Succinct summation of week’s events:


1) The election is finally over and this little girl has stopped crying.
2) We’re a step closer to not hearing the saying “fiscal cliff” for hopefully a long time.
3) Nov UoM confