Well, the continuing bad economic news has created an unusual turn of events in Michigan this year. According to the Realtors statistics, Michigan has experienced a 10% deflation of house prices (new and used). Surprisingly, this flattening of property values comes despite a record year for sales!
Folks, hold onto your hats- this could be a ride like we’ve never seen!
blue
Replies
Lets hope for the best. But sooner then later somethings got to happen.
http://moneycentral.msn.com/content/P131154.asp
Sorry about all the ads.
I'd like to see some more of those good ol days like we had under Jimmy Carter.
Double digit interest, banks fighting to give you more on your jumbo CD's.
All kinds of owner financing because nobody could buy anything on bank borrowed money.
Folks fighting over income producing property- they'd buy it today at almost any price because tomorrow the rates were going UP.
All above is true, would I really like to see it again - No.
Is it possible we may see some of it - Yes.
"I'd like to see some more of those good ol days like we had under Jimmy Carter."Don't worry, you will get your wish soon enough. Inflation in the real economy (as opposed to the government's fudged computer models) is running at scary rates, and two of the Federal Reserve governors have openly stated that in their opinion, it is out of control. The way the Fed "fixes" a runaway inflation problem is with double-digit interest rates. Paul Volker showed us how well it works when JEC was President.The fate of our economy is tied to consumer spending, and that spending is fueled by debt. Last year people pulled over $600 billion out of mortgage refis, and much of that went directly to spending on gadgets and playtoys. If interest rates kick back up to the levels needed to cool inflation, that refi piggy bank is going to go away. Tilt!
If interest rates kick back up to the levels needed to cool inflation, that refi piggy bank is going to go away. Tilt!
I agree TJK. In fact rates have been increasing. I just read that some lenders are now starting to tighten up lending practices. They are raising the standard for those zero interest deals and trying to slow down their use.
Another tidbit. Credit card delinquency just broke the record and hit an all time high (last month).
Here in Michigan, Delphi, the world's largest parts supplier is in the final stages of deciding to file bankruptcy. There are two more weeks till the new laws take effect. If Delphi goes under, they will dirupt a huge number of shops which supply them. GM and Ford are reeling too.
We need some good news in Michigan.
blue
Mortgage lenders might be tightening up, but the feds are doing some strange and screwey things in debt land. I received a "pre-approved", SBA-guaranteed loan application from Citi Group. No collateral, no financial statements, no paperwork, just sign on the line that's dotted and they will cut a check! This is totally different from my experience with the SBA in 1992 when it took six full months to apply for the loan and get funds. It's as if the government is desperate to pump money into the "business" economy. What's next, are they just going to mail out checks?
A recent article in the San Francisco Chronicle said that a study by Columbia University and the University of Pennsylvania's Wharton School indicated that the prices in San Francisco and certain other areas were not inflated and would likely not see a bubble burst. Too many people wanting to own too few houses in desirable locations. The article did say that some areas could see up to a 10% reduction in prices when interest rates invariable rise over the next couple of years. The article is at:
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/09/20/BUGA7EQCSS1.DTL
A sidebar not included in the on-line article:
Areas with few signs of a housing price bubble Area Median price* Change**
Los Angeles $446,400 25.8%
New York 436,600 12.7
San Francisco 641,700 15.0
Areas with potential signs of a housing price bubble Area Median price Change
Miami $286,400 23.6%
Portland, Ore. 206,500 9.3
San Diego 551,600 29.8
*Data is for existing, single-family homes in 2004.
**Since 2003. Source: Columbia/Wharton study, National Association of Realtors, Chronicle research
I see the same thing. Some local banks are slightly more careful but the big ones are trying to give money away still. I get phojne calls practically begging me to take it, which I don't.
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jim... you sold your hose a couple years ago , right ?.. do you feel now that you got out at the top ?
here's an interesting conclusion from Gary North's Reality Check
<<<<CONCLUSION If I am correct about the cause of comparatively lowrents -- falling demand rather than rising supply -- thenthe coming increase in ARM rates will make renters out ofmillions of recent first-time home buyers. A recessionwill add to the supply of these people: lost jobs, lostincome. They will be forced to walk away from their homes. They will lose their credit rating when they walk. Itwill stay lost. The new bankruptcy law, coupled withmortgage contracts that made them responsible for the debt,if the abandoned house is sold for less than the mortgage,will keep them renters for the rest of their lives. That is when you should start buying rental homes. Imputed rents will become more accurate representations ofthe underlying economic reality. That's when it will payto be an owner of rental property, purchased at a discountbecause the recent owners walked away. It is time for you to become a smart buyer. Thisbegins with shopping. Get a sense for home prices in yourarea. You will then be able to spot bargains when theystart to appear. >>>>>
winners & losers ... young dudes ain't gonna believe it until they see itMike Smith Rhode Island : Design / Build / Repair / Restore
Mike, I still own two houses in Michigan, both for sale. I am getting some decent cash out of the Lake Huron property, when I rent it. We do weekly rents, but we're more interested in moving it, rather than booking the season. I'm currently in a condo in Grand Blanc and I'll probably end up lease optioning it when I'm ready to go. If I do that, I'll probably use it as collateral on a business loan when we hit San Antonio.
I've done alright in Michigan, but I know that I should have done better, and I will do better. Michigan will be ripe for picking up bargains, but I'd still prefer to be living in an area that is gaining residents, rather than losing them.
I know I'll still be here for at least 6 more months because I just got word that the grandkids are moving back for 6 months locally because my Son In Law took a contract here in Michigan (he does auto design on Catia).
blue
seems like you'll make yup your mind just as soon as your grandkid's parents make up theirs...
i have so many balls in the air right now i can't move.. just have to keep juggling until i can figure out how to reduce the load....
don't get me wrong.. it ain't bad.... but i sure can't make any plans until we move on to the next big thingMike Smith Rhode Island : Design / Build / Repair / Restore
Mike, I know the feeling about ball juggling. Were in the final stages of adding a few more balls to juggle. It's a necessary evil. As long as I'm stuck in this forsaken place, I have to keep generating income.
The one thing that hasn't dropped in price in Michigan is raw land. Everything we look at is overpriced. Every farmer thinks his raw acreage should be priced as if it has streets, sewers and utilities in it. I actually thought it would be easy to find development property, but we had a rude awakening!
I vaguely remember you mentioning that you were headed somewhere warm. Was it in the Carolinas?
blue
Blue, have you ever seen this site, http://www.vrbo.com ? might help you on your weekly rental. We use it all the time & have had very good results.
Thanks G8. That site looks like an excellent site. I was most impressed when I checked a site available in Oscoda and noted that it had been visited 1400 times since feb 2004. That tells me that they get enough hits to make it worthwhile. I'll check it out and see if it makes financial sense.
My dilemma is that I don't want it booked solid for the summer because I'm selling it but perhaps I'm thinking wrong.
blue
Blue,
If your rental is in a good location, you might just have a CASH COW! I Know of many who also use VRBO, that rent out their Ski Condos, that our making major cash flow. They all add on a $75-&100 cleaning fee that is in the fine print.
It used to be $150 to list on the site. Then you just need a way to collect payment for credit cards. Most who rent get 20% at time of booking & full payement 30 days before the stay!
Good Luck!
You do realize that the reason for CC delinquency this month is the hurricanes?And that the increasing rates on bankruptcy is due to the deaadline beaters? both short term anomalies that may be good for the economy in the long term.
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I'd like to see some more of those good ol days like we had under Jimmy Carter.
I'm wondering why you would start with bashing Carter. He seemed to be in the Oval Office at the time when the actions of predecessors came to fruition. LBJ, with his "guns and butter" deficit spending got that whole cycle started and no one after him dared fully tackle it for a long time.
And what about the current Texas offering. He's never seen a spending bill that he doesn't like. The party's long held mantle of financial constraint has been discarded. Pure Texas value in Bush when it comes to the deficit - the bigger the better.
intrepidcat,
Bizarre as it sounds I'm with you..I bought my first home in those times and to say the least it was wonderful.. Inflation made my house payments easier very year.. The same time my home was worth more each year..
The price of homes here in Minnesota was artificailly low due to our usery law.. No bank could give a mortage higher than 8% and inflation was well into double didgets.. thus mortages weren't available! If you were a Vet (as I was) you could get a FEDERAL VA loan at 8% as I did and buy homes that couldn't sell due to the lack of mortages..
I kinda figured it was payment for my service in Vietnam.!!!!
Now those on fixed incomes were really hurt during that period Grandma got $89 a month from social security and her cost of extremely modest living was much higher.. Only due to help from me and the rest of the family was she able to get by..
Those were wild times - the '80's.
Had some bank stock that did really well and spun off some good investment companies from their REO.
Just liquidated one investment company from the original bank spin off and was amazed the stuff that everyone thought was worthless had appreciated so much.
"To preserve liberty, it is essential that the whole body of people always possess arms..."
Richard Henry Lee, 1788First United States Senate
Interested to see what you'd do personally, ride it out or unload?
how far is down ?.. you don't ride it out.. you ride it down..
if you can turn a spec property into a rental property, you can ride it thru... might take 10 years to move thru the housing inventoryMike Smith Rhode Island : Design / Build / Repair / Restore
Tom, I've already started my plans. At this time, everything I own in Michigan is up for grabs.
In the future, I will not be putting my name on any note. I will be buying using OPM.
Even when things slide downward, there is still a lot of money out there waiting to be invested. Finding the good investments is part of the solution. There will be many.
blue
Just posted this over in the bar. Looks bad.
http://seattlepi.nwsource.com/opinion/242931_trahant02.html
Prices dropped in Manhattan, too, according to the Wall Street Journal.
Prices Fall in Manhattan
As Housing Market Cools
By DANIELLE REED
DOW JONES NEWSWIRES
October 4, 2005 12:44 p.m.
NEW YORK -- Housing market watchers can exhale. Prices in some of the nation's hottest markets are at least leveling off, and in some cases even coming down.
In New York, a report prepared by appraisal company Miller Samuel Inc. on behalf of real estate firm Prudential Douglas Elliman released Tuesday showed that average Manhattan apartment prices fell nearly 13% in the third quarter 2005 to $1.15 million from $1.32 million in the second quarter.
I don't know what the whole article said because you DID NOT POST A LINK.However looking at several other articles that quote the same company indicated that housing values did not decrease.http://www.nydailynews.com/business/story/352124p-300296c.html""The boom is continuing - just not at the torrid pace of the first half of 2005," Miller told the Daily News. "This is a return to more normal behavior for a healthy real estate market."One indication the market's still strong was the average price per square foot - which set a new high and edged closer to $1,000 per square foot. It has risen quarter after quarter with one exception for the past three and a half years, Miller said.""As a result, entry-level Manhattan apartments hit all-time price records. For instance, condo studios rose 18% from the second quarter, to an average $531,739 - and 34% from their year-ago price.One-bedroom condos gained 10% in price in a single quarter, to an average $794,039. That was 21% more than their average a year ago.At the other end of the scale, the luxury sector was slow - more because of a short supply of really expensive apartments for sale than a lack of demand for them.""Just four apartments priced at $10 million or higher changed hands during the third quarter. There was no way the luxury sector could match its second-quarter performance - which was exceptional thanks to 17 sales of $10 million or higher, and one-of-a-kind trophy transactions like media mogul Rupert Murdoch's $44 million penthouse purchase at 834 Fifth Ave., Miller said.Looking ahead, Prudential Douglas Elliman CEO Dottie Herman predicts solid price increases for the year as a whole - but expects the pace to slow from last year."http://news.bbc.co.uk/2/hi/business/4310234.stm"That is down almost 13% from the previous three-month period and brings to an end a period of growth that had seen prices jump in the first six months of this year."My sense is the buyers are saying: 'No more. We want a price correction,'" said Jacky Teplitzky, executive vice president of Prudential Douglas Elliman Real Estate.Ms Teplitzky estimates that the market is overvalued by about 10% at present levels.'Spotty market?'Even so, it may be too early to talk of a correction despite the signs that consumers may have lost their appetite for increasingly expensive apartments.On an annual basis, the average flat price was 10% higher than in the same period a year earlier.Apartment block on 5th Avenue, New York
They may not look much, but flats in Manhattan are hard to come by"We're not seeing prices fall," said Jonathan Miller, author of the latest report."What we're seeing is more entry-level sales and a more moderate appreciation of property than we've seen in previous quarters." "
Well, no, I didn't post a link because it's a paid subscription site.
Edit: It's in the archives at http://www.wsj.comI did post attribution:"Prices Fall in Manhattan
As Housing Market Cools
By DANIELLE REED
DOW JONES NEWSWIRES
October 4, 2005 12:44 p.m."I will agree that there seems to be some disagreement between the news services.
Edited 10/5/2005 7:17 pm ET by Ken
Michigan update: Delphi had declared bankruptcy. Gm is the parent company of Delphi and is responsible for the wages till 2007. Gm's odds of going into bankruptcy jumped from 10% to 30% because of Delphi's action.
Car sales are plummeting since most incentives were dropped.
Thing look bleak.
blue
Still working on that development down here in Comal county?
Things are booming.
"To preserve liberty, it is essential that the whole body of people always possess arms..."
Richard Henry Lee, 1788First United States Senate
Intrepid, we are still interested in the San Antonio area. Right now, we are busy chasing some local stuff, but we haven't decided against Texas. We also have some due dilligence to do about legal matters. I'm in a holding pattern waiting for Gandalf to deal with that.
blue
Well, good luck on both fronts!
CNN was reporting this morning that GM was on the verge of bankruptcy.
"To preserve liberty, it is essential that the whole body of people always possess arms..."
Richard Henry Lee, 1788First United States Senate
michigan ....who wants to live there
i grew up in michigan, in saranac..small town, where we lost or
grocery store and drug store and pizza place.and and and..to super box wal-mart k-mart CORPerations control..everybody is leaving.. all the kids are moving west.. colorado oregon cali
most of the people ive meet in all those places are from michigan and have know plans of returning..the state has become a republican/christian strong hold.
the U.P. is sill conservitive
lower is all about use it up, sell out to korea,china,mexico
plant hemp...get away from fuel, make your motor cars good
high mpg local parts..support from the gov..increase land wealthy rich players taxes
support the local farmers buy local
what eles do i have to say
STOP BEING "REDNECKS" its not as cool as your country music station plays it out to be.boycot fast food/by local produce
ride you bike
Edited 10/16/2005 2:33 am ET by driftwood
GM has billions in CASH laying around. Billionare Kirk Kirkorian has just upped his stockholding stake in GM. He didn't get to keep being a billionare by being stupid. Maybe he knows somthing we mere mortals don't.
Delphi is asking for 63% concessions from workers, but when filing for bankruptcy, asked for millions in compensation to retain the top executves who got them into this mess!
Edited 10/16/2005 10:15 pm ET by Kowboy
What's the bad economic news? Corp profits are up. Employment is up. Wages are rising. Nationwide, home sales and prices are still rising in spite of increasing costs and interest rates.
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I was just about to cock back the hammer....thanks for the "fair and balanced news..."
.....2 kids were brought to a pen filled with horse manure,one looked and quickly started wining relentlessly about the smell and the thought of having to clean out all the crap, the other dove in and enthusiastically started looking for the pony....
when life deals you lemons ....make lemonade..
