Saturday, December 29, 2018

AMERICAN STOCK MARKET - WORST DECEMBER SINCE 1931

Robert Mueller, House Democrats and slowing economy will end Trump's 'great time' in 2019

Paul Brandus
A slowing economy. Robert Mueller. New York investigators. House Democrats. Prediction: A year from now, Donald Trump won't be having a 'great time.'
Outside Trump International Hotel & Tower in New York City on Sept. 25, 2018.
Donald Trump recently tweeted of his presidency that “we are having a great time.” That is surely what Capt. Edward Smith must have said after his ship, the RMS Titanic, smashed into an iceberg back in 1912. Things didn’t work out too well for Smith, and as 2018 ends, the USS Trump is also taking on water — fast. For Trump supporters this may seem like fake news, but let’s examine some cold hard facts.    
First: The Trump economy has peaked. Like a candy bar, the tax cut gave it a quick but short-lived sugar high. Second-quarter growth was impressive, a 4.2 percent annual pace. But this slowed to 3.5 percent in the third quarter, and the Federal Reserve says it will slow further to about 2.5 percent next year and, heading into 2020, to 1.95 percent.
Some economists say this is too cheerful: A CNBC survey of economists, fund managers and strategists suggested that there’s a 23 percent chance of an outright recession within the next 12 months.

A wild week on Wall Street

US stocks fell marginally yesterday, with the Dow down by 76 points after one of the wildest weeks on record left analysts and pundits none the wiser over the future direction of the market. The words “surreal,” “panic” and “shocking” were among those used to describe the situation.
The week began with the worst Christmas Eve in history, as the Dow fell Monday by more than 600 points. The decline was prompted, at least in part, by the report that Treasury Secretary Steven Mnuchin had contacted the major banks, which gave assurances that their liquidity positions were sound. This raised questions as to why he thought it necessary to ask them in the first place.
The markets were closed Tuesday, Christmas Day. On Wednesday, the Dow soared 1,086 points, its largest ever point rise in a single day. The following day the markets opened significantly down before rising at the close. The Dow moved through a range of more than 800 points. After falling by 2.7 percent at one stage it finished the day 1.1 percent higher.
Friday saw a repetition of the pattern of swings, albeit in a somewhat more muted form compared to earlier movements. The market rose on the opening—the Dow was up by 243 points at one stage—but finished the day in the red.
This week registered the first gain for markets
in three weeks, but they remain on course for 
the worst December since 1931, in the depths
of the Great Depression. All major indexes 
are set to record annual losses for the first 
time since the financial crisis of 2008.
At the beginning of the week, both the Dow and the S&P 500 index were on the brink of entering a bear market, defined as a decline of at least 20 percent from the most recent high. But they pulled back somewhat by end of the week and are now down 14 percent and 15 percent respectively from their peaks.
While any number of events can impact the markets on any given day, the underlying instability is grounded in longer-term economic and political processes.
A key factor is the overall slowdown in the world economy. At the end of 2017, the tone in markets was generally upbeat because global output had experienced its most sustained phase of synchronised growth since the end of the financial crisis. However, it proved to be short-lived, and the year has ended with the Japanese and German economies—number three and number four in the world respectively, after the US and China—on the edge of recession.
At the same time, growth in China is slowing—last quarter it experienced its lowest growth rate since 2008-2009—and US growth is also expected to fall from the level of above 3 percent achieved this year as a result of the stimulus provided by the Trump administration’s tax cuts.
The impact of lower global growth is compounded by fears that the trade war between the US and China is going to escalate. The clock is winding down on the 90-day deadline agreed to on December 1 between US President Trump and Chinese President XI Jinping to reach a deal.
So far the tariff measures introduced by both sides have had relatively little effect. But that could rapidly change because the US has indicated that it will increase a 10 percent tariff imposed on $200 billion worth of Chinese goods to 25 percent if no deal is reached.
While talks between the two sides have taken place, and negotiations will be stepped up in January, there are limited prospects for an agreement because the US is demanding what it calls “structural” changes in the Chinese economy, including to the state subsidies provided to key industries, which Beijing regards as fundamental to its future development.
Moreover, trade tensions have been heightened by the arrest in Canada of Meng Wanzhou, the chief financial officer of the Chinese telecom giant Huawei, and the push by US intelligence and military agencies to have the firm excluded, both in the US and internationally, from the establishment of new networks, above all for 5G mobile phones, on “security” grounds.
Global markets, which have all fallen through this year, are being significantly impacted by the sea change in financial conditions. In the decade since the financial crisis, the Fed and other major central banks have pumped trillions of dollars into the global financial system, providing a major boost to asset values, above all stock prices. But this program of quantitative easing has been replaced by quantitative tightening, as central banks move to reduce their holdings of financial assets.
It is significant that a spark for the US sell-off, following the decision of the Fed earlier this month to raise interest rates 0.25 percentage points, was provided by the comment by Fed Chairman Jerome Powell on the reduction of the central bank’s asset holdings.
He indicated that this would proceed at the rate of $50 billion per month and was on “auto pilot.” Powell’s comment was nothing more than the articulation of what has been Fed policy for more than a year, but it had an impact because it drew attention to the fact that one of the key factors in the market bull run since March 2009 was no longer at work.
In addition to the economic processes, the market turbulence is being fuelled by the ongoing political crisis in the US. Trump has been targeted by key sections of the military and intelligence apparatuses, speaking through the Democratic Party and the New York Times, as a threat to the geo-strategic and military interests of the US.
This opposition reached new heights with his announcement of the withdrawal of US troops from Syria and the subsequent resignation of Defense Secretary James Mattis. Now the conclusion is being drawn that Trump may also be a destabilising factor on the economic front and the push for his removal needs to be intensified. This was the essential line of a recent comment published by New York Times columnist Thomas Friedman.
Global political upheaval bound up with the growth of the class struggle—the deepening Brexit crisis in the UK, the ongoing opposition to the Macron government in France embodied in the “yellow vest” movement, instability in Italy and uncertainty over the future course of the Merkel government in Germany, to give but a few examples—is also feeding into financial markets. Together with the worsening economic outlook, it means that the market turmoil that has marked the end of this year could be the start of bigger upheavals to come in 2019.

