Trishntek]

Pardon me,,,,,

GodDamnSonofaBitchingMutherFuckingTittyLickingBabyRapingNineBallBastard!

Just when you think, "they have got to be kidding!" Suddenly, it's "OMFG!"