The greed of Wall St. and the Banks have put US second to China

The headline news today is from Paul Volcker. Here's some excerpts from Bloomberg's article:

Volcker Says China’s Rise Highlights Relative U.S. Decline
By James Tyson and Michael McKee

Sept. 29 (Bloomberg) -- Former Federal Reserve chairman Paul Volcker said the rise of China and other emerging economies has underscored a decline in the comparative economic and intellectual leadership of the U.S.

“I don’t know how we accommodate ourselves to it,” Volcker, an economic adviser to President Barack Obama, said in an interview with PBS’s Charlie Rose taped yesterday in New York. “You cannot be dependent upon these countries for three to four trillion dollars of your debt and think that they’re going to be passive observers of whatever you do.”

The former Fed chairman also said unemployment at 9.7 percent will slow the pace of recovery from the U.S. recession as Americans default on mortgages and consumer loans. Moreover, commercial real estate loans are likely to cause further losses for banks.

“This recovery will be slower,” he said. “We can’t just pump up consumption and pump up housing again.”

Most of the people who did this to America were leaders in the financial system of our country and they have ultimately relegated our country to a more diminished place in the world economically. Yes, we still have strong Military power, but eventually this sellout of our way of life because of their greed will affect Military spending too. We have no other choice. We're broke while the wealthiest of Americans participated in this scam on America. They were supposed to be so smart, but couldn't they have seen derivatives produced no real products for consumers or really added any substantive assets to our country. It was all just paper (money) and it made our real wealth disappear as we have now nothing but debt and we owe it all to China.

Story of the day: TAXES!

So 2 more people have problems not paying their taxes. The first was Geithner, now Treasury Secretary. Today there was Tom Daschle, who decided to pull his name as Health and Human Services Secretary. The other was the newly created Chief Performance Officer who was to watch performance of Gov't agencies.

Let me vent for a moment on taxes. First of all we have been screwing up these past 50 -75 years because we have been taxing income. All these years while we were consuming beyond our means, we have been taxing income, instead of taxing consumption. Now that the American people have started to save and not spend what they can't afford, watch there will be a someone pushing for a Consumption tax. That's like closing the barn door after the horse has run away. But someone will promote this idea, most likely a Republican.

There is an advantage to a consumption tax. One advantage is that it doesn't require any special paperwork, or create the type of problem Daschle had today in not reporting income as he used the services of a car and driver and said he never thought about paying the tax. With the consumption tax, you pay the tax immediately when you make the purchase, as you do now with State Sales Taxes. Over time we will see where this goes. But we are moving from a Consumption society to a Savings society because of the current economic crisis. Now would not be the time to move to Consumption taxes. But a simpler tax code surely would help.

Bailout: Wall Street or Main Street? Who to believe

The predicate for this $700 Billion dollar bailout plan is that it isn't to bail out Wall Street, it is needed to bailout the economy. Well let me point to previous calls by the President and Wall Street as to what determines the health of the economy. There are 2 things that determine the health of the economy. It is Corporate spending and Consumer spending. In fact, we have been told around Thanksgiving each year that it is the Consumer which determines nearly 67% of that equation and Corporate spending the other 33%. One could make a very good argument to give the $700 Billion to Consumers instead.

Yes, business needs to be able to borrow to get the goods and equipment necessary for their businesses to function. And our economic system is based upon consumption. However the Government doesn't tax consumption. Maybe it should and we need to reshape the tax code. As more and more of our population retires we won't have enough Income from the rest of the population to tax adequately to get the necessary funds to keep this ship afloat. Maybe indeed it is time to change the tax code to a Consumption Tax and away from an Income Tax. That way everyone pays including illegals and those who cheat on their taxes.

Today's Republican Debate

I watched the Republican debate today hosted by This Week's George Stephanopoulos, and was surprised at what impressions I walked away with. There was so much bluster and machismo about fighting a war and attacking our enemies that no wonder we are in Iraq. It seemed to me, with the exception of Ron Paul, every candidate wanted to fight someone, somewhere and sometime. If you like war most of the Republican's running this time won't let you down. I must admit I was impressed with Ron Paul and secondly by Mitt Romney, of all the candidates. Mitt is very smart and it showed today.

I did like the question on whether candidates favored a "Fair Tax", which I beleive is a consumption tax. I do support a Consumption tax so that everyone would have to pay a tax based upon what they purchase. The more you purchase the more your tax is. The less you purchase the less taxes you pay. It would help to eleminate the IRS.

The one inconsitent position of all the Republican candidates, except Giuliani, was their support for Pro Life at a time when they all espoused the killing of life by this war of choice in Iraq.

Overall, I wish that there wouldn't be so much talk of waging a war, continuing the war in Iraq, the use of Nuclear weapons to bomb the holiest mosque of the Muslim world located in Saudi Arabia. Cool down the rhetoric please.

Income tax versus Consumption tax?

At the heart of the debate on illegal Immigration and Border Security is a significant financial component. The argument goes something like this. All these illegal immigrants are causing major financial burdens on the rest of Americans because they don't pay taxes, work cheaper than legal immigrants and are destroying our healthcare system as they use Emergency Rooms to treat their illnesses as they don't pay for health insurance. In addition, we are not going after employers who hire these illegal immigrants.

A lot of these arguments are valid. However, there is a way to change the financial equation that could help solve part of this burden. It would require changing our tax system from a tax on income to a tax on consumption and that would include services. What do you think?