"I doubt that Trump understands -- or cares about -- what message he's sending. Wealthy Saudis, including members of the extended royal family, have been his patrons for years, buying his distressed properties when he needed money. In the early 1990s, a Saudi prince purchased Trump's flashy yacht so that the then-struggling businessman could come up with cash to stave off personal bankruptcy, and later, the prince bought a share of the Plaza Hotel, one of Trump's many business deals gone bad. Trump also sold an entire floor of his landmark Trump Tower condominium to the Saudi government in 2001."

Trump’s Gentrification Scheme to Enrich Real Estate Developers

A tax loophole intended to help the poor is funneling money to wealthy investors.

By BRYCE COVERT

December 28, 2018


Buried within the more than 500 pages of Donald Trump’s 2017 tax cut was an unobtrusive line item with potentially damaging consequences. Proposed by Senator Tim Scott of South Carolina, the provision allows governors to select certain census tracts in their states, in economically distressed areas, as “opportunity zones.” The Treasury certified the last of these zones in June, bringing the total number to 8,700. Now, investors who fund projects in these areas will get sizable tax breaks—even on unrelated investments. As long as they dump profits into a fund earmarked for the opportunity zones, they can defer or even eliminate the capital gains they would otherwise have owed.

Some of the census tracts that have been identified as opportunity zones may be truly distressed. But it’s dubious whether others should qualify—this summer, for example, much of Long Island City in New York was named an opportunity zone. Now that Amazon has announced it’s moving one of its two HQ2 branches there, the retail behemoth could nab a $225 million tax break simply because the site happens to fall in one such zone—this, on top of the $1.7 billion New York has already offered Amazon. Investors who purchase apartment buildings for the influx of tech employees will also see tax breaks. So will anyone building office parks, or grocery stores. That money may well be better spent elsewhere, but during the debate over the tax bill, such questions received very little attention. Neither, really, did the zones themselves. Since its passage, though, President Donald Trump has enthusiastically promoted the plan, issuing press releases boasting that “new investment will flow into blighted developments, stalled infrastructure projects, and other desperately needed economic enhancements” and create fiscal improvements that will “help turn dreams to reality.”
The thinking behind the zones reflects Republican faith in privatization as a cure-all. If Trump has departed from conservative orthodoxy on trade and entitlements, he is squarely with the party when it comes to this issue. On the campaign trail, he promised to spend $1.5 trillion on the country’s infrastructure, but when the details of his plan were released a month before the election, it was merely a proposal to privatize roads, bridges, and waterways. Trump has similar plans for the nation’s air traffic control system, the Department of Veterans Affairs, and even the Postal Service. Each one offers huge upsides for a select group of financiers and business owners, but does little to nothing for the American people.

None of these promises has fully gone into law—apart from opportunity zones, the first of which the Treasury implemented this spring. Since then, a number of funds have cropped up to cash in on the boom. Anthony Scaramucci, who served as Trump’s director of communications for all of ten days, plans to launch a $3 billion “opportunity fund” at his hedge fund Skybridge Capital. Cadre, the real estate crowdfunding platform partially owned by Jared Kushner and his brother, Joshua, is also focused on exploiting the zones. As Charles Clinton, the CEO of EquityMultiple, a real estate investment startup, said in September, they are “one of the biggest real estate investment opportunities in decades.” 

Similar efforts have been undertaken in the past. In the 1980s, Margaret Thatcher created eleven “enterprise zones” in the United Kingdom, which produced fewer jobs than promised. Each cost the government between $35,000 and $45,000, indexed for inflation. The areas are still home to some of the poorest people in the country. During the 1990s, Bill Clinton set up 104 “empowerment zones” in six urban areas around the United States, including Atlanta, Baltimore, and New York, as well as three rural areas, in Kentucky, Mississippi, and Texas. Clinton’s plan (unlike Trump’s) tried to encourage not just capital investment, but also hiring and upfront investments in equipment. But research on empowerment zones has found that they had little to no effect on economic growth or poverty. They were expensive, too, costing $850 per resident.

One of the reasons why these zones often fail to deliver an economic boost is that governors and investors tend to pick areas that are already on an upswing. (Long Island City is a good example; it had been gentrifying for years before Andrew Cuomo nominated it as an opportunity zone.) In May, the Urban Institute found that 28 percent of the census tracts governors had designated as opportunity zones already benefit from some of the highest levels of private investment. They’d be attractive areas in which to invest with or without a big tax giveaway. In other words, opportunity zones are a massive handout for investors, and there is scant evidence that they bring investment to the places that need it most.

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Of course, Trump himself has experience bilking tax breaks and subsidies to make massive profits. He accumulated at least $885 million in tax breaks, grants, and other subsidies from New York to build his empire of hotels and high rises, according to The New York Times, including the longest tax abatement the city ever handed out, 40 years, to rehabilitate the Grand Hyatt Hotel in the ’70s. He even pocketed $150,000 from a fund meant to help small businesses damaged in the September 11 attacks. (He owned a Wall Street skyscraper not far from Ground Zero, but it wasn’t damaged when the planes hit the Twin Towers.) Trump may be the country’s preeminent expert in spotting a government handout to developers and squeezing it for all it’s worth. It’s no surprise that he’d be as excited to stamp his name on these opportunity zones as he would one of his hotels.

Trump may be the country’s preeminent expert in spotting a government handout and squeezing it for all it’s worth.

But these misguided policies have lasting consequences. For one, there is no way to ensure that investors who were already planning to put money into housing or infrastructure don’t just decide to do it in opportunity zones to reap the tax benefits. Second, the zones typically allow investors to retain complete control over their projects. After state governments designate the areas, local communities get no say over what is invested in and by whom. Don’t like the new toll road in your town financed by a hedge fund? You may have no way to vote it down or give input into how it’s implemented.

There’s a better way. Lyndon Johnson’s Great Society directly financed construction across the country. Dwight Eisenhower built the country’s network of highways. The bipartisan Community Development Block Grant program, enacted in 1974 by Republican President Gerald Ford, gives local communities money for projects they decide are most important for their economies—a program that Trump wants to eliminate.

The Joint Committee on Taxation has estimated that the tax incentives in opportunity zones will cost $1.5 billion a year for the first eight years. Just think what that money could do if directed to build new water lines in Flint, affordable housing in Fresno, decent school buildings in Baltimore, or better roads in Akron. Bankers on Wall Street might not get a payday. But do we care more about their dreams, or those of poor residents in neglected communities? 

TRUMPERNOMICS FOR THE RICH…. and his parasitic family!
Report: Trump Says He Doesn't Care About the National Debt Because the Crisis Will Hit After He's Gone


 "Trump's alleged comment is maddening and disheartening,
but at least he's being straightforward about his indefensible
and self-serving neglect.  I'll leave you with 
this reminder of the scope of the problem, not that anyone in power is going to do a damn thing about it."

TRUMPERNOMICS:
THE SUPER RICH APPLAUD TWITTER’S TRUMP’S TAX CUTS FOR THE SUPER RICH!

"The tax overhaul would mean an unprecedented windfall for the super-rich, on top

of the fact that virtually all income gains during the period of the supposed

recovery from the financial crash of 2008 have gone to the top 1 percent income

bracket."

  
“The undermining of the I.R.S.’s enforcement capability coincides nicely with the Republican playbook: Enrich wealthy individuals and corporations with tax giveaways that balloon the deficit, justifying spending cuts for health care, education and infrastructure, then amplify the process by not holding high-end taxpayers accountable for the amounts they owe.”

A Gutted I.R.S. Makes the Rich Richer

With enforcement enfeebled, as much as 20 percent of potential tax revenues go uncollected.
By The Editorial Board

The editorial board represents the opinions of the board, its editor and the publisher. It is separate from the newsroom and the Op-Ed section.
Let’s take a moment to pity the Internal Revenue Service. Yes, to many Americans, it’s a money-grabbing ogre siphoning hard-earned cash to the faceless federal bureaucracy.
But the nation’s tax collector today is an enfeebled enforcer. Its budget has been bled dry by a Republican Congress in service to wealthy donors and businesses aggressively pursuing tax avoidance, leaving uncollected 18 percent to 20 percent of potential tax revenues annually. That’s the conclusion in articles by the journalism site ProPublica, co-published by The Atlantic and The Times.
Loopholes are beyond the means of most Americans who earn salaries or are paid hourly wages, and are exploited by those who derive significant income from investments or business revenue. Although we’d all like to pay less, relative to most developed nations our tax burden is a pretty good deal.
It’s an even better deal for the richest Americans, who have benefited the most from President Trump’s tax cuts. The rich are different: They’re more likely to cheat, according to one study of I.R.S. data. And the I.R.S. has about as many auditors now as it did 60 years ago, when there were half as many Americans. The undermining of the I.R.S.’s enforcement capability coincides nicely with the Republican playbook: Enrich wealthy individuals and corporations with tax giveaways that balloon the deficit, justifying spending cuts for health care, education and infrastructure, then amplify the process by not holding high-end taxpayers accountable for the amounts they owe.
Dodging taxes is as old as taxes themselves. Just ask Mr. Trump, who has employed systematic dodging for decades, according to a Times investigation.
We got a good look at one of the bigger problems, the proclivity of the wealthy to hide cash from the I.R.S., in 2008, when the Justice Department was able to pierce the Swiss bank secrecy veil during an investigation of UBS. The department uncovered thousands of rich Americans who were hiding about $18 billion in offshore accounts arranged by that Swiss bank. Many were compelled to fess up and pay up. But eight years later, the Panama Papers, millions of files hacked from a Panamanian law firm that specialized in caching money for the rich and powerful, disclosed that there were still plenty of rich people willing to play hide-and-seek with the I.R.S.
The odds are in their favor, and growing. ProPublica reported that I.R.S. audits dropped 42 percent from 2010 to 2017, a period in which the I.R.S. budget was lopped by $2.5 billion, adjusted for inflation. New investigations of people who don’t file dropped to 362,000 last year, from 2.4 million in 2011. That costs the Treasury $3 billion annually in uncollected taxes. More than $8 billion in back taxes did not get collected in 2017 because the agency couldn’t get to them before the 10-year statute of limitations ran out, another worsening problem. Tax delinquents can simply wait the agency out. ProPublica estimated the total shortfall of uncollected funds since 2011 at $95 billion.
These uncollected billions could pay for any number of things: better care of wounded veterans, infrastructure improvements such as a desperately needed new tunnel between New York and New Jersey. You could even build an expensive wall.
One area where the I.R.S. still bares its teeth is in auditing people in the lowest tax bracket. If you are claiming the earned-income tax credit, which provides cash for people who typically earn less than $20,000 annually, you are as likely to be audited as someone earning between $500,000 and $1 million. ProPublica reported that 36 percent of all I.R.S. audits focused on this group. It may not be a crime to be poor in the G.O.P.’s America, but you can expect to be treated like a criminal for accepting the government’s cash to make ends meet. At best, that’s an inefficient use of I.R.S. agents: Compliance should apply to all, but the I.R.S. should do most of its fishing where the big fish are.
The Trump/G.O.P. tax policy is now operating at peak failure. The tax cuts have failed to increase gross domestic product beyond the “sugar high” stimulus they gave to an economy already heading toward record low unemployment. The economy seems to be slowing, making a mockery of the promise of strong growth that was used to peddle the tax cuts.
The stock market is shuddering at the idea of a slowdown, which corporations contributed to by using their tax windfall to buy back more than $1 trillion of their own stock. They have, to this point, immolated capital instead of using it for additional hiring, increased wages or further business investments.
A CNBC poll found that millionaires are still sanguine about the economy. They can well afford to be. If their stocks lose value, they can take a write-off. If stocks rise, their maximum long-term capital gains tax is only 20 percent. Most American households don’t own stocks — or no longer own them, having been forced to liquidate stock holdings in the Great Recession, which was precipitated by a collapse in the housing market. Thus the wealth gap grows, reaching levels not seen since the Roaring Twenties.
To pay for the millionaire tax cuts, sacrifices had to be made. So Congress limited deductions for state and local taxes to $10,000 annually. While that generally applies to well-to-do people who can itemize their tax returns, it was also a clear shot against blue states such as California and New York that have relatively high state and local taxes. But reducing these deductions, along with higher interest rates, punished the housing market, which is stagnant nationally and in a free fall in the Northeast.
Our ability to keep the $1 trillion deficit created by the Trump tax cuts from deepening depends in part on collecting taxes to which the government is legally entitled.
Think of it this way: To protect our nation, we have the most powerful army in the world. To protect our tax base, we have an army on the order of Liechtenstein’s.

