Where do you think cuts in spending need to be made?

Since there are going to be round the clock negotiations to hammer out a compromise on reducing the debt this weekend. I thought I would summarize the results of my Mini Poll here. Remember all this drama is going on in order for the Republicans to get concessions for their votes to raise the Debt Ceiling. It is clear how folks think these trade-offs should be made. Here's the question and their Vote:

Where do you think cuts in spending need to be made?

Answers and Percent in Favor of the choice
1. Everything, no exclusions. 39%

2. Increase taxes on just the wealthy. 33%

3. Increase taxes on everyone. 7%

4. Cut mainly from Defense. 13%

5. Cut mainly from Medicare, Medicaid and Social Security 6%

6. Don't need to cut anything or raise taxes. 3%

So 39% are in favor of cutting everything and 33% say they would choose adding taxes on the wealthy. That's a 72% majority.

Market outlook: Painful times

Lest there be any doubt, the markets are heading down a lot more down. If you had any doubts, look at the volume of Fridays drop in the chart below, with 280 million shares traded. Average volume runs about 180 million shares these days. The volume for the last two days should have woken you up to what's happening. The major stock of the Dow 30 stocks responsible for this spike at the close was Cisco's stock. This market move of the past 30 days is a systematic steady erosion and not the quick panic correction followed by a nice rebound. This is eventually going to get quite painful for most people.

Most people will watch the drip, drip drip of their losses like a deer caught in the headlights. Those of us who are on the short side of this market, will reap the rewards of our patience. But here this, I will not take much pleasure out of this as the true meaning of this decline was avoidable and many fine people are going to be hurt financially. As a newsletter I read today said, "Wall Street thinks all is rosy, but Main Street knows it is a depression."

I have posted many charts on this site and showed some 30 year charts in those posts. The future does not look rosy. I wish it did! But we must face the reality that our elected officials are not trying to solve our countries problems. And let's be honest here folks, the Republicans are still saying no to any taxes, even for millionaires. They would rather see us default on our debt and try and win some political advantage then to fix the economy. I realize I am being partisan here, so save your emails to me. The last time this happened was when the then Speaker of the House, Newt Gingrich, shut down the government. They lost the next election smartly. It wasn't necessary. People were reacting to the inflexibility of those in power. If everything is on the table, so is taxes!

The U.S. corporate tax rate: Is it really too high? Nope!

Yes, we are in a lot of trouble when it comes to our Debt level as a Country and if we don't fix that problem we are all going to be in worse troubles than we are now. Much is being discussed in terms of cutting spending by Republicans, Democrats and Tea Party members. Congress is feeling the pressure, especially by the Tea Party. All this is good but it deals with only 1/2 of the equation, cutting spending. The other part is to raise tax revenue for the government, which is off the table and not being discussed because they say we pay too much taxes now. That is why the Bill to attempt to have the wealthiest millionaires in our country pay more taxes was defeated in the Congress.

What we hear now is that our Corporate taxes are the highest in the world and need to be reduced. This is both true and false. How can that be both true and false at the same time, you ask? That's simple to answer. It is because while we have a top Corporate tax rate of 35% on profits, we also have a 0% tax rate for many Corporations as well if they can fit through the loophole. That is why companies like GE, Bank of America and many, many others pay no taxes at all. That's right, both companies made Billions of dollars in profit last year, but paid no Corporate taxes. In fact, Bank of America even got a rebate from the government. Here's the actual date on the Corporate Tax rate by Country. Notice what it says for the US. The best way to use this list is to think of a Country you think is financially doing well. For example, many believe Germany is the best economy in the EU right now financially. Well, their Corporate tax rate is 29.8%, but all companies pay that amount in Germany!