What's the bad economic news? Corp profits are up. Employment is up. Wages are rising. Nationwide, home sales and prices are still rising in spite of increasing costs and interest rates.
Piffin, I wish that were true here. Corp profits are down. We have the highest unemployment rate in the nation. We have the lowest rate of population growth in the nation (we have net losses in population). Home price dropped 10% despite a record year for sales and historically low interest rates.
How does that last thing happen?
blue
TOH had an interesting article based on the assumption of baby boomers and the surge of buying houses. Baby boomers were able to buy and move up. But as the boomers moved to the older demographic 50-60, Boomers had created their own problem by the surge of houses. Or otherwise- there isn't enough people in the lower age demographics 40-50 or 30-40 to buy these houses. TOH postulated that the new stradegy would to buy and keep.
Our economy is also determined by boomers. I've heard it said you can predict the economy by the numbers of 43 yr olds.
The good news in all of this is Ted Nuggent is talking about running for Governor. Looking though the treads nobody has mentioned how the present Governor Grenholm has totally messed up the state. An example of this is drive on I-696, I-94, or I-275. What a mess
If your time in Michigan goes back to 1970's- do you remember how bad the auto industry was???I joined the service because I didn't think I could find a good job
Born in Royal OaK MI
Edited 10/22/2005 9:29 pm ET by curley
Although I always vote Republican I don't think Granholm has done too bad a job with the hand she's been dealt. Ironically the mess around 275/94/696 is mostly due to the growth taking place (hmmm, new folks moving to MI; novel concept, huh?) in areas like Brighton, Canton, Royal Oak, Rochester Hills, Shelby Township, etc. The deluge of traffic is hardly her fault. It's a national symptom of our American culture that values large houses on large pieces of land and all of us (me too) feeling that we shouldn't be sharing rides with our neighbors or friends. In short, we sprawl way too much. But before you start complaining about Detroit traffic be sure to check out Atlanta, Boston, Chicago and L.A.
- Rob
Curley, my stint in Michigan goes back to 1953 when I was born. I've lived on the auto workers roller coaster my entire life. I remember in first grade when I had to buy a tablet from the teacher for 10 cents, and my mom almost cried when I told her I owed the teacher!
The late 70's was rough around here. With 10% unemployment, everyone was a contractor! Most of the carpenters in the state left the trades or headed to Texas.
I don't think I would be a big fan of Nugent but I guess I'd have to wait and see his platform. His radio stint was horrible.
I'm not going to blame Granholm for the roads. The state has allowed the highest weights, by far, in the nation and now the crumbled concrete is showing what happens when you overload them. We face double edged sword however if we lower the weight limits to something sensible. The volume of trucks on the road would triple! I'm so sick of construction zones that I pray for frost. Michigan only has two seasons, contrary to the reports: we have winter and then we have orange barrel season. I hate orange barrels!
blue
Re: "I'm not going to blame Granholm for the roads. The state has allowed the highest weights, by far, in the nation and now the crumbled concrete is showing what happens when you overload them."Once got to talk to a German civil engineer. I asked him about the difference between US and German roads. He said he didn't understand the US system. Here we were, at the time at least, the richest nation and yet we built cheap roads designed to crumble in a decade or two.Germany, a much smaller and less rich nation, built their roads to last for a hundred years, or more. They excavate a lot deeper and install a lot more and sturdier foundation materials to a higher standard. It costs several times as much per mile to do it their way but once done they last longer so long term the roads cost much less. To tie this in with the thread it can be noted that the entire US economic system is designed around short term returns, exploitative and unsustainable use of resources and a need to constantly expand to maintain profits. Which pretty much dooms the economy to a continuous series of boom/bust cycles which are wasteful of resources, natural and human.
Are you suggesting that Germany or any other country is not subject to economic cycles?
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Re: "Are you suggesting that Germany or any other country is not subject to economic cycles?"No. But I am suggesting that they tend, historically, to take a longer term view of investments and economics. That this in turn tends to dampen both the economic fluctuations and dampen the consequences, both positive and negative, of these fluctuations.The US, and unfortunately more of the world as US practices are imposed on them or misguidedly adopted, tends to be lead around by its nose and the quarterly report. Blindly plunging forward without much thought to the long-term consequences. This is across the board. We go into Iraq without any plan to maintain the peace or build a nation simply because right-wing dogma maintains that we 'don't do nation building'. It was sold on a lie and bolstered by a well sold fantasy that it would be both quick and easy. Shades of 'home before the leaves fall' heard in WWI. We, the American tax payer are coming up on the half Trillion dollar and 2000 lives mark.Builders assemble and promote untenably large and inefficient structures as far into the countryside as possible. Ignoring the simple historic and logical reasons why remote buildings tended to be rare. No concern to the builder who makes the money selling a fantasy. Of course the property taxes paid by the residents don't cover the costs of the roads into the woods, the protection from wildfires and avalanche and wildlife. Nor do they pay for the greatly increased area needed to be covered by police, ranger and ambulance. No the general taxpaying public pick this up. Welfare for the rich. The same can be said of most breakfront developments. They are made possible because the Federal government will pay to rebuild after the hurricane comes. And should the sand shift, as they naturally have done for millennia, the taxpayers will pay through the nose to 'renourish the beach'. A process that will have to be done with ever increasing frequency because the process leads to ever steeper offshore inclines. Reagan deregulates the S&Ls and the taxpayers end up with bill for 200 Billion dollars to clean it up. Some estimates claim it is closer to 400 Billion but we likely will never know as the bailout is so obscurely structured none can actually calculate the cost. Fortunes were made and not a few disappeared off shore. All financed by the taxpayer and justified under the dogma that 'the market is self correcting' and deregulation will save money'. Sure. Note that he main criminals, convicted so the term is apt, are now popular consultants for the financial community and people who listen to them are tied into Enron, Global crossing and many other scams. In each case the taxpayers finance the picking up of the pieces and the whitewashing of the problem and trend.This pattern is repeated over and over because Americans are genetically incapable of looking, thinking or planning long term. A national trait that is made possible because of our fortunate geographical position, free access to resources and demographics. None of these benefits remains untarnished. The fat is gone and mistakes are now being taken from bone. Germany, Japan, and most other nations have long ago had to deal with these realities of limited power and resources. They do this largely by looking farther into the future and making smart choices. They don't always get it completely right but, for the most part, they do well by their citizens. Maintaining an even playing field and smoothing the hard edges of both success and failure for the greatest number of people. Considering the resources they have to work with they have done very well. We have many times the wealth, resources and size and yet we can't even manage to get the rates of infant mortality rate or poverty below third world levels. Largely, IMO, because we keep looking at the height of the peaks, short term gains we celebrate, while ignoring the area under the curves, the long term. This plays out in our international, economic, military, trade, education, medical and environmental policies and controls. Or lack of policies and controls.
I'll take the opposing side here.The US which you claim is unable to plan ahead is responsible for rebuilding the economies of Japan, France, and Germany because it is in our best interests - long term.The way those countries which you claim have long had more intelligent long term methods of dealing with shortages of resources at home have a long hisory of dealing with those shortages by pillaging other countries, and starting wars amoungst thjemselves to satisfy their needs or dominating their colonies and keeping them in subjection. if you can justifuy calling that intelligent long range planning, go right ahead.And studying charts of any European economic cycles shows instantly that they have had greater swings than we and over approximately the same time periods, exposing the falacy of all your claims .In short, your hatred of all things American has blinded you to the facts of natural economic cycles.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
gee , paul.....
<<<
The way those countries which you claim have long had more intelligent long term methods of dealing with shortages of resources at home have a long hisory of dealing with those shortages by pillaging other countries, and starting wars amoungst thjemselves to satisfy their needs or dominating their colonies and keeping them in subjection. if you can justifuy calling that intelligent long range planning, go right ahead.>>>>
once again we agree... ummm..BTW <<<<pillaging other countries, and starting wars amoungst thjemselves to satisfy their needs or dominating their colonies and keeping them in subjection.>>>
hah, hah,hah..
if we could only see orsels as others see us Mike Smith Rhode Island : Design / Build / Repair / Restore
I was wondering how long that observation would take.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Re: ..."rebuilding the economies of Japan, France, and Germany because it is in our best interests - long term."This is one of the last gasps of the old guard who could see beyond their noses. The progress of the short term imperative has its seeds in simple greed, a tendency as old as man, but it became ensconced in the American business system when the modern concept of incorporation as a method of avoiding responsibility and liability while concentrating profits. This has its roots in rush to build the railroads across the continent after the civil war.Until after WW2 the progress of this imperative was, for the most part, not the central feature of US business. US business practices were the envy of the world for accountability, openness and honesty. This confidence has steadily eroded since that time.The sort sighted crowd was well entrenched by the time reconstruction of Japan became an issue and the rebuilding was resisted. The kicker that pushed us toward doing it wasn't long term interest but the commonality of the US industrialists with the with the German and Japanese industrialists. The major corporations within both Germany and Japan, the same ones that built their war machines, survived the war. The US industrialists, in some way a return for their support of rebuilding the fortunes of their fellow industrialists in Japan and Germany, learned how to play the military/industrial/political game. A game with its origins in Italy, Mussolini united the interests of industry and government, but Germany was quick to adopt the idea. Japan did much the same but they substituted religion for government as they had very little independent government. Only well after WW2, some would say after Korea, did the corporations really learn to exploit the trick. Eisenhower, in the original version of the speech, had termed it 'the military/industrial/congressional complex but the last term was dropped in the final version.The combination of long term interests and US industrialist's sympathy for fellow businessmen down on their luck swung the balance and we rebuilt them. US business wasn't going to hold anything as trivial as building crematoria to support the holocaust or enabling the axis war machines against the industrialists. This is business. There were profits to be made. Rebuilding was a wise choice but the transfer of the knowledge of how to set up a self-reinforcing military/industrial/political system was an unfortunate event if not consequence. Not to say we could humanly avoid the knowledge getting out so given this inevitability I suppose you can't regret the rebuilding which has had benefits.What you fail to understand is that business cycles go round and round but the duty of the government is to mellow the cycles for the citizens. And it is the experience of the citizens which counts. Not the aggregate economic situation you cite.Re: "In short, your hatred of all things American has blinded you to the facts of natural economic cycles."I guess the fair play, honesty, openness and real accountability, what America was known for before we got short-sighted, was unAmerican. I guess you think the only Americanism left is the slipshod scam-centered practices, renamed 'accepted business practice', we see so often now. And you call me blind?Anyone who disagrees with the party line shows a "hatred of all things American". As if you have some special right to define what is or what is not American. I am an American and anything I do, including pointing out the faults of the present political and economic system as I see it, is American.Typical right-wing rhetoric. We are doing fine and everything is looking up. Nothing to see here. Move on. Not because the evidence really supports the conclusion strongly but if the general public snaps out of it's irrational exuberance long enough to smell the coffee the music stops. So calling me unAmerican is just defending the house of cards. Protecting your own economic interests. So I realize it's not personal.
The same is true for residential construction standards. Houses are built to much higher standards for materials and workmanship. Here in the U.S., we tend toward "affordability" over substance in new construction. Those EIFS-stucco palaces and the McMansions with plastic "slate" roofs will all be in landfills in less than 75 years.
no they won't ..... they're going to provide work for remodelers for the next 100 years...
they said the same thing about the post-WWII housing.... Mike Smith Rhode Island : Design / Build / Repair / Restore
they said the same thing about the post-WWII housing....
And that housing is holding up pretty good around here Mike! Ironically, I was taught the same methods by carpenters who built all that post wwII stuff and we aren't building any better or worse than they did.
Actually, I think we might be building slightly better.
blue
come on Blue, The roads suck cause the job went to the lowest bidder. I explain this to every customer that tells me my price is too high.
What's the bad economic news? Corp profits are up. Employment is up. Wages are rising. Nationwide, home sales and prices are still rising in spite of increasing costs and interest rates.
All true. But I am one who quit the corpoorate life a few years ago -- "locked up" my retirement program, and started my own business.
In the past week and a half, I have learned that my retirement is likely worthless -- due corporate bankruptcy of Delphi (Furtune 50 just a few years ago). Stock in my 401k -- bought for between 13 and 20 dollars, is now cheaper than a postage stamp.
All of a sudden, rising wages, nationwide home sales, and rising prices mean little. In fact, the rising prices part is just plain scary.
Unless you're the lead dog, the view just never changes.
Inflation IS scarier when you retire, but are you telling me that you left your entiure retirement fund in one single stock? If so, That flies in the face of every piece of investment advice you can find anywhere. If that is the case, you can't blame Delphi unless somehow they forced you to leave it with them. Echos of Enron. All the employees wailed when they had a choice of where to invest, but they ignored good investing advice.
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Inflation IS scarier when you retire, but are you telling me that you left your entiure retirement fund in one single stock?
No, "my entire retirement" once had two major parts. A 401K (which had only the required percentage in company stock), and an honest-to-God retirement plan. One of those odd things that companies formerly promised to their employees.
And in keeping with sound advice (from former years), my plans were for the retirement plan be my major sustainence, and the 401k would be rainy day savings, or icing on the cake.
Now, it is safe for me to assume that the retirement plan is close to worthless. And that the portion of the 401k that was in company stock, will never recover.
I'm not trying to get anybody's sympathy here. Just trying to point out that all is not rosy with the American economy, as you suggested.
Unless you're the lead dog, the view just never changes.
Well, i think you(blue and piffin) are both right.
Piffin in #33 said, I've pretty close to doubled my business each year for 3-4 years now and you are suggesting that isn't good enough?
blue in #38 said, We are deadset on avoiding anything in the upper market and concentrating on finding property suitable for houses under 300k, which is not easy to find.
And from previous posts my recollection was that Piffin's market was top end, as in living off investments top top end. Blue is focused on the <300K market. Virtually all the gains in the recent recovery (5years) have been concentrated in the very highest income brackets. This trend has grown since the 1960's but the income gains are much more concentrated into the higher brackets now. So the top end market is booming while the low end is living on the edge. The macro economic data agrees with piffin and blue's local pictures.
Eric
And here's the data from my statement about income distributions from a short summary of census bureau data:
http://www.epinet.org/content.cfm/webfeatures_econindicators_income20050831
View Image
Additionally, there was a post a few months ago about an extensive study on buildingremodeling trends which asserted that construction work (available income) will be concentrated towards the high end markets. Essentially saying the same thing as the graph above....both based on the same census data.
eric
I don't know about Piffin's market. I can only tell you about ours, which is what this thread is about.
The top end market dried up a few years ago. Yes some house in the top end are still selling, but only after the buyers beat up the builders, and only after the house has sat on the market for a year or two, eating up the juice and killing all hopes for a heathly profit.
The mid level market 500k to 750k is bogged down. Sales are brisk, only to be lost because the buyers can't sell their existing 400k house. The used house market in the 400k range is the bottleneck. I'm sure this segment is the major reason that real estate values have dropped 10% in Michigan this year.
The market that is stil selling well is the 250k range. Anything close to $250 is moving fast. Of course the big nationals dominate this market.
Read another tidbit in this weeks real estate news. There are 40,000 house in some stage of foreclosure in the Metro Detroit area. 16,000 are in substantial delinquency.
blue
blueeyedevil;
You need to understand the bigger picture.. For decades large corporations were skimming profits off and failing to manage their companies properly. They covered it up thru accountiing gimmicks and by closing down rather than reinvesting.