The lack of deterrence will only encourage more cheating. The I.R.S. needs to be capable of doing the job for which it was created — from answering taxpayers’ questions to chasing down the richest cheats, even if they occupy the Oval Office


SWAMP KEEPER TRUMP’S BIGGEST DEAL EVER:
Saving the 9-11 invading Saudis’ arses!
https://mexicanoccupation.blogspot.com/2018/11/mike-lee-swamp-keeper-trump-and-his.html
"I doubt that Trump understands -- or cares about -- what message he's sending. Wealthy Saudis, including members of the extended royal family, have been his patrons for years, buying his distressed properties when he needed money.
“The Wahhabis finance thousands of madrassahs throughout the world where young boys are brainwashed into becoming fanatical foot-soldiers for the petrodollar-flush Saudis and other emirs of the Persian Gulf.” AMIL IMANI

 I recommend that Ignatius read Raymond Ibrahim's outstanding book Sword and Scimitar, which contains accounts of dynastic succession in the Muslim monarchies of the Middle East, where standard operating procedure for a new monarch on the death of his father was to strangle all his brothers.  Yes, it's awful.  But it has been happening for a very long time.  And it's not going to change quickly, no matter how outraged we pretend to be. MONICA SHOWALTER

SWAMP KEEPER TRUMP’S SECRET SAUDI MISSION:
“You saved my a rse again and again… So, I’ll save yours like Bush and Obama did!
WHO IS FINANCING ALL THE TRUMP AND SON-IN-LAW’S REFINANCING SCAMS???
FOLLOW THE MONEY!
"I doubt that Trump understands -- or cares about -- what message he's sending. Wealthy Saudis, including members of the extended royal family, have been his patrons for years, buying his distressed properties when he needed money. In the early 1990s, a Saudi prince purchased Trump's flashy yacht so that the then-struggling businessman could come up with cash to stave off personal bankruptcy, and later, the prince bought a share of the Plaza Hotel, one of Trump's many business deals gone bad. Trump also sold an entire floor of his landmark Trump Tower condominium to the Saudi government in 2001."
“The Wahhabis finance thousands of madrassahs throughout the world where young boys are brainwashed into becoming fanatical foot-soldiers for the petrodollar-flush Saudis and other emirs of the Persian Gulf.” AMIL IMANI
  I recommend that Ignatius read Raymond Ibrahim's outstanding book Sword and Scimitar, which contains accounts of dynastic succession in the Muslim monarchies of the Middle East, where standard operating procedure for a new monarch on the death of his father was to strangle all his brothers.  Yes, it's awful.  But it has been happening for a very long time.  And it's not going to change quickly, no matter how outraged we pretend to be. MONICA SHOWALTER

Swamp Keeper Trump prepares for the inevitable move to impeach him and ask for asylum in Scotland.

Fox News host Tucker Carlson said in an interview Thursday that President Donald Trump has succeeded as a conversation starter but has failed to keep his most important campaign promises.

“His chief promises were that he would build the wall, de-fund Planned Parenthood, and repeal Obamacare, and he hasn’t done any of those things,” Carlson told Urs Gehriger of the Swiss weekly Die Weltwoche.

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