Monday, September 19, 2011

Apparently everything is broken again

We remain locked in a vicious cycle of "Europe is saved let's rally" followed by "Europe is broken, sell, sell, sell".

Today we hear that there are further concerns about Greek debt levels and their in ability to actually institute the cuts they've described.  European markets are down 2.5-3% which would have been major news just 2 months ago, but 3% swings have become the norm on Wall Street.  Unfortunately, all of this volatility is having a real impact on investor confidence as investors pulled more than more money from the market than at any point in the past 2 years.

President Obama will role out a new set of proposed tax increases today to help cut the deficit.  This proposal has the same chance at success as you do winning the Powerball.  Some of the ideas are fair and sound, but in the run-up to 2012 there is no way Congress is passing any new taxes.

Here are some of the rumored proposals:

* Raise tax rates for individuals with income exceeding $1 million and those making more than $10 million per year.  There could be a 5.4% surtax on joint returns above $1 million and individual returns above $500,000. In theory that could bring in as much as $480 billion over 10 years.

* A possible cap on itemized deductions for individuals (over $200k) and families (over $250k)

* Lots of ideas around mortgage interest deductions.  They might consider eliminating it altogether, eliminating it on second homes (very easy to work around that, but I charge for that kind of info :) ), reducing it on first mortgages from $1million to $500k, etc.

* Going after hedge funds and their 15% tax rate.  This is long overdue. 

* There is also some talk of a tax holiday to encourage repatriation of profits but the more I've read on this subject the less I'm convinced it will do anything to spur job creation.

We should have the full details by 10:30am.  The skeptic in me thinks that this will be little more than a talking point during the debates in October 2012.  President Obama "If Congress had just let me raise some revenue from billionaires, little Suzy's mom would have got 12 extra hours at Walmart this week and she could have bought her that iPad she wanted for Christmas."

You'll have to tilt your head a bit to read this but I found it very interesting.  @alphatrends (Brian Shannon) posted this note from his local Burrito restaurant.  It highlights the price increases that have been passed along by Sysco to the restaurant this year.  Those are some painful price moves.


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