A classic example is Clark fork lift company of Battle creek.. They made the unions the punching bag and blamed the unions for all of their short comings.. It is now the standard of business schools as to what not to do.. yet many major companies continue to do just that..
Less than 5% of the personal at GM have any real say in anything the company does.. those 5% will profit at the expense of the rest no matter what happens.. Roger Smith should have taught GM a lesson but instead he became the pattern. They've already lost Oldsmoble and now they threaten to close Pontiac and Buick. ( when is the last time the threat of closing was good for sales?)
Foreclosures in Detriot? Heck, the top %5 of GM and most other companies don't care anything about Michigan, they'd rather be in Palm Beach anyway! I'm amaised that there is a whole lot more foreclosures than just the 40,000.
I'm in NJ and there is an artical in this mornings paper about the market starting to drop. A friend of mine said NY city prices are also droping. Maybe the bubble is going to burst.
Headstong, I'll take on anyone!
Blue,
You and I may have read different news on Delphi, but from what i have been reading it's a labor dispute more than a strictly economical downturn.
The unions won't budge on health care provisions and cost.
Fine, so Delphi go tits up, reorganizes with no union or a new union contract and is back in business.
There is a fine line union wise between organised labor and extortion and they (unions) need to recognise this.
ALL
Why all the gloom and doom? Things are changing, slowing up a bit perhaps, but why predict hitting a wall??
Studies have shown that perceptions had as much or more to do with what happens to the economy than the actual tangible economic forces do.
I'm not saying we should bury our heads in the sand here, but screaming that the sky is falling will ultimately result in just that.
EricIt's Never Too Late To Become
What You Might Have Been
[email protected]
Since Blue started the thread and has some big money involved in a state that may be cruched worse than the rest of us, he is doing valid inquiry. Some others may be sowing worry in hopes of reaping woe.I don't complain about the manure smell or look for the pony. I use the manure to fertilize what I plant, and reap the gains.
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Piffin, even though I stand to lose quite a bit with each news report, I'm far better off than many around here. I'm also very prepared to make the most of it, even if I were forced to stay here indefinitly, which seems like an impossibilty at this moment.
I guess my question would be this: If the economic conditions are as good as they are outside this state, what is stopping y'll from making some big change? Why are so many dabbling in pennies, when there are real dollars to be gained?
blue
I see that conditions in MI are diff from the rest of the nation overall, but don't quite follow your last question. I've pretty close to doubled my business each year for 3-4 years now and you are suggesting that isn't good enough?
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Piffin, maybe my question wasn't directed to you. Maybe it was.
Have you doubled your net income, or doubled your business? If you've doubled your net income, then keep up the good work.
My point is that many are bragging about how things are booming, but very few are rolling in dough. I guess I'm just asking a rhetorical question. Or perhaps, I'm telling you something. I've lived through eras around here when things were booming and all I made was grocery money. I'm admitting that I didn't know enough about making money, to make anything worthwhile at all, even though the times suggested that I should.
blue
Gross, net, and cash flow.
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All the corporate cut backs seem to be blamed on the high cost of medical coverage. Nobody questions why medical costs are so high. Blame the insurance companies? They aren't the ones that set the rates, just pass on the costs plus their markup. (Of course they aren't totally blame less) In this age of 'target pricing', let's all ask ourselves if our quality of life/health has matched the increases of medical costs. The medical 'profession' is a huge money making machine that has been a sacred cow protected by one of the largest poltical lobbies this country has.
Just my thoughts.
Speaking of medical costs: my brother (senior engineer) just told me that his Chrysler coverage has just been significantly reduced. All of a sudden, their coverage does not cover dr visits or prescriptions! And he has been warned that this is "just the beggining". Also, he mentioned that GM is taking a dollar per hour from employees. I don't know if that means salaried or union.
All of this does not bode well for the rust belt. You guys outside the rustbelt do not fully understand how significant all of this is. Michigan started the recession during Bill Clinton's term and we have not had a recovery. The only thing doing well has been new construction because mortgage lending practices have been pushing home prices up. Now that the mortgage rates are starting to creep, I can foresee an extended retraction looming in all aspects of the housing market.
A friend of ours is a realtor in a previously hot suburban yuppie market. In the past five years, this area was so hot that it was not unusual for every house available to have multiple offers above the asking price. In the last year, sales have stopped. The realtor said that every one of her listings have lowered their asking price. I know of two sellers that can't unload their homes and have had them on the market for more than a year.
Is this the first sign of the bubble?
blue
You guys outside the rustbelt do not fully understand how significant all of this is
True. I deliver my mother to her summer home near West Branch (Mich) every May. Couple of years ago I was talking with another summer house owner there who'd just graduated (late bloomer) with a teaching certificate. Couldn't find a job and said that was true for the majority of her class. IIRC, Flint area. Zero school expansion.
Astounded me as around here all we hear is "gotta raise taxes so we can compete for teachers". And this is a small pop. area that supports every flavor of private school there is. An immense amount of money being voluntarily spent on education. She was aware of the discrepancy.
Your bubble (or not- I have no idea) certainly isn't in evidence here. Too many, IMHO, good jobs created every year. Major problem is "affordable" housing. 40% increase in value of unimproved land last yr. Outlying counties are the recipients. Does not increase quality of life for anybody. Looks like a traffic light coming to my neighborhood, unsure how many wrecks are requisite. But our exit plan's in place, without a date. PAHS Designer/Builder- Bury it!
You're going to move because of a traffic light? Or is that just the symbol of lost peace and quiet? Where do you want to go?
Don K.
EJG Homes Renovations - New Construction - Rentals
You're going to move because of a traffic light? Or is that just the symbol of lost peace and quiet? Where do you want to go?
LOL No, the light's a symptom. For instance, there was also a 2300 acre farm, between here and the light, recently sold. New owners, out-of-state development co, proudly announced they were going to "preserve" 80% of the farm!!!! Great, only 400 acres of new mcmansions coming. Most of the remainder is too-steep slopes. At least I hope the farm airstrip (currently serves a turbo prop) is too small for an air community. That'd get us moving pronto. We're in the flight path and get buzzed on the way down.
The new Univ. research park (other side of town) is very selective about tenants (must be U. research connected) and is filling up fast. Projection is that it alone will double the population. More people and more big boxes don't improve our quality of life.
We're very fortunate to be living on the side of town we are. Actually, fortune had little to do with it. I chose here. And we have no timetable for leaving. May never happen, love it here. DW enjoys her business. But if trends continue we may find it too crowded. I don't have Blue's financial ambitions. We're happy living modestly and assume we can do fine anywhere, given a good-sized nest egg, which'll happen if we sell.
As to where, Michigan never much appealed to me. Nor your part of Va. <G> Mountains of NC are apparently experiencing much of what we have. I hung onto a little family land in the Arizona mtns (5 hr drive to a city)- maybe. We land-shopped the west, where both of us grew up, before settling here. Now that financial concerns are less important, there are numerous relatively dead spots. Or maybe that farmhouse on Sardinia's W coast is still available... hard to say. But if we do leave here, there's gonna be one hell of an interesting auction. But probably not the mortiser I picked up (at auction) yesterday. Gotta get a picture of it later.
You about have your move set? PAHS Designer/Builder- Bury it!
Tom - The biggest obstacle between me and the truck to VA is getting this house done. I'm semi-retired now. That means I got lots of things to work on and none of them make me any money. <G> Once this is done, I'll have two incomes from two units (not counting the Virginia stuff), and that will make every month a whole lot easier. It will also mean that I don't have to keep paying workers and buying material. More money in, less out. That would be the ticket. I won't go into everything that needs doing, that's a thread in itself. (I think I'm making headway though.)
Actually, my almost DW committed to a project at work that will take her to December. We will be down there for the holidays. I thought I would be done and down there permanently then too. Now, it's looking very doubtful. So, when she asked if she could stay to March so she can get her 25% profit sharing, I gave in and said "Sure." I'm so cooperative... If I'm not done by March, I'll be putting out a call for help.
Don K.
EJG Homes Renovations - New Construction - Rentals
I'm familiar with the West Branch area Va Tom. It has always been an "up north" town and I don't really see any great future there. The situation that you describe regarding teaching jobs is typical for around here. The universities churn out tens of thousands of education grads, and most have to move out of state to work. The large school system that I used to coach in is cutting staff.
blue
The sophistication of some of the treatments is partly to blame. 25 years ago, you got cancer, you got some basic therapy, and that was it. Now you get cancer, you get a slew of high tech treatments like bone marrow transplants. Expensive stuff. People insist on everything they can get to try to stay alive. Same goes for every category of major disease... more effective treatments, more money, so insurance costs are higher. I have a $1M cap per year on my insurance... $1M is a lot of medical treatment, or so you might think.
You and I may have read different news on Delphi, but from what i have been reading it's a labor dispute more than a strictly economical downturn.
The unions won't budge on health care provisions and cost.
Some labor dispute.
Delphi has decided to cut the average wage to $12.00 per hour, when the current wages are $26.00 per hour. They also want to substantially cut the health and benefit package too. Naturally, there isn't a union leader in the world that would embrace that kind of "deal".
Don't get me wrong, I'm not pro union or anti-union regarding this. I'm just relaying how bad it is getting in Michigan. All of this bad news comes after a steady stream of bad news for the last few decades here in the rustbelt. The liberals cry that all the jobs are going overseas and they might be right. No body knows this better than the blue collar crowd that I grew up with. Our sprawling neighborhoods were built on the backs of industrialized labor. We thrived when the industrial age was booming and now we'll suffer the withdrawls of a new economy.
Public officials like to point out that higher paying high tech jobs are growing. What they aren't telling you is that places like India and Pakistan are making substantial inroads into buying the technology and training that are quickly replacing these high tech jobs too. I know guys that were making $50 per hour and more that have lost jobs, or slashed their wages in high tech industries like auto design and engineering.
Basically, here in Michigan, it's all bad news, steady, on a daily basis. No industry is sacred.
Of course, we will be told to "make lemonade", but those offering the advice don't see the miles and miles of abandoned industrial properties, the closed shops, the lease signs everywhere. They fail to understand that the economic lifeblood is being drained out of a major metropolis that contains millions of semi skilled workers, who have no alternative means of earning a living. Metro Detroit is a lunch box town, but they don't have anywhere to take their lunch to anymore. We are a hard working town that will get up every morning and work long hours to make ends meet, but we don't have anything to build anymore. When we hear of major players in the auto industry, posturing to turn their empires into scap jobshops, we instinctively know that nothing good can come out of it. Basically, our state is now vying to replace the poorest of the poor in the ranks of weak per capita income. Additionally, we are saddled with the burden of replacing an aging infrastructure and dealing with an aging population that may, or may not have their promised pensions.
Oh yeah, pensions. Guys that have 28 years of service, that were told that they needed 30 to receive a fair pension are now being told that their pension might not be there, or that it would be substantially reduced. I've known guys that worked a lifetime only to see the company close shop and give them zero for their pension. Imagine how you'd feel.
Like I said, I'm not seeking sympathy. I'm already prepared to do what's necessary. I've already made fire plans to leave this god forsaken state.
Last one out, turn out the lights.
blue
Thanks for a very imformative post Blue.
I did not know that a wage issue like that was on the table..............wow!
Or that you were invested big in the area. I know you have talked a bit about development and such, I didn't realise that your plans had gone through.
You paint a bleak if realistic picture. What a shame. We have gone from being and industrial giant to a tech leader and now are losing both industries to outsourcing.
I picture a trail of families leaving the state ala Graps of Wrath style.
Upstate NY is in similiar condition and the taxes in the state are among the highest in the nation. The poulation has actually dropped in the state and corporations are hard pressed to stay and if they do it is because they are offered great tax incentives to do so.............and guess who is funding those breaks?? The poor azzhole who lost his job when some factory shutdown who's scratchin his chin trying to figure out how to buy groceries.
I don't know what the answer is.
Eric
It's Never Too Late To Become
What You Might Have Been
[email protected]
Erik, I mentioned that the Delphi people had turned down a wage package of $12 per hour. Today I read that the actual number was $10-12 per hour. In that same article, it mentioned that one of the laid off Delphi persons was considering going back into construction, if he doesn't get called back. Of course, that doesn't surprise me. I've lived a lifetime of competing with UAW workers who get laid off and get 95% of their takehome pay, then do contracting for next to nothing just to keep busy.!
This Dephi issue is/has created a very significant issue of stability throughout the region. It threatens the very existence of GM and GM is a very significant economic force in Michigan. The most damaging issue is one of certainty. All employees, and their suppliers are on edge. They don't know what the future holds. As a result, they do what most people would do; they stop buying. They hoard their cash. They stop traveling. They stop buying clothes. They stop buying cars. Even the retirees are recoliling becasue under federal bankruptcy laws, their pensions will be taken over by a Federal pension guaranty program. That program has limits, which usually are lower than the retirees get. The net result is a pay cut for those on fixed incomes. Again, of course, some of the retirees are talking about coming back into the working market...some of which will be in construction as low payed contractors.
The cycle continues.
To paraphrase a quote from a retired couple from today's article "We're scared. We've stopped spending and are saving as much as we can. " Great! That'sjust what we need around here.
Personally, I havn't landed any development deals. We are still actively searching. We have looked at a very wide variety of deals, but we're not in a hurry to do a deal, just for the sake of doing a deal. It has to be a solid money maker. We have lined up some substantial investor and groups and the only thing holding us back here is finding the right property. We are deadset on avoiding anything in the upper market and concentrating on finding property suitable for houses under 300k, which is not easy to find. We are also looking for property in fast moving markets that could house multiples.
You might find it ironic that we are still willing to invest in Michigan, but the reality is that since we are here, we still have to move forward. We can't curl up into the fetal position. But it's scary.
Ironically, it's not really that scary for me, because I'm not going to be personally on the hook for any of the debt. Those days are over. i do however have some property to divest and I wish I was located in a hot market like some are talking about. Smitty can tell you how troubling that can be in a down real estate market. He's forever warning about spec houses do to the troubles that he ran into back in the 80's.
blue
I'm not an economic expert, nor do I own loads of rental property (tried it once, wasn't nuts about the "people" side of the business). But I do live in Michigan and have lived here for 10 years. Some of my random thoughts after reading many of the posts:
- It's not nearly as bad here in Michigan as everyone makes it out to be. My wife and I hosted a party at our house last night. There was about 25 people in attendance. I'd say roughly a third of them had moved TO Michigan in the last 2-3 years. I was shocked. Most of them moved here for jobs of course, a few to be closer to aging parents (not all old folks want to retire to Florida). While we all had a semi-sarcastic chuckle about moving TO Michigan, most of them were very happy to be here. It's a beautiful state filled with very nice people (in my humble opinion), lots of outdoor recreational options, all major sports teams, etc., etc.
- Unemployment rate? It ain't so bad folks. Check out this recent link:
http://www.freep.com/news/statewire/sw122817_20051019.htm
I'm in the service sector and I see these jobs increasing at a pretty good clip. Service doesn't have to mean scrubbing toilets either. Many of the folks in our town, just outside Ann Arbor, are in the service sector and my hunch is the average household income is a good bit over $100k/year.