Country/Region Corporate Tax Rate

Afghanistan 20%
Albania 10%
Algeria 19%
Angola 35%
Argentina 35%
Armenia 20%
Aruba 28%
Australia 30%
Austria 25%
Azerbaijan 22%
Bangladesh 0–45%
Barbados 25%
Belarus 24%
Belgium 33.99%
Benin 35%
Bhutan 0–25%
Bolivia 25%
Bosnia and Herzegovina 10%
Botswana 15%
Brazil 34%
Brunei 23.5%
Bulgaria 10%
Burkina Faso 10–45%
Burundi 35%
Cambodia 10%
Cameroon 38.5%
Canada 11–16.5%
Cape Verde 15%
Central African Republic 19%
Chile 17%
China 25%
Colombia 33%
Croatia 20%
Cuba 30%
Cyprus 10%
Czech Republic 20%
Denmark 25%
Egypt 20%
El Salvador 25%
Estonia 21%
Finland 26%
France 33.33%
Gabon 35%
Germany 29.8%
Georgia 15%
Gibraltar 33%
Greece 22/25%
Guatemala 31%
Guyana 35%/45%
Hong Kong 16.5%
Hungary 10%
Iceland 18/3%
India 33.2%
Indonesia 25%
Iran 25%
Ireland 12.5%
Israel 25%
Italy 31.4%
Jamaica 33.3%
Japan 40.7%
Jordan 15/25/35%
Kazakhstan 17.5%
South Korea 13/25%
Latvia 15%
Lithuania 15%
Luxembourg 29.63%
Macau 12%
Malaysia 25%
Malta 35%
Mauritius 15%
Mexico 28%
Monaco 33.33%
Montenegro 9%
Morocco 30%
Netherlands 20/25.5%
New Zealand 28%
Norway 28%
Pakistan 35%
Panama 30%
Peru 30%
Philippines 30%
Poland 19%
Portugal 25%
Romania 16%
Russia 13–20%
Saudi Arabia 20%
Senegal 25%
Serbia 10%
Singapore 17%
Slovakia 20%
Slovenia 21%
South Africa 28%
Spain 25–30%
Sweden 26.3%
Switzerland 13–25%
Syria 10–45%
Taiwan 17%[
Tanzania 30%
Thailand 30%
Tunisia 30%
Turkey 20%
Ukraine 25%
United Kingdom 21–28%
United States 0–35%
Uruguay 30%
Uzbekistan 9 %
Venezuela 15/22/34%
Vietnam 25%
Zambia 35%

I think we should lower the overall Corporate tax rate but all companies profits should be taxed and all should pay with no exceptions. I don't care if the Corporate Tax rate was 25% instead of 35%. I'LL BET WE WOULD STILL GET MORE TAX MONEY INTO THE U.S. TREASURY THAN WE DO TODAY! After all, if we are the policemen of the World as Libya seems to show, we need to pay for it somehow and just cutting spending is not the answer.

Here's something that was published in August, 2008 and received little notice. You can click on this link and read the entire article. "Two out of every three United States corporations paid no federal income taxes from 1998 through 2005, according to a report released Tuesday by the Government Accountability Office, the investigative arm of Congress."

Are you seeing the problem now more clearly? I hope so!

Market outlook Update: Wednesday, April 15th, taxes are due

I have updated the chart above with an additional Red downtrend line which says to me that we will not go over 9,000 on the Dow, in this latest move up, unless the news is very, very good on the economy. So we will be in a tighter range than we were before and some, including myself, would be wise to consider selling around 8,600 or so and taking profits on ETF's like TNA and SSO and also Apple and Ford stocks as well.

From the chart above you can see we are going to most likely be in this band from 7,800 to less than 9,000 for a while and with each day making the case going forward for selling before we hit the top of this range. By the way, the 200 Day Moving Average hits right now at about 9,200 and will be going lower and lower each day. Again to emphasize, news will be the main market mover in coming days and weeks. One day earnings will be unexpectedly great for a company which will steal the headlines for that day and another grim with worse than expected earnings for others. It will be volatile. Right now the Volatility Index, symbol VIX, is below 40 at 36.50, but expect this to go back sometime soon to 44-50 again.

Money will be put into 401K's, IRA's and other retirement accounts this week as taxes are due April 15th, Wednesday this week. And some may want to put those funds to work right away. So I see this week still being positive and increased volume on the Buy side.

Policy on Iraq is about Oil but not what you think

The Bush/Cheney policy that drove us into Iraq was not WMD or other stories about a terrorist haven there. It was about OIL. But it wasn't that we had hoped to capture a source of oil for ourselves, nor did we want to really help the Iraqi's share in the profits of their oil supply revenue. It was about keeping the Middle East in turmoil so that Oil prices would stay high.

As you look to the chart shown here you can see the effect of the years of this Administration on the price of Oil on the right of the chart. It has gone above the 1979 spike in the center of the chart. Add to this the fact that both Bush and Cheney are Oil men and add to the mix that 2006 brought the highest profits in history to big Oil companies and their executives. That is why the President is rattling his saber with Iran. That is why there is no diplomatic effort to get the Iranians and Syria involved in talks. Because as long as there is turmoil, war and sectarian violence, Oil prices will continue to climb, as will gasoline prices.

There are ample stockpiles in our strategic oil reserve, and this Administration is doing all it can to keep the conflict going because the big fear is that if there is a peaceful solution to this conflict, Oil will once again go below $30 per barrel and Middle East countries will feel the pinch, especially the friends of the Bush's; the House of Saud in Saudi Arabia.

You want to do something to help end this war? Try using less gasoline, start saving energy and start promoting higher gasoline taxes to cut demand. It is the American people that can truly make a difference here, not the politicians. Start now.