- Delphi/GM situation. This is a hard smack in the face that all these companies/employees have needed for a long time. Some of my friends work at the Big Three and they welcome this purging. In the long run it will make them healthier and more competitive. You have to realize it's essentially a zero-sum game. If Delphi pays their retirees and workers less money than the savings are either returned to shareholders as profits, plowed back into the business to improve ROI or perhaps spent on bigger/better projects with vendors which helps distribute resources to others in the Michigan (and national) economy.
- Home values in our area dropped 1.7% in the last six months. Not so bad. We owned our house from '96 through '04. We sold it, on our own, in three weeks for 5% under our asking price. That left us with an average 7% yearly gain on the house. Granted, it's not 20% appreciation like they've seen in California. However I don't have to deal with crazy traffic jams, mud slides, earthquakes, 120 degree heat, etc.
It's not all doom and gloom.
- Rob
rob... reading your post i get the impression of timing and location..
you sold your house in '04 ( timing )
and you're living in the Ann Arbor area doing service work ( college town -- location )
my guess is you're in an enclave
this economic downturn we're starting on is going to be very much about enclaves , economy sectors, winners and losers
i predict the paycheck middle class is going to be the loserMike Smith Rhode Island : Design / Build / Repair / Restore
It's not all doom and gloom.
I've never said that it's all doom and gloom. Early on in the thread I acknowledged that there is a lot of money and there always will be.
Some of my friends work at the Big Three and they welcome this purging.
There are always winners and losers in every turn of events.
Unemployment rate? It ain't so bad folks. Check out this recent link:
I had to chuckle when I opened up the link only to find out that Michigan is still lagging substantially behind the rest of the country. The alarming thing about that is that there in no end in sight. The pressure from rising oil prices hasn't done it's dirty deeds yet. The american auto industry has been banking on the SUV market and the sudden rise in fuel costs will surely decimate that segment of the industry. The inflationary effects of higher fuel costs will hit everyone across the board but in the final analysis, Michigan takes the much bigger hit because of their dependency on the sale and manufacturing of automobiles. I vividly remember the last two regional recessions caused by energy crisis.
blue
delphi is competing against a global labor force, not local.i can see both sides, but unions appear to me as becoming more of a temp agency now. "Employees" of Delphi realy emp. of UAW.
delphi is competing against a global labor force, not local
I fully understand that VaGentinMI. Michiganians have been losing ground to the global labor force for decades now. That is one explanation why the values of real estate in MI is dropping.
blue
Blueeyeddevil,
Sorry I'm a little late arriving back at this discussion. Your explaination of what is happening to MichigaN IS A PRECURSOR TO WHAT WILL HAPPEN TO THE WHOLE COUNTRY IF SOMETHING ISN'T DONE.. (oops caps lock) The basic problem is too much of the wealth of this country is in the hands of too few of people and they care little about what happens to you or I
I mean we can argue if the top 1% own 90% of the wealth of this country or the top 2% Heck since I'm a liberal I'm willing to accept 3% to further the discussion..<G>
The question is, is that good for the country? Back in the days of the robber barons This country realized that such a policy is wrong for the economic health of the nation.. Carrnige and JP Morgan's set prices high to maximise their profit and in turn with less available cash to work with the nation slowed downed economically..
If you want a microcosism of what we are in for look at the farm economy.. A handfull of wealthy sugar growers are able to force thru congress bills that benefits them at the expense of us Americans.. Agri business like Cargill and Archer Daniels control the price paid for the crops and then can control the markets enough to sell us corn at 100 times the price paid for it..
Factory managers earn 500 to 5000 times what the guys who make the cars do. Unions need to pretty much give in to Management or face replacement by other desperate workers..
Your dad may have worked 30 years for a company expecting retirement benefits and now he's not going to get them. Part of the deal that kept him on the production line when other, better offers were made and the retirement fund has been raided and it's empty..
You know in simple terms that is theft.. If you put your savings for retirement in a bank and then get politicains to rewrite the rules so the bankers can use the money. that is somehow legal..
I guess my bashing of the top 1% of the nation should come to a POINT.. Here it is.. the currant batch of politicains is guilty of some pretty serious crimes and should be looked at very carefully....
But I have good news for you.. property is never going to become worthless!
While the poor suburbs of Detroit may not increase in value and may even lose value. At some point the population pressure will drive prices back up.. Look at the population growth of today.. When I was born there were 100 million less people in this country. A nice new suburban home could be purchased for $3500.00 (no I didn't miss a zero) A child born today will comment about how when he was born a nice suburban him could be purchased for only $350,000 (and no he didn't miss a zero) <G>
IS A PRECURSOR TO WHAT WILL HAPPEN TO THE WHOLE COUNTRY IF SOMETHING ISN'T DONE
I too believe that Michigan will lead the way in the "correction".
I don't know if I want to blame the politicians, or even the CEO's for this though. To me, it's just market forces doing it's thing.
I'm not really trying to figure out a solution-I'm just pointing out some facts. These are facts that seem to run contrary to what's happening right now all over the US. There is a lot of concern here in Michigan at the grass roots level and yet the country is "roaring".
Is it possible that were roaring just like we did back before the great depression?
blue
blueeyeddevil,
Your facts are correct! Now let's look at the facts a bit..
What causes the facts to be the way they are?
it's simple and if you have another explanation I'd sure be glad to debate it..
The rules have changed..
There were one set of rules during and immediately following WW2 however Vietnam changed a lot of things.. Immediately following Vietnam Reagan to tell Americans that government was bad.. Heck maybe he was already preaching to the choir. (The mess of Vietnam, Watergate etc.)
It seemed like we could just blame the government for everything.. Turn everything over to private enterprise, deregulate everything..
We did and had scandal after scandal the banking scandal is just one example of deregulation going wrong.. Look at the airlines and accounting and especially when the government began to soften regulations on retirement programs.. well the list is long..
There have been some who benefited from the deregulation, mostly those who controlled assets like the banks and corporations etc.. That's's not the working stiff...
Is t possible that this is a precursor to the great depression?
No it's worse!
During the French revolution less than 1% of the french controlled 95% of the french wealth.. During the entire 19 century England's wealth was controlled by fewer and fewer individuals and as the 20th century dawned England was forced into wars due to conflicts between the 1% of Germans and the 1% of British who controlled the wealth of those nations.. WW1 was the result followed by the depression and then WW2
Social upheaval always follows when so much of the nations wealth is controlled by such a small percentage of the people.. That social upheaval is typically increased due to unpopular wars that cost the lives of the poor and middle class..
Social upheaval always follows when so much of the nations wealth is controlled by such a small percentage of the people.. That social upheaval is typically increased due to unpopular wars that cost the lives of the poor and middle class
I'm not so sure the next revolution will be as dramatic as they have been in the past. Heck a revolution nowadays might mean voting in a Democratic congress!
Things aren't as drastic as they used to be. When the crunch hits, we'll still have zillions of McMansions. They'll probably be devalued and maybe the tenants will be renters, rather than mortgagors, but nevertheless, the lower class will be living quite large, all things considered!
blue
Blueeyeddevil;
I'm sorry but revolution always has been bloody and violent.. To remove the establishment requires no less.. They are entrenched and certainly unwilling to give up their privledges. If you look at the revolution in Russia as an example. Before the communists came into power the ruling class was pretty well decimated.. As recently as the 1980's in Cambodia any of the ruling class who remained was quickly put to death..(Watch the movie The Killing fields to see what I mean) In Cuba in the late 1950's and well look at the history of the world..
Simply switching political parties will not change anything. The top 1 or 2% will simply pay the democrats to do their bidding.. Actually most already are. That is they contribute to both sides and then whichever side wins they call upon them for favors, since it is so horribly expensive to run for political office the politians have no choice. Congressmen for example start to raise money for their next campaign the moment they are elected..
Regarding the huge number of McMansions, I don't honestly expect such a thing to happen.. when the crunch happens, banks simply will not be able to afford to sit on nonrevenue producings properties. Most likely what will happen is what occurs in Europe now, that is home owners will get 50/75/100 year mortages.. A taste of what I'm speaking about is currantly happening, that is it is possible to get an interest only mortage now. Thus reducing your payment from say $2000 a month to only $800.00
You are right about real revolutions but fantascizing that we are anywhere near one here. We have higher than ever rates of home ownership, higher than ever numbers of citizens invested in the capitalist stock markets, and more competition amoung banks due to the inernet than any time in history. people are invested in the American dream, not revolting against it.
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Piffan
I do not suggest that revolution is eminent, rather that the seeds are sown and the results will happen.. If you look at America's own history we are in very similar shape to the 1930's. That is much of America's wealth was concentrated in the hands of a small portion of the population. There is the potential for economic instability and the world economic situation is volatile.
The only thing that prevented America from going communist in the thirties was Roosevelt progressive ideas. By eliminating some of the more egregious inequities. Roosevelt was able to prevent the third largest political party from gaining any further foothold in America.
If you look at America in the 20's (the so called roaring twenties) similar conditions were present.. High home ownership, discrimination against recent immigrants, banks investing in the stock market etc..
Better offers!?!? Really??? Better than $60-$70/hour, full benefits, great pension (granted, now fading) 95% pay when they lay you off and all the overtime you want?
Pray tell...where were these companies offering better jobs than that? If they ever existed I have a hunch they're long gone.
Blue, didn't mean to say you said it was doom and gloom. I was addressing the overall tone of the posts/posters. I readily admit that Michigan's unemployment rate is higher than it should be. But I don't think 6.7% is all that bad. My gut feel is that at least HALF of those folks that are unemployed probably don't even want to be working. I still remember taking a few economic classes in school and the "ideal" unemployment rate is something like 3.5% - 4.5% if I recall right. There are just certain people that don't want to work, can't work or have skills that can't be put to use until they re-educate themselves in a viable trade/profession.
- Rob
But I don't think 6.7% is all that bad. My gut feel is that at least HALF of those folks that are unemployed probably don't even want to be working.
There's two sides of that coin too. Unfortunatly, many of the unemployed will be looking for some very lousy paying jobs in some very lousy conditions.
One of the things that the unemployment rate doesn't reflect it the amount of people that have dropped out of the jobhunt.
I've always made it a habit of looking in the want ads to see how many carpenter ads are running. Not many, if any at all. There were times when I'd see fifteen or twenty ads, now, there's maybe one.
There is a great need for many of those losing their jobs in manufacturing to re-educate. Unfortunatly for them the areas that they want to educate for are laying off too!
I'm normally an optimistic person, but I see many years of recession for Michigan before I see hope for a robust recovery. I plan on cutting my losses as soon as I have the timeframe for leaving. You had to settle on a 5% reduction, I'm thinking I'll need 10 to 15%, which all in all isn't really that bad. But, if we continue to be inundated with horrible financial news, it's not unthinkable that I'll have to dump as much as 25% of my equity to move on, which I will do without giving a second thought because I think the bleeding will get much worse here in the rustbelt over the next decade.
blue
I guess it depends on your profession as well as your priorities. I'm in a sales role and work with customers across the U.S. so I'm not overly affected by the local economy. So, fortunately, I don't have to worry too much about the local trades. But I will say that, anecdotally, many in our area don't seem too worried about all the Michigan turmoil.
If your goal is to squeeze more financial gain out of your home/local properties then I too would probably pull up stakes because Lord knows there are greener financial pastures out there. But I look at our finances as a three-legged stool. There's my income (which is tied to my local Michigan employer, and would be hard to beat elsewhere), our home (which I personally don't view as a great source of personal wealth creation; I mainly want my family to enjoy it) and our stocks/retirement funds. I focus real hard on the first one and the last one and feel we're doing fine. If I could have all three that would be great, but two out of three ain't bad.
Blue, I agree that it's going to be a while before Michigan climbs out of this funk it's in. Think about it. You have many blue collar manufacturing employees who have encouraged their kids and grandkids to follow in their footsteps (though I always thought the smart ones were the ones that encouraged future generations to pursue education; at least to fall back on). It's going to take a while to purge those folks of their mindsets and lifestyles. But Michigan is a state of hard-working, industrious folks and, with leadership, I think we'll come out of sooner rather than later (but will still be years).
- Rob
Read something in the paper today and looked up the reference on the web:http://www.pmigroup.com/lenders/media_lenders/pmi_eret05v4s.pdfI thought it was interesting and might stimulate some thought.According to this, at least a small part of it some of the properties are close to 33% overpriced, based on historic and recent trends, and the chances of a fall, based on supporting economics in the area, nearing 60%. It isn't across the board but IMHO it tends to point out that the cards are stacked up pretty high.Due to the interlocking nature of markets, a well accepted fact but not not part of the article, a failure in one area could cascade in unpredictable ways and, possibly, farther geographically, that might seem reasonable.
You liberals kill me. Do you know that the top !% of taxpayers pay 38% of all income taxes collected? Do you know that the top 50% of taxpayers pay 96% of all income taxes collected? But that still not enough for you, you want 'mo money,'mo money, 'mo money, for more redistribution-of-wealth-I-haven't-earned. Give me a break already.
I live in Southeastern Michigan where Delphi is getting big concessions from it's workers. My wife and I went through a new $300,000.00 sub division that opened for sales two months ago and is half sold out already. Are all these people stupid, or do they think the economy is better than all the naysayers do?
Kowboy,
First I'm a progressive not a liberal.
Second if it is true that the top 1% of Americans' own 90% of it's wealth why aren't they paying 90% of its taxes?
Third, the dream of home ownership is fundamental to the American dream.. so a family buys a home that is an economic stretch for them, what's wrong with that?
I live where the average home is well over a million and homes on the lake near 8 figure average.. Many people realize what a economic opportunity expensive homes are.. They use their home both as a shelter and as a shelter from taxes..
In simple terms you stand to gain more from inflation with an expensive home than with a cheap home. If all homes raise 10% you gain more owning a million dollar home than a home costing $100,000.
Currently homes are the best way to avoid paying a lot of taxes.. Appreciation on homes is pretty well tax free, and currently a better investment than the stock market..(especially considering the tax angle)
Inflation is happening and will happen at an ever greater and faster way. The Last Time America fought a war and "charged it" was Vietnam, look at what happened to the cost of homes following Vietnam!
frenchy - you ask why those controlling 90% of the wealth don't pay 90% of the taxes...
The answer is really simple, in this country we tax "income", not wealth. Read your tax laws.
Not for nothing, but the idea of an income tax was not immediately accepted by the population when it was started. There was a whole lot of fighting about it for a few years. Read your Constitution.
Don K.
DonK
Sure you are correct when you state that America taxes "income" and not wealth..
My question for you is,,
Why?
It isn't terribly hard to hide income*.. it sure would be hard to hide wealth..
* the fderal government helps the wealthy do just that. The tax code is 22,000 pages long,, you get a 30 page booklet? What are the other 21,970 pages for?
It wouldn't be hard at all to hide wealth. People earn incredible sums of money to beat the IRS. They'd figure out a way around a wealth tax as well. Besides, up until the last few years there was this thing known as an estate ("death") tax which addresses your wealth concern. As soon as a Democrat returns to office this tax will return I'm quite sure. I think it's one of the craziest taxes around personally. You work hard to earn money and, by using AFTER TAX MONEY, you accumulate wealth. Then when you die they tax it again. Never quite understood that one.
- Rob
strokeoluck,
Let's be accurate please. The estate tax was only levied on those with estates over a fairly large amount.. The average small business owner could pass his business on to his son without paying any tax.. as could the average small farmer etc.
In addition if the father choose to he could take advantage of many tax laws and multimillion dollar estates could pass on without the tax mans hand touching any funds.. Now granted the father needed to realize that he was mortal and wouldn't live forever to take advantage of those loopholes.
Sometimes they were ignored and then the appropriate tax would be leveed..
The question I always ask in those cases is,,... Is that the intention of the deceased? Not every father wants his estate to go on.. Maybe the children were a disappointment, perhaps he felt a tremendous obligation to his country or maybe he just didn't care,,
But I digress..
America is not patterned after Europe.. In Europe nobility was able to pass their wealth on down to their children and their children were thus able to live fabulous lives without any merit of their own..
America is a meritocracy.. that is we achieve based on our merit and not on the chance of birth.. Nobody in America is promised a free ride.. not even the children of rich parents.
You might check the constitution to confirm my thoughts.. If you find something to that effect please let me know..
I'm not sure if I'd bash Europe much anymore. The EU is likely to be the dominant superpower in a generation or two. Besides there are many, many instances where wealthy families in Europe lost their position/wealth/estates due to revolution, invading armies, etc. God bless the Constitution but it does go to show that there are always underlying forces at work that "somewhat" help resolve inequalities that exist. I trust that even you agree our system is flawed in some respects. Travel around the world and many international folks will be only so happy to point them out to you.
The other thing you're failing to take note of is that in Europe there MANY families that go broke trying to maintain those estates without....TA-DA....income!
Without getting into a pissing contest w/you (because this thread is really about something else...I think), I always find positions like yours a little humorous. Would it be safe to assume that every last penny of wealth you accumulate you will be giving away? Leaving absolutely nothing - nothing - for your children? So that they too can enjoy the great freedom and opportunity that is America? I read a great article about Buffet and Gates recently. It was so d*mn ironic. They both initially said they were "going to give all their money away". But then, buried deep in the article when questioned more intently about this, they both admitted that their children would have "ample financial resources passed on to them thus putting them in the top 1/2% of the wealthiest people in our country". Ohhhhhhhhh, well isn't that just sublime.
- Rob
strokeoluck,
I think we are in agrement here.
Why?Because it's there.
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Piffan,
Your response has me baffled.. Because it's there? Does that mean you approve of taxing income and then exempting those who are capable of hiring the right lawyers and tax accountants to avoid paying their fair share?
Do you believe the currant tax code is correct?
Don't be oberly baffled. Sometimes humour is good.But it is a fact that politicians can and will try to tax anything that exists
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Piffin,
Hey agreement!
Both parties,
If a senator from a republican state has a flood you can bet your boots that he'll call for aide and a new flood control project..
Now how that's supposed to help the senator from New Mexico who's problem is drought I can't figure out.. but the senator from New Mexico will vote for the senator from Virginia and the senator from Virginia will vote with the senator from New Mexico.
(hey help me get reelected and I'll help you get reelected..) Oh and it's all the democrats fault that the budget is bloated.. (If you're a democrate change that to it's all the republicans fault that taxes are sooo high!)
Yet year after year most politicains are reelected!
Vote the rascals out!
If we changed the house and senate every election I doubt the budget would be nearly as bloated as it is..
i'll drink to that
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
"I'm a progressive not a liberal."
Yeah, I get it. Progressively taking more and more of the fruits of the hard work and risk by the producers and redistributing it to the non-producers based on some willy-nilly altrustic mumbo-jumbo of "fairness". No thanks.
Liberals can rename themselves all they want, but intelligent people will see them for what they are; smug, self-righteous, we-know-what's-best-for-you communists.
say kowboy... you sure don't come across as "intelligent people"... ain't chu kinda riding coattails there ?
what role do you see for govt ? c'mon ... mouth.... what is it that your federal govt. is supposed to take care of ?
the only ones whining around here are blowhards like yourself... heh, heh, hehMike Smith Rhode Island : Design / Build / Repair / Restore
Mike:
In my line of work, specifications are critical. I like 'em in my board postings too. Would you be so kind as to indulge me the following?:
1. Which of my postings do not reflect me as an intelligent person?
2. What/whose coattails am I riding on?
3. Please define and specify instances of my "whining" and being a "blowhard".
To answer your question, the federal government is supposed to take care of national defense and the Interstate Highway system with a bit of Social Security thrown in and that's about it.
Yours truly,
"Mouth" (I like that, thanks)
Edited 10/25/2005 7:52 pm ET by Kowboy
Kowboy,
You failed to mention protect our borders, police the sky (air traffic control is and should be a federal responsibility), mail, interstate commerce, energy distribution and well etc. etc. etc.
Kowboy,
I am a Progressive, republicans have named me a liberal since that has negative connotations that progressive doesn't.
Things like progressive income taxes where those with the most pay the most!
Those of us in the middle aren't taxed as heavily if the ones with the most to protect pay their fair share!
Oh, and calling me a communist is plain silly..
Try to grow up a little will you?
Edited 10/24/2005 3:30 pm ET by frenchy
"Too much wealth of this country is in the hands of too few people." - Frenchy (64017.65)
com.mu.nism 1. A theoretical economic system characterized by collective ownership of property and the organization of labor for the common advantage of all members. 2. The Marxist-Lenniinist version of communist doctrine that advocates the overthrow of capatalism by the revolution of the proletariat.
The American Heritage College Dictionary
"I'm a liberal..." - Frenchy (64017.65)
"First, I'm a progressive not a liberal." -Frenchy (64017.88)
Frenchy, which is it?
I'm sure you'll soon be everyone's favorite poster on this forum.
nah... he'll turn into a pussycat like intrepidcat didMike Smith Rhode Island : Design / Build / Repair / Restore
You offer a speculative comment to a post by davidmeiland before answering my questions?
I answered yours, you should answer mine.
c'mon , cowboy, u gotta be kiddin me...... your lame discourse requires my time ?
read some of my past posts ... they're good enough to refute your illogical positions
you're just another lame-o thinking they got what they have by the sweat of their brow and owe nothing to society..
shame on uMike Smith Rhode Island : Design / Build / Repair / Restore
Mike,
Clearly you are unable to substantiate that I am not an intelligent person, a coattail rider, a whiner, a blowhard, illogical or lame, as your previous posts allege. I have read some of your previous posts and respect your abilities as a contractor. However, your inability to back up what you say reminds me of my mother-in-law. When she can't win an arguement on the merits of her case, she becomes dismissive and resorts to name-calling also.
You won't substantiate your allegations because you can't. This is glaringly obvious to me and all other readers.
Edited 10/26/2005 10:05 am ET by Kowboy
no, cowboy.. not true..
i just don't feel like reiterating all of the things that refute yor position..
since i've basically had this conversation with at least 20 other blowhards like you since 2000... i'm bored..
thanks for helping me cope with my enui
but keep posting... we'll show you the error of your ways yetMike Smith Rhode Island : Design / Build / Repair / Restore
Kowboy,
Please read American history. In the past there were those who accumulated great wealth in certain business secotors. Too much consentration of wealth and power in too small a sector stiffled business and slowed the national economy.. The government went after it and it was called trust busting..
It's still done, recently the monopoly controlled by Bell telephone was busted up and look at the proliferation of phone service since then.. Recently the Computer industry which is totally dominated by Bill Gates was attempted to be busted.. Your republican party protected Bill gates monopoly and the suit was terminated.. (I hope you'll enjoy the loss of American domination of this market as it allows th rest of the world time to catch up to the advantages he has.)
As to your insistance that I'm a liberal, well you are free to call me whatevr you wish, it doesn't make it true. I am a progressive and if it takes being called a liberal for you to realize that I oppose those who want America to go backwards then so be it.. Call me a liberal if that's all you are capable of.. I remain a progressive..
If you've read any of my earlier postings you would be aware that I live in a fairly wealthy community, I live here because I earned it myself, pure old fashioned capitolism.. Even under capitolism there are flaws in the system.. Read about the oil depletion allowance and other such benefits given to the wealthy and not available to you.. actually read all 22,000 pages of the Tax code and then read the 30 pages they send you.. Himmmmmmmm maybe the tax code isn't exactly fair?
Finally This "commie" was at one time one of those who protected you from the real "commie" threat. That's right I did two tours in Vietnam and a chest full of medals to verify my service.. By the way The US Navy doesn't get secret or top secret clearances to "Commies"
Frenchy:
I do not insist that you are a liberal.
You've insisted that you are a liberal.
Then you've insisted that you are NOT a liberal. I've simply documented your quotes and subsequent inconsistencies and asked for clairification, which has not been forthcoming.
Liberalism and/or progressivism or whatever else one wants to label the confiscation of other's wealth for redistribution by government is the precursor to communism, no perjorative intended.
I appreciate your service to our country, keeping this board free for us to pea all over each other. My brother died in Vietnam, March 16, 1970, when I was fifteen years old.
I also appreciate and agree with your extension of my answer as to the function of the federal government. Thanks.
Kowboy,
OK you seem to use projoritive words a great deal,, can we dipense with them? Words like confiscate wealth..
Hmmm,,,..... taxes are a confiscation of wealth and I'll agree with that statement but as you used it you imply that the wealthy shouldn't pay their fair share..
An Aircraft carrier costs billions of dollars and we need a whole bunch of them.. IF I owned all of the money in America shouldn"t I pay all of the taxes that buys those Aircraft carriers? (and the rest of the military?)
OK If I owned 99% of all of Ameirca's wealth shouldn't I pay for 99% of the taxes?
98%? and then I pay 98% of America's taxes?
Hopefully you see that I'm getting down to 90% where the top 1% of Americans are, shouldn't they pay 90% of the taxes?
Frenchy:
The top 1% pay 38% of all taxes collected. The top 50% pay 96% of all taxes collected. I don't mind paying my fair share but the top 1% shouldn't have to pay 90%. That's counterproductive and mightliy unfair.
"A liberal is a conservative that hasn't been mugged yet."
Oh Kowboy,
How much you have to learn. The Bush Tax Cuts have eased that burden to somewhere around 34%. How dare those who earn 18% of the total income per year in this country expect to fork over a mere 34% of all taxes collected.
I say we organize a mob and burn them at the stake.
All kidding aside, while doing a little googeling to reply to Frenchy in another thread in the Tavern I found several graphs and charts that showed the bottom 20% paying a - 2 thru -4% of the overal tax burden. I'm not sure how you pay a minus percentage of the burden but I'm betting it has to do with the Earned Income Tax Credit. I'm all for programs that help a parent take better care of and provide a better future for a child but it's funny how that statistic never gets thrown around when you talk about taxes.
I'm guessing the negative numbers come from factoring in welfare and other subsidies.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Jon,
The numbers I saw were more directly related to gross income which is why I suspect that the Earned Income Tax Credit had something to do with it. I know a few people who got all of their tax money back and then some. Never thought about the welfare angle
I also wonder ( not enough to do anymore research) if that includes pure income tax or things like FICA also.
KOwboy,
Well if we use your figures then the top 1% should only own just 38% of the nations wealth.. Even the most rabid conservative isn't going to make such a foolish claim as that.. Most accounts are around 90% but I'm fully prepared to accept any other reasonable number.. If you claim say just 85% of the nations wealth is owned by the top 1% then I'd be prepared to agree that the top 1% should only pay 85% of the nations tax bill.
To look at the numbers you just claimed, the top 50% pay 56% of the nations tax bill,,,..... That would be fair if it didn't leave you and I paying too great a share.. I think the median income in America is something like $38,000 per household..
That means half of the nation lives above that number and half below.
Should grandma who makes say $16,000 a year pay the same percentage of her income that Bill Gates does? (nothing personal Bill Gates) Remember Bill Gates has a team of tax attornies and accountants who's sole job is to avoid taxes while grandma pays taxes not only on her income but on the gas she buys and dozens of other ways..
There are 22,000 pages in the currant tax code,, how many pages do you get when Uncle Sam mails you the forms, 30?
To look at the numbers you just claimed, the top 50% pay 56% of the nations tax bill,,,..... That would be fair if it didn't leave you and I paying too great a share.. I think the median income in America is something like $38,000 per household..
Then maybe it's time to stop blaming the rich and focus on the 20% who pay nothing since we are talking about " Fair".
robert
I just responded to your comment about the bottom 20% they probably pay a greater share of their income in taxes than rich do.. they just don't pay much income tax...
Shouldnt some consideration be given to the "Tax revenue" created by someone such as Gates? Ya think he might employ a person or two?
The way i've always seen it is that if your loaded, (top 1%) you're gonna want more. One way to get more is to employ people to get it for you.
If a man employs 10000 people that all pay taxes, isnt it a kind of double taxation to expect him to pay so much more in taxes too?
I think it sucks when someone kills himself to succeed and is then punished by the government and hated by people that didnt share his drive.
"I think it sucks when someone kills himself to succeed and is then punished by the government and hated by people that didnt share his drive. "
I couldn't have said it better myself. Thanks and Amen.
Kowboy,
I don't think Warren Buffit or Bill Gates are killing themselves..
In fact I don't think that Bill Gates or Warren Buffit are hated by many people. Envy maybe,, I would like to earn what they do. I strive hard to do so, work hard and am frugel with money.. I have aslightly better than average income and I try to improve it every day.
I've never met either person, I've only rarely read much about them. Thus I sure couldn't hate them.
I would like to see that they are paying their fair share of taxes. That they aren't using their wealth to hire tax attonies and politicians to avoid paying their fair share.
If they aren't, well I'll have to find another couple of well known examples.. Has anybody got a copy of either gentlemans tax returns?
Frenchy:
My copy of Inc. magazine arrived today and I'm going to quote and paraphrase their Opinion page to make my point:
The static that best reflects the prosperity of the average American is the growth of productivity-the output of goods and services divided by the amount of labor devoted to generating them. Productivity only grew 1.5% per year between 1973-1993. When the economy rebounded in the eighties, pundits and politicians worried America would be surpassed by Japan. Productivity surged between 1995 and 2000, averaging 2.5% per year. Productivity picked up again after 9/11 and after 2000 at 3.5%.
When productivity grows at 1.5% annually, Americans double their living standards every 48 years. At 3.5%, living standards double every 20 years.
The rise in productivity/living standards is the outgrowth of information technology.
THANK YOU MR. GATES. Because of your risk-taking, hard work and innovation, Frenchy's children will have a higher standard of living than he did. Please forgive his ingratitude and inappropriate curiosity of your taxes.
We could refund every penny you've ever paid in taxes and still not come close to repaying the gargantuan debt the world owes you for the wealth your risk-taking, hard work and innovation have provided.
Kowboy,
Excellant point. Increase the real rate of growth and America prospers! I fail to see where reducing the percentage of taxes paid increases the growth rate..
You can prove it yourself!
The lowest state taxes are in North Dakota, why aren't you planning on moving there? If low tax rate and prosperity were bed partners, then North Dakota should be booming while Hi tax states like Conneticut. New York, Calfornia, Hawaii Minnesota, etc. would be suffering..
That is simply not the case is it?
MSA1
I suspect that Bill Gates isn't killing himself.. <G>
The question remains, should the wealthy pay their fair share of taxes or should the simple fact that they are wealthy allow them a break?
Thoughout history the wealthy have always had to pay for things.. The kings and noblemen of Europe paid for roads and schools and armies. etc.. the middleclass (farmers and merchants) paid the king and the children of the king were able to inhierate the throne.
Repeat
(untill the king was overthrone)
One of the principles that this country was founded upon was that nobody should be superior by reason of birth.. Everyone could achieve according to their merit..
A meritocracy if you would.
Give the wealthy all the tax breaks you want,, the result is that you will be forced to pick up the slack.. Your taxes will go up!
So my question remains,
should those who have the most pay the most?
There are different ways of "killing yourself". Do you think he just found microsoft and all his operating systems hiding behind his furnace?
Of course everyone should pay their share of taxes, but you bring up the example of roads. Does Mr. Gates somehow consume more of the usefulness of the roads than others? I dont think so, so why should he pay more for them.
Finally consider this: lets say (for the sake of arguement) that mr gates were in a 20% bracket. At that, he would pay more in taxes in one year than I might make in 5 years. Once again, how much punishment is enough for hard work?
Does anyone else think this conversation even remotely resembles the headline..."Real estate drops 10% in Michigan"?
- Rob
MSA1
Let's answer your last point first.. As America's richest person doesn't mR. gates stand to lose the most if this country were to fall?
My statement is and always has been those that have the most should pay the most.
OK Let's use your numbers.. Assume that Mr. Gates pays in one year taxes equal to the amount you make in 5 years. (You are assumming that his tax attornies can't read and don't bother to apply for all the special exemptions he can get) {exemptions not available to you or I}
I'm sorry but I haven't seen your tax returns so I have no idea of how much you make. I don't want to insult you so I'll pick a large number, say $100,000 a year.. Let's also assume that you are correct in that Bill Pay's 5 times that in taxes every year, That means a multi billionaire pays $500,000 a year in Taxes..
If other rich people pay accordingly the top 1% which owns 90% of the wealth in this country don't even pay 1% of the nations tax bill..
We can speculate "till the cows come home". Bottom line untill we have access to the tax returns of the wealthy it's all pure BS..
I do know this.. Of the 22,000 pages in the currant IRS book, less than 30 apply to you and I.. Is it possible that the other 21, 970 pages have a benefit to MR. Gates that you and I don't have?
Income taxes are just that, they tax income. The extremely wealthy don't pay much income tax unless they earn income. But why speculate, there is plenty of public information out there. Take a look at this:http://www.taxfoundation.org/publications/show/542.htmlOddly enough, over 90% of the people who pay no income tax also earn less than $30K a year. The super-rich like Bill Gates are nice to poke fun at, but they really aren't the problem. We are becoming a nation of people who work for a living, and those who vote for a living. Once the scales of democracy tip in favor of the latter class, the game is over.
A few simple comments on your last post (and, I'm sure, not your last):
1) $100,000 is not a large number
2) I'm sure Bill paid more than $500k in taxes last year, probably lots more. Can I prove it? No. Nor do I care to waste more precious time than it's taking me to bang out this post seeking that information out. But I'm sure it's out there in net-land somewhere.
3) Why would you assume that 21,970 pages don't apply to you and me? And why would you imply that they favor the rich? I know some fairly wealthy people and they pay all sorts of oddball taxes that I'm fairly confident are buried deep in the tax code.
I've also seen firsthand that the wealthy do indeed throw off a "trickle down" effect. My boss has three homes (necessary? No. But he's truly a rag-to-riches story), a plane, several nice vehicles, etc. So he employs lawn services, home cleaning services, a pilot, plane maintenance company, needs his vehicles maintained and insured, employers catering companies frequently, etc, etc. Some of these people make $20k/year, some probably make close to $100k/year. All are benefitting (and paying taxes) even if he's avoiding every tax in the world - which he's not. The circle of life continues.
- Rob
strokeoluck,
I live near the Cargills, not familar with the name? They are the richest privately held company in the world.. I know Just how big they are.. I mean giant big..90% of all the tugboats and 95% of all the barges in America belong to a small division of Cargill. The worldwide land holdings alone would choke most people and again that is a small fraction of their business..
They dominate the grain market and set prices. Ever wonder why a farmer should make so little growing a bushel of corn and yet a box of cornflakes costs sooooo much? Much of that differance winds up in the pockets of the Cargills..
Now before you think I have something against the Cargills, you should meet them.. Nice polite people who really don't carry on as if they were among the richest people in the world..Yet every ten years you and the rest of American tax payers spend an average of 22 million dollars per lock and dam so the Cargills can get more barges per trip and reduce their transportation costs. There are 24 locks and Dams on the Mississppi just in Minnesota alone.. Yet I've never seen the price of FJOC drop one dime. (FJOC/ frozen concentrated orange juice something that Cargill controls 85% of)
Cargills have had whole rivers dug simply to avoid using the railroads.. Billions and billions of your tax dollars spent because Cargills don't want to use the railroads.
That is what's wrong with politics in America.. If you are a republican or a democrat and you are running for office a place you must go to get the money ot takes to run is to the Cargills.. They will be extremely generous. The reason they will donate soo much is because when you are elected you will take their phone calls and listen to their concerns. Then the tax laws and many many bills will be written in a way that favors Cargills over the family farmers or the local co-op..
I don't mind the rich, heck I'm trying very hard to be rich myself, but it's a simple principle.. those who have the most pay the most and that isn't the way the rules are..
Ok Frenchy, let's say I agree with you. Life is unfair (that's when my Mother would say something along the lines of "tough! life isn't fair! now what?!"). Taxes are unfair. Blah, blah, blah.
But you're missing my point because you're so wrapped up in your rhetoric. SO WHAT if the Cargills are not paying their fair share? SO WHAT if our system is so "corrupt" that my tax money is being spent to dig rivers that shouldn't exist (and again, my time is too valuable to go searching to really see if this is true; again, I'm livin' in your world...right or wrong; and for tonight you're ALL RIGHT!). So what? Spending pork keeps the economy going. Hurricanes keep the economy going. When people get rich and they spend money that the rest of us "little people" can use, they/we keep the economy going.
You keep saying "fair" share. There is no fair my friend. Fair is a relative term in 99% of life.
- Rob
Strokeoluck,
My aren't you a cynical one? There needs to be fair, or an illusion of fairness for any civilization to work.. Examples of when it fails produce things like the french revolution or Pow Pacs Cambodia..
Think that is too remote?
Are you aware that during the 20's and thirties the communist party was the third largest political party in America? (and growing faster than either party)
If Roosevelt hadn't come along with his new deal would America have gone the way of Russia?
Or lacking that, would America have been too weak to provide material support for England to enable her to fight Hitler?
Remember the battle of Briton took place 15 months prior to America entering the war..
My point is that Under the policies followed by Hoover many Americans felt that Democracy wasn't working for them.
Essentially I agree with your perspective. I have put forth similar views myself.That said there are a few minor point which IMHO need to be said. Re: "My point is that Under the policies followed by Hoover many Americans felt that Democracy wasn't working for them."Essentially correct IMO but the US, all the way back to its founding, has had a tentative and grudging acceptance of real democracy. It was intended originally to be only land holding white men who would have a vote. And even then, in a nod to the fears of the uneducated, uninformed and wrongheaded having too much control and steering the nation in a manner not to the liking of those in the know, there was always one or more disconnects designed in. The size of the army was increased following a series of rebellions after the revolutionary war to keep the American rabble, many who were veterans, in line. To this day, and despite claims that it couldn't happen here, the military has always been a method of control. The 'coal wars' where the US Army was brought in and machine gunned strikers was not a singular event. Direct democracy was also alloyed with the inclusion of the Electoral College. The senate, for good measure, was not originally designed to be elected. The US is the only remaining state considered a democracy to have this manifestation of doubt in its trust of a people being able to run its own business without the guiding hand of the few who own it. The US is a representative and, even then, an indirect democracy. Historically in line with the times when our nation was formed and the nations which we came from. Most of the European nations had 'divine right' royalty that provided legitimacy and a monied, landed and/or titular elite to make the decisions.The idea that a people could gain its right to govern by way of the consent of the governed and that the unwashed masses would have some, any input, into who was in charge, even if the decisions were still to be handled by the elites, was completely alien and revolutionary.But as weak as the democratic tradition is within the US it wasn't the democracy that was letting the people down in the Hoover administration. It was unrestrained capitalism. As you well know democracy being a system of political organization and capitalism being a system of economic organization. Further that even though the two are often spoken of in the same breath, as if they were one and the same, they are in fact separate and capable of operating independently.Marxist/Leninism had by design been set up as a democracy. A unification of communism with democracy. A direct democracy at that. It was never designed as a totalitarian system and it was only the exigencies of the Russian revolution, human desire for power and WW2 that served to explain, if not excuse, the slide into totalitarianism and the loss of all but a vestigial form of democracy. On the other end we can look at present day China. A communistic and centrally controlled totalitarian political organization which has embraced capitalism. This showing that there is indeed a synergy to be had between relatively unrestrained capitalism and the ability of a central totalitarian regimes ability to focus resources of an entire nation to the good of business and its elites who then feed wealth back to the political leaders.Another small point is that, contrary to the popular view in which the US was moving during WW2 as a mass in lockstep, there were violent and hard fought labor disputes. There were conflicts with longshoremen, dockworkers, munition handlers and the merchant marine. The later group had higher casualty rates than most of the armed forces as they played 'slap and tickle' in unarmed and slow ships with packs of U-boats.This at a time when the Russians were our friends and their system of economic organization was not to be scoffed at. Partly because we were using many of its features. The US itself has largely converted itself into a very efficient command economy during WW2, contrary to the present party line. In fact many of the economies of scale, streamlining and coordination of production were adopted by the 'free market' capitalists only after their companies had been reorganized for them by the government during the war. These efficiencies, long overdue, and education policies went on to produce much of the prosperity that was seen after WW2 and before Vietnam where they were squandered.Collectivism in several forms has a long history in the US. American collectivism, unionism and Marxist inspired organizations all blended together. Americans were inspired by the writings, intention and logic of Marxism/Leninism in the face of the disgust and loathing of what unrestrained capitalism had done to this country. Just as it is wrongly assumed that the Army will not shoot citizens for bucking the establishment it is also wrongly assumed that the US is immune from revolution and mass insurrection if the distance between the top and bottom become too much and the bottom loses hope. The 'New Deal' was a rejiggering of the situation to reinforce the hopes of the poorest. A reorganization that was sure to be done by legislation and concession or mob rule. The former being the preferred method. But not the only one as has been seen in many other countries.
Excellent comments on democracy in the U.S., and why our founders feared it. I came across this 1939 quote by T.S. Eliot (in a Pat Buchanan column) where Eliot warns about the rise of democracy in a culture that lacks ethics:"As political philosophy derives its sanction from ethics, and ethics from the truth of religion, it is only by returning to the eternal source of truth that we can hope for any social organization which will not, to its ultimate destruction, ignore some essential aspect of reality. The term 'democracy,' as I have said again and again, does not contain enough positive content to stand alone against the forces you dislike – it can easily be transformed by them. If you will not have God (and He is a jealous God), you should pay your respects to Hitler and Stalin." In other words, politicians can and will use "democracy" as cover for their schemes. Ignorant, immoral, impoverished people are easy to seduce. Others can be killed, jailed, or marginalized. As long as the pols can buy off 50+% of the people and win elections, no problems mon. Rights? They'll give us all the rights they think we need, comrade.It's interesting that as the memories of WWII, Hitler, Stalin, and Mao fade, the same mistakes are about to be repeated.
It's interesting that as the memories of WWII, Hitler, Stalin, and Mao fade, the same mistakes are about to be repeated
Do you think our freedom of press might make things abit different from those examples mentioned above?
blue
I used to be shocked when I heard teenagers confusing WWII with the Civil War. Many know almost nothing of that era and the giant changes it brought in the world. The Press? It's simply a reflection of society -- they give us what we want to see and hear more or less until someone waves a dollar bill under their noses. Our country turned a corner in the last decade, and IMO we're headed for some ugly times because ordinary people are increasingly turning their lives over to bureaucrats. Here in CO, the voters just approved a $3.7B tax increase with the swing votes coming from the Denver area counties. Politicians convinced 52% of the voters that they can do a better job spending our money, even though it was their stupid, spendthrift ways that caused the problems in the first place! In the big cities, the vote was 70% in favor of the increase while in the rest of the state, those percentages were reversed. The people who vote for a living carried the day.Most of the large newspapers and media pundits backed the tax increase. I suspect their support had something to do with the political advertising budgets for the upcoming elections. Spending on political ads will make up for the drop in subscriptions from people who have less money because they handed it to the pols.
I feel the housing industry was driven too much on HYPE and there has to be a market correction sometime. I feel it will be regional and slowly migrate around the country. It will be scary for awhile and what shakes out may be a boon for people with cash. So just sit on your cash and move it carefully. Building suppliers may be hit the hardest which may be good for us. I don't feel it will get as bad as it did during Jimmy Carters administration. Lower taxes is good right now. And if the Feds slow their spending we won't be rocked as hard.
>>My aren't you a cynical one? <<
Cynical? No. Tired of you. Yes.
>>There needs to be fair, or an illusion of fairness for any civilization to work<<
You see Frenchy, you're making my point for me and yet, for all your rhetoric, you're missing the point. In my humble opinion, we already HAVE an illusion of fairness. For instance if Bill Gates pays nothing in taxes (and I can't recall if you said that or not, so don't get your undies in a bundle saying I'm putting words in your mouth), but his mega corporation DOES, that's ok with most folks.
>>If Roosevelt hadn't come along with his new deal would America have gone the way of Russia?<<
You've now gone from tax expert to futuristic prognisticator?!? How the heck do you know this would have happened? That's like me saying that if it weren't for Reagan Europe would have fallen to the Soviets as well. There are many thoughts and theories, good and bad, about Roosevelt and his "new deal". Roosevelt was also a fan of pensions. You can see where that's getting us today.
strokeoluck
Bill Gates is probably a bad example of my point, the really classic examples of abuse are too obscure for common discussion.. For example I know that Bill Gates intends to donate almost all of his profits back into society that he already donates heavily to schools and to world health..
I used Bill Gates not as a villan but to point out that wealth in this country has privledges that the middle class will never experiance. Included in that is the ability to influance the laws our politicains pass. That influence is often abused in ways you would never begin to understand..
Same with Warren Buffit, I really respect some of the common sense positions he's taken in his pursuit of wealth.. He's done quite a bit that is admirable and worthy and I honestly believe that he's earned whatever benefits he gets..
I used those two individuals as examples simply because they are well known and immediately draw a mental picture of the kind of wealth I'm talking about.. Too many here think when I discuss being rich I'm talking about middle class kind of wealth. where you have a nice car/ home and a few bucks in the bank.. The Cargill Mc Millans are a far better example but since they pay publicity agents to keep their name private they aren't well known enough to be discussed.. In fact of the top 1% of the wealtiest people in this country most are really obscure..
Look at the tobacco companies for example. Who are the prime owners of those? The liquor companies, even the top drug companies (legal) You can find the CEO's and company presidents etc. but finding out much about the actual owners is far more difficult..
Part of that privacy is warrented.. They simply don't want to be the target of criminals.. Fair enough.. The rest is because it is simpler to pull strings and make changes when your actions aren't public knowledge.
As for my ability to forecast the probable turn of events, it's based on history.. every action has a reaction and if you understand the action it isn't much of a step to forecast the reaction.. Imagine if America had adapted the republican parties policy of America first..
That was a major plank of the republican party prior to America's involvement in WW2 The America first movement lead by Charles Lindbergh Strongly tried to keep America out of WW2. If the republican position had dominated England would have fell. Without England to stage our invasion of Europe Amrica could never have been successfull in defeating Hitler.
As for your comment about pensions, Only recently have they come under attack.. Corporations raided the pension funds and instead of Ceo's and others going to jail as they should have, Bush left them alone..
Re: "The America first movement lead by Charles Lindbergh Strongly tried to keep America out of WW2."The movement to keep the US out of the war was not small or insignificant. Father Coughlin was preaching and spouting his own special brand of hate and antisemitism to an estimated 30 million households and this when the US was a less populous nation. Also Henry Ford had produced his own version of the Hitler youth. Was a well documented antisemite and fought long to keep the US out of the war. Not entirely surprising seeing as that Ford was making profits from both sides. Read more about Ford and WW2 German connection:
http://www.washingtonpost.com/wp-srv/national/daily/nov98/####.htmIf the Japanese had not bombed Pearl Harbor and the Germans not held up their end of the pact with Japan by declaring war on the US the US may not have gotten involved for years. Years that Britain couldn't spare.
4Lorn1
Exactly! Ford began to lose his vision as the twenties ended and thethirties began.. That's when he went in serch of solutions that conformed to his concept of religion. His solution was Hitler! He was in awe of Hitlers efficency in turning Germany around economically and believed there were lessons for him to learn.
(the Irony is that Hitler thought Ford a fool. and one by product of his meeting Ford was the VW. Hitler figured if a fool like Ford was capable of dominating the production of automobles in the world as he had,... the superior German's etc. etc. blah blah blah!)
As for The Japaneese bombing of Pearl Harbor, You need only to read history to know that Hitler did as much as possible to delay that.
Hitler's world vision Delayed America's involvement untill 1946 or 47 by which time his V3 rockets would have threatened the US east coast. Forcing America to sue for peace.. Support for the America first movement was largely funded by Ford and other major industrialists..
Hold on a minute there buddy.
Cargill has Turkeys and Hogs here plus I believe some chickens.
The water at your house comes to my house , via rivers all barge access.
Isnt that somthin?
They bring feed up the Arkansas and grains.
We got us a real live Cargill plant here .
Tim
Mooney,
Cargill buys feed at a price that almost is a guarantee that some farmers will go broke every year. Their relative size ensures that they get the very best deals..
In the past when one person dominated a whole industry America found that it was in it's interest to bust the trusts.. Because they pay the politicains in the form of campaign contributions no politician who needs to run for office is ever going to bite the hand that feeds them..
You and the rest of the middle class Americans wind up paying more and more every year for food while paying the taxes that Cargill uses to increase their profits..
drive around this country and notice just how much Cargill owns.. Or better yet get yourself admitted to their headquarters and go downstairs and look at the glass wall that lists their major assests.. It will shock you!
Frenchy, so now the reason some farmers are "guaranteed" to go broke every year is because of Cargill and their prices? Given what you've shared with us so far I'm sure you've got some story of an old Uncle Joe that used to be a farmer and therefore you know all about this. Let me beat you to the punch...
1) I once had ten dairy farmers in my immediate family. None of them farm any longer. Not one of them blames Cargill. Nor do I recall ever attending a farmer's wedding, funeral or family reunion where the Cargills were blamed (although I suppose it's entirely possible that they were all just too thick-headed to know as much as "Frenchy" knows when it comes to getting shafted by "the man").
2) All of them "blame" bigger farms that had more land and capital to be more efficient and utilize more productive methods of farming. In other words market forces drove them out of the business. I know...not the sappy "save the farmer" story most Democrats want to hear about (and no, I don't care what political affiliation you have, I'm now referring to Democrats in general; not addressing this statement to you), but it's reality.
3) Most of them are SOOOOOOOO very glad to be out of the business. Sure it was painful short term for some of the younger ones to find other professions. But they're glad they're done with farm work. They all chuckle when they see concerts like "farm aid". The reality is most small farmers, if they had to do it all over again, would not choose farming. Sure they love the land, love the animals, love the integrity of the work. But it's incredibly hard work with little pay (again, no Cargills involved here) and the only way you eke out a living is if you stick with it long enough to sell your land to a housing developer.
- Rob
strokeoluck
Check to see who owns the biggest farms in the country.. ADM and Cargill's Cargill is a little more sophisticated than ADM in that they own farms not directly but thru small holding companies.
The only reason I'm aware of that is I had access to Cargills corporate headquarters. If you could get into that place, and spend ten minutes looking at the glass wall where their corporate holdings are listed you too might begin to understand..
Since Cargill employs publicity agents to keep their name out of the public spotlight the depth of their holdings aren't as well known as Bill Gates is for example.
You keep thinking that Cargills had no impact on farming prices.. Can you explain how they couldn't? They are the worlds dominate player in farming and commodities. The price paid for grain is low and remains low for a considerable time. Thus farmers either lose money or make too little to offset all of the hard work and honest effort they put into it.. When they sell out, guess who winds up owning their land?
Is it possible that the other 21, 970 pages have a benefit to MR. Gates that you and I don't have
No, not possible. The beauty of America is that everyone here has the ability to create what Bill Gates did. The opportunity still exists today. Bill might be the richest man in Babylon today, but his throne is open for the taking. Anybody can do it from the lowest of the low to the most privileged.
Freedom of choice and the abilty to own property and business make this a great country. Instead of complaining about CEO's compensation, maybe more people should strive to be a CEO and reap the rewards.
blue
Amen brother.
- Rob
blueeyedevil,
I wish it were so!
The facts are that the tax code is currantly written to favor the rich.. If it weren't then what is the need for 21, 970 pages when you and I only get 30?
Finally there is only one CEO in a company, If it was simply merit that made a CEO the CEO then your statement would be valid.. That isn't the case and it's been so well documented so I shouldn't need to justify it.
The pay for CEO's is way out of line and that's not just my position but the position of many hard headed investors.. Warren Buffet has said as much.
Why should someone earn millions of dollars running a little pizz ant company like General Motors <G> when the president of the country only gets $400,000.00 ? (especially when they are doing as poorly as they are? )
I love the idea of merit and ability determining your station in life.. and if the rules and laws were fairly written maybe I'd be worse off, maybe I'd be better off but at least it would be merit and not who daddy was that determines my fate..
Frenchy,I've been following this thread since it's inception. I'm now reflecting on stories that I've read about how you got out or the AF with no money but now are building a dream house on the lake.Would you attribute your success to favorable tax laws and good breeding or hard work and determination?You keep saying the same line that the tax code is 21,970 pages too many for the little guy, do you really believe that? Does it really matter how big the tax code is?
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Jon,
Sorry but it was the Navy,Naval Aviation, wings of gold not lead like the Airforce uses <G> , OK how did I achieve what I did?
Hard work, ambition, luck, timing, not making too many foolish mistakes, coming from a successful white middle class background and attending excellant schools.
The tax code helped me a little. I've already said how little I pay in federal income tax. I'm also aware of how the tax code and such CAN REALLY KICK IN .. I had an Uncle who was among the richest people in Minneapolis. For some reason he took a shine to a smart azz kid and gave me a lot of advice. The main bit he gave me that remains to this day is, Always consider the tax consquenses before earning the money. (this was in the late 1950's) (PS I paid income taxes at the age of 5!)
Jon,
You asked about how big the tax code is and does it really matter?
Not if you don't care about fairness..
It's very complexity prevents most people from reading or fully understanding the tax code and all of it's ramifications..
How many people get excited about so-and so getting a tax break that most don't enjoy? can you imagine the evening news reporting that Bill Clinton took deduction 97312.87b?
But they sure do get excited when a little sex is reported..
Taxes are boring and you don't care, sex is exciting and your ears perked up.. Yet which means the country has a strong military? Which means that your city can hire new policemen and which is just fluff?
If your neighbor was selling crack cocain next door, You'd report him but chances are if your neighbor told you about a tax dodge he was using you wouldn't report him..
I don't know Frenchy.You're a very optimistic guy, even when you're being a pessimist.>>>"It's very complexity prevents most people from reading or fully understanding the tax code and all of it's ramifications.."I remember in a recent thread S. Hazlett said you can make more money with a pencil than tools sometimes. Jeff Buck followed up with noting that he encourages Cory to be smarter than those who can only rely on tools to make a living. I think this is a good illustration to refute your point.Just becaue the tax code is long, boring, and complicated that doesn't mean that it's unfair.For the record, I wish the tax code was more fair. It would be very fair, IMHO, if every one paid x% of their income. No deductions to take, just a flat tax. I'm sure there's plenty of reasons why this idea is bad, but those with money would still be paying more than those with less so we wouldn't be completely giving up to the aristrocrats.
Jon Blakemore RappahannockINC.com Fredericksburg, VA
Jon,
I certainly understand the appeal of a flat tax.. It's very simplicity is why it has appeal.. That plus the very valid point you made that some of the very rich would at least have to pay something.
The objection to a flat tax is the level of burden it places on each person.. (sorry,... here I go again with examples) A bag lady (or someone living close to the edge) might starve if she is forced to give say 10% of her money in taxes. The middle class might not be able to pay their mortage or send their kid to college if they are forced to pay a flat tax while the burden on the CEO of a major tobacco company would be minimal..
I like the concept of a progressive tax rate.. the simple beauty of those who have the most too lose need to pay the most to keep the status quo..
A bag lady (or someone living close to the edge) might starve if she is forced to give say 10% of her money in taxes. The middle class might not be able to pay their mortage or send their kid to college if they are forced to pay a flat tax while the burden on the CEO of a major tobacco company would be minimal..
hogwash!
The biggest reason that the flat tax will never be implemented is because it would put 1/3 of the workforce on the streets (accountants, bean counters, tax collectors, etc, etc, etc.).
blue
The facts are that the tax code is currantly written to favor the rich
And there's nothing stopping you from being one of the rich! You are the only impediment!
blue
Blueeyeddevil,
If and when I become really rich shouldn't I pay my fair share of taxes? Or should tax attornies and politicians make it so that I pay less than my fair share?
It's really simple! If I don't pay my share and the money is spent anyway, that means you and other like you will have to take up the slack..
Frenchy, don't believe every billionaire is paying zero taxes. That's just what the liberals want you to believe.
If you really want to do something about the tax situation, maybe it's time to embrace Forbes national sales tax policies. Several countries have used his idea and are doing quite fine.
blue
Blue,
If we're going to have a meaningful discussion you cannot make statements I haven't said and them attribute them to me..
First to clarify, I never said All billionaires.. can't we both agree that some billonaires maybe even (Bill Gates and Warren Buffet) may pay their fair share of taxes or at least what the tax code requires them to pay?
What I have repeatedly said is that the tax code is written to benefit those who pay for the election of politicains.
Second I accept the idea of a national sales tax as long as it applies equally across the board to all purchases.. Why should you be required to pay a national sales tax on purchases for your business and Warren Buffet be exempt from doing the same when he purchases IBM?
Why should a housewife need to pay a national sales tax on her Minivan and have the chairman of the board of Phillip Morris be exempt when he buys his new Gulfstream 4?
I aspect in all this is that, contrary to common belief, it is not the average and poor who are steering policy. Iraq, a half Trillion dollar rat hole so far, was not lobbied or pushed for by the middle class and poor. Even Afghanistan wasn't pushed for much by the average American but that sale made a lot of sense, to both the American people and the rest of the world, so it was no great burden to make that sale. The Iraq issue was more a manufactured dog and pony show, in the worse possible sense. At least one termed it a God and phony show. Many will claim it was perpetrated for the nebulous claim of 'the good of the people' or lately 'the good of the Iraqi people' but, in the terms of the Watergate mouthpiece, it is always useful to 'follow the money'. A lot of well heeled, positioned and connected people closely associated with the people who manufactured and pushed the case have made a whole lot of money. The vague and ill defined benefits that are supposed to be enjoyed by the American people some time in an undefined future remain theoretical at best. Verging on hypothetical. But the financial benefits have been very substantial, very real. Those in power have throw a flag over it and obscured the view with crosses and many have bowed and saluted out of reflex and confusion but past the woodwork and under the multi-colored rags there is a large dollar sign. Well polished as the touchpoint of power. And this is the idol that is being worshiped. The average citizens don't make, or have much input into, such commitments. Missile defense systems that are physically incapable of ever stopping the threat. Multi-Billion dollar aircraft that are less capable in the real world than ones a tenth the cost. Tax breaks for Billionaires. Including the elimination of taxation on 'passive losses'. Another guarantee that businessmen won't pay a cost for a decision to build what is not needed. The vast majority of the tax code benefits the well heeled not he average citizen. The whole idea of Reaganomics, making the rich richer on the off chance some benefits might shake out for the poor, makes about as much sense as trying to feed the chickens by stuffing the horse full of oats. None of these changes were pushed for by the average citizen.Which brings up an underlying reason why the well off deserve to pay more. The better off you are, the more cash and power you swing, the more likely it is that the government will heed your cries, adopt your viewpoint and support your causes.Some of this has to do with politicians wanting, needing, money to get reelected. Part of this is because politicians, same as a lot of others, tend to want to hang with well dressed and cultured people who are untroubled by the need to go to a regular day job. Consider when the majority of public meetings are held and the when the majority of legislative lobbying gets done. Business hours. If the ordinary citizen wanted to have some meaningful input they would need to take time off of work. The intention, conscious or not, is to exclude the common citizen so business as usual can be perpetrated.
tip 'o the hat -
your set up and middle arguement were very strong, but kinda faded at the denoument -
"there's enough for everyone"
Ah well.
Ive been following the thread and keeping my mouth shut for its turned political . Political is somthing I cant change . You didnt make the thread for political and only interrested in statements to fact that deal directly.
I actually think you are in good position with vaction rentals. All the research Ive done repeatedly anounces very strong profits with low ball maintenence considering the very high prices. Recreation properties are in my mind the best out there because they bring in such an inflationary price compared to worth. Time shares are robbing people of an illusion of ownership. Those rates are the very best recorded to "sell " people a week of rental with a yearly fee for up keep. What a deal. Last time I accepted a trip to music city Branson Mo, they wanted 5250 down for a one week piece of the pie for what I valued as a 65000 dollar property. Multiply that at 52 weeks paid in advance. Once they get their money whats keeping them from splitting? Nothing as has been proven by stock markets and retirement funds. Talk about a bubble bursting !
You asked why Arkansas is booming so fast but Shreddar answered for me . Thats ok but Im going to release the divulged secret that is open market news.
We house Walmart corporate, Tyson foods, and Cargill. All are low paying companies compared to your state . Drum roll ; People here would think they cut a fat calf if they could land a job making 12 dollars an hour! Arkansas landed Toyota this year! Our plants here pay 7 dollars an hour and they pay family medical out of their check. The person employed is covered in most cases. If they had a 12 offer and family medical paid they can hire the cream of the crop from every plant. We lost Toyota here to another area of the state but are entertaining other automobile offers. Meanwhile we continue to put meat on your table cheaper than anyone else will. China is self efficient but they are buying our processed chicken along with other countries. We are providing an export because we do it cheaper. As old timers say around here ,thats the meat of it with out throwing in potatoes.
We continue to buy used vehicles shipped in from other states because there is market here for lease vehicles when they are auctioned . Rental car companies ship directly to Little Rock, Searcy , Tulsa Ok and Kanasas City Mo. That makes a statement . New car stores like selling one year old used inventory with extended warranties.
There is land here for 1000 per acre in 40 acre plus tracts. It is said that the Mennonite are aquiring all the land . Well not all of it but they are sucking up big sections and raising chickens for Tyson. I have respect for their forsight and business sense because its a market that is "working" . Yall are going to keep eating meat if you dont drive a new car. Take it or leave it but its fact. Mennonites keep moving in here throwing up farms and poultry construction is solid. Those 400 ft houses are being framed and built for minimum wage to about 8.00 per hour.Framers are being trained there for I was a super building them several years ago at 12 bucks. Those boys would love to put cars together for 12 bucks out of high school. Toyota came and we are expecting more to come for a piece of the American pie. Theres a prediction on where it might be happening away from Mich. We dont think GM will lay down and quit but thats editorial and not fact yet.
Somthing has to give with the outsourcing of jobs. Weve got to do it cheaper to hold on. Plants will make those moves as they have demonstated already.
I guess you heard Ms is letting casinos rebuilt on dry land to stay in business and retrieve revenue. I think thats an example of what plants are going to continue to do. From the facts it suggests that its going to be a chicken scratch world for a while , so do se doe. Enter the dance or sit it out.
Mike and Piff will make a living where they are until its time to hang it up for they are in good position where they are to sell labor. Odds are they wont retire there. My prediction for them would be to cash in and head for somewhere their money is worth more that they have made and will make. The baby boomers will want to extend their money made when they hang up their nail guns unless they are in a semi retirement business where they are such as the rental business where their knowledge and money can survive their greatest existence. Where ever that may be .
The hurricanes alone will give a strong out look to construction to the coast where it happened. Many others will shuffle to other states as they have to here and surrounding states. Right now several other states are offering a better life to the victims. Arkansas wouldnt mind supporting a greater labor force that would be willing to join the stuggle of scratching out a living which is more than many of them have now. We could draw more plants to produce for Walmart where there distribution centers are located. We could also make farmers out of them.
For me I see watching the movement and looking for openings as always . There will be oportunities. That would surely differ from state to state and even area to area. I have noticed you always have your head up looking . I think thats the answer and reacting to movement . Sounds a lot like studying fishing as envirement always changes it . You have to keep moving to stay over it .
Tim
Second if it is true that the top 1% of Americans' own 90% of it's wealth why aren't they paying 90% of its taxes?
Wealth and Income. Two very different things. Be careful what you wish for. Taxing wealth won't be the answer your looking for. What do yuo suppose they'll do with that wealth when it starts getting taxed?
What do yuo suppose they'll do with that wealth when it starts getting taxed?
Most of it is already moving overseas...
Robert,
Bosshog suggested that we tax spending and I suggested while that had merit we should also tax wealth..
If someone chooses to leave America to move to a tax haven they will do so. (it is a free country) But in doing so they lose the advantages of being an American.. Should they decide to return to America once they find out that there are shortcomings to living in a tax haven as well they will then owe back taxes..
OK Frenchy,
Define wealth? What arbitrary dollar figure would you assign it? My inlaws, neither one graduated highschool by the way, have at least $2 Mil. Are they wealthy? Is a guy who has amassed $500K by the age of 28 wealthy? Where is the line drawn?
More importantly, how do you justify taxing money each year if it wasn't earned? That wealth was taxed once in the year it was earned. Taking any of the proceeds it generates will also lead to taxation. And, in many cases any efforts to touch the principle will lead to taxation becasue of how it is invested or shelterd. So now you want to tax it just because it sits there? OK, I'm on board so long as that tax extendeds down to anyone with more than $2500 in savings. See the ubsurdity of it all now?
Frenchy you continue to propose tax plans predicated on the FEELING that those with more should be punished because they will feel it less anyway. This would all be much easier to take if you would simply admit your Communist party affiliations and be done with it.
People with wealth invest in sure things. They buy blue chip stocks. They buy established businesses or start ones that are fully funded and have a good chance of surviving. They make the investments that make this economy go round.
Give those people with wealth a reason to move off-shore or out of our country and watch them run. And, watch our economy topple around us. But best of all, there is some small country just waiting to house all that wealth for them and there will be no shortage of places for them to go. Don't believe me? Look at rock stars and proffesional athletes from some of the countries with absurd tax laws and you'll find that most are expatriots.
Robert,
You're not even close.. Wealthy means the top 1 or two percent of Americans as determined by their net worth.. Would you understand if I said mega rich? Owning a $5 million dollar yacht doesn't even begin it, nor does owning a fleet of private jets..
It's not feelings.. It's based on America's history and why we were formed..
America never wanted to become a second rate England where those of noble birth were granted special privledges.. It is and was a meritocracy.. Where people like George Washington and Thomas Jefferson could become president not because they were a member of the lucky sperm club but because they were of good charcter and merit to achieve that on their own..
As for wealth flight,, the simple facts don't prove you out.. The rich can move from England to several tax havens around the world.. You can't swing a dead cat in England without hitting a Lord or wealthy person who owns a fabulous estate, same with France and Germany etc.. sure there ar a few in Monte Carlo and other such places.
But Far from every wealthy person.. (heck, who would Rolls Royce sell to if they all left? <G>)
Same with America,, you can move to the Bahama's and many other tax havens (like North Dakota <G>) but rumor has it that most Americans stay in place, grumble about taxes but pay them.. I don't know, you might check to see if Bill Gates and Warren Buffit have left..
Finally Rock stars and Pro athletes are some of those who most directly benefit from Bush's recent tax plans.. Do you think they are moving back since he got the plans approved?
A lurking painter I am. Taxing wealth? So you penalize someone who lives within their means, saves and build equity and works long hours? You tax these rewards? And then where do you send these revenues? Even the thought of this sends a cold shiver down my paint spattered pants. Believe this or not you can acquire wealth in this country without inheriting.
Stinky,
I think if follow the trail to the beggining You'll see thats the argument I was trying to make. Taxing wealth is insane first of all and how exactly are we defining "Wealth".
stinky,
In leu of income tax the tax formula is based on wealth..
With the richest 1% of the population paying 90% of the nations tax bill..
(I'm trying to be fair here, since the richest 1% own 90% of the nations wealth why shouldn't they pay 90% of it's tax bill?)
As for someone who lives within their means, saves and accumulates a little nest egg for their retirement unless they become the richest 1% they won't have any real tax debt..
The wonderful thing about a wealth based tax is that it helps dramatically the young family that is just getting started.. remember how hard a struggle it was to buy your first house? Heck just to buy the drapesand rugs caused me to stretch the family budget so much we couldn't afford vacations.. The family choice was rugs and drapes rather than a vacation..
When you are starting out you need everything, one thing you don't need is to pay a big portion of your income for taxes..
As you age and accumulate wealth your tax obligation would increase.. However the middle class which currantly has the biggest tax burden would get a major tax break under a tax the wealth program..
Nobody would be free of taxes as along with a wealth tax we'd have a consumtion tax.. (a sort of federal sales tax) That would help[ those who want to save and live within their means, since they wouldn't buy frivously just to keep up with the Jones and thus they wouldn't spend as much for the consumption tax..
The problem with that logic Frenchy is that the bottom 20% of all taxpayers pay -2% of the tax burden.
It's just driving you nuts that someone has something that you don't? Explain to me again why it's ok to tax wealth so long as you define wealth? Would you still be interested if wealth was defined as anyone who has more than, oh lets say, $5 less in the bank than Frenchy?
Look at the property taxes in "wealthy" areas. They already pay a "Wealth" tax.
Go ahead and tax the hell out of those "rich" people. Just remember, unlike most of us, they can live anywhere they please. If you start making enough of them angry, they'll just pick up their toys and leave the country, and Uncle Sam will have to do without the tax revenues they pay. Remember, one percent of taxpayers is only about 1.2 million people, even though they pay 38% of income taxes. Lets say 100,000 of them left the country in protest. It would cut government tax collections by about 3%! Hmmm, I wonder who our good Uncle Sam will visit to make up the difference? That's right, the folks remaining will pick up the tab -- so who wins in this whizzing contest?
to everyone
Goodevening gentlemen..just one little note to all, remember who our customers are..they are not the 38g income household.The consequences of making the wealthy pay the majority of taxes does not bode well. I detect a tinge of resentment towards the wealthy here in the U.S.
Our tax system suffers greatly...Way to complex. I believe we need to keep the wealthy engaged in spending THEIR money any way they see fit. If it includes a G-4 or a having a marvelous room addition built(hopefully by one of you) so be it. On the wall in my shop is a large sign that says "Remember the golden rule,the customer with the gold rules" Chow, Stinky
TJK
well by your logic then we should give a bigger tax break so the rich stay,,
Hmmmmmmm, let's use do a little test and see how it holds up..
North Dakota has no state income tax.. So by your logic all the wealthy Americans should live there.. Well guess what,, that's right! the rich live in places like Conneticut with a high state income tax.. rate.. And Calfornia, and Hawaii.
As for North Dakota, I recently read where it has the smallest percentage of wealthy in the nation..
C'mon now, I said the rich can live anywhere they please. And for that matter, I don't know many poor people who would volunteer to move to ND! The tax code has to balance many factors and my point was the rich are probably not a good punching bag because they have the means to punch back. Raising tax rates on the wealthiest Americans will not solve any problems in the long run. Its as silly as the policians who are calling for windfall profit taxes on oil companies -- the oil companies will simply pass the increased cost of those taxes on to consumers, duh-oh!
Edited 10/30/2005 9:39 pm ET by TJK
TJK
While you have a valid point regarding the idea of somehow getting congress to controll their spending, it really isn't going to happen..
Much as you and I would like to see it, it isn't possible..
Every state has it's special interest groups who need to be pleased.. That all costs money.. I don't care if it's the VFW who want a statue put up or the road building industry who want new roads built or some poor single mother who wants food..
All of those groups demand money, your tax payer dollars..
(OK and mine too<G>)
The only way to keep them happy and get reelected is to satisfy those wants.
Using judgement is for those who have no fear of reaction by the electorate.. If a senator denis a new road, how many people will vilify him? (especially when his opponant is pointing out that road?)
As for passing on costs, well that isn't always possible.. The free market system ensures that.. raise the price of oil too much and suddenly people start to buy fuel efficent vehicles, or seek alternatives.
I've repeatedly said that someday I hope to be stinking rich.. I hope that the taxes I pay make others shudder! Because I know that no matter how much I pay I'll be a whole lot better off than if I was poor and didn't pay any taxes!
The only real question left is what's fair.. Should those who have the most pay the most? or should they be able to with the aide of smart tax lawyers, friendly politicians, and a very liberal president (at least as far as tax breaks for the wealthy) pay les as a percentage than most middle class?
robert,
Pretend you are going to design a tax code that is fair. Should those who have the most pay the most?
Yes I pay a great deal of property tax on my home because I live in the richest zip code in the state and I live on a very desirable lakeshore parcel.. That is only fair..
(in case you don't understand, I pay more taxes because I have more and I think that's fair)
Now wealth,, Hmmm. I would think that if you make the Forbes fortune 500 list you are rich.. I wouldn't make the Forbes fortune 5 million list or even the Forbes fortune 50,000,000,000. I think I'm somewhere around the Forbes Fortune 140 million.. (another words right in the middle)
regarding your complaint about the bottom 20% not paying their fair share.. Hmmm. I wonder if they pay a gas tax when they buy gas, or cigarette tax, and lottery tax, etc..
I know they pay property tax otherwise the landlord would have his property foreclosed.
Kowboy, if you've read carefully, you'd understand that 94% of Michiganders are still employed. No one is saying that all commerce has stopped. All I'm pointing out is that there is a definite chill in the housing market in Michigan.
I know it's hard to remember so far back, but it wasn't too long ago when no one thought the stock market would ever take a dive again. The dotcom bust surprised everyone and I'm predicting that the housing bubble will have the same effect.
Big money will be made because the housing bubble bursts, just like big money was made on the dot com bust...by some.
blue
Blue:
How do you reconcile your "definite chill in the housing cycle in Michigan" with the 60 day, $300,000.00 sub division sell -out that I witnessed yesterday? How can a developer, Sonrise in Grand Blanc, have an eighty-lot subdivision priced in the 300k's sell 40 lots in two months if there is a "chill" in Michigan housing?
Kowboy, I'm not familiar with that Sonrise subdivsion in Grand Blanc. Where is it, I'll go check it out. I'm very impressed with those numbers. I'm curious about the style, size and quality of the homes.
I know for a fact that the spec house inventory rose substantially in the Grand Blanc area from last year to this year. Delcor has a sub a mile from me (I'm in the Grand Blanc area) that has put up a whopping ten or so houses in two seasons.
I think the biggest story would be the big multinationals. Pulte put a huge load of carpenter contractors out on the streets this season.
blue
Try this:
I'm amazed that I've never ran through a SonRise sub, since they have 7 subs in my neck of the woods. I think perhaps one of their "future" subs might be one that I was chasing. It was a foreclosed sub, with the streets in, that has sat empty for the last 2 1/2 years. All the utilities are in. Nothing has happened till two weeks ago. They sent a crew in to mow all the weeds down. We traced the owner to a lawyer who controls it, but he never would return our calls. I was pretty sure they were just waiting for the redemption period to expire before they start building. I expect to see holes in a few weeks.
I just checked out their website. An article trumpets that they have sold 45 houses or condos in the last 90 days. Thats not bad, but it's not Feruary either. Everyone has strong sales during the last 90 days. The dog days of winter will soon be upon us....
I will drive by their subs, but there's one interesting thing about their website. They don't specifically give directions or street locations to any of their subdivisions!!!???!!! The map give a general idea, but I was astounded not to find exact locations. I wonder why? Their website seems to be above average.
blue
Have the property taxes followed ,betting not .
Have the property taxes followed ,betting not
The tax revenues will drop, if the property values do, but that will not show up till next year.
Michigan is a high tax state. We have high gas tax to pay for crumpled roads. We have so much road repair needs that I actually hate summers because every major road around me is bottlenecked with contsruction barrels. I pray for the frost that will freeze the earth and give me a three month respite from traffic jams.
blue
It may be that the "professionals" are doing a bad job.
I was in BOyne City, Michigan to care for a house 2 weeks ago. The house is appraised at $205k. We had a pair of real estate "professionals" out because the house was going to be sold. One said they could list it for $185. The other said it would sell for $165.
Considering the commissions and various expenses, the owner would clear $150k.
I know people who will still let the owner clear $200k for the house.
The $50k difference is caused by "professionals" moving houses not in getting fair prices. That shows up as a drop of real estate prices.
I know people who will still let the owner clear $200k for the house.
Your statement doesn't make sense. You claim to know people that will buy that house for 215k? Why don't you buy it at the $165 and flip it?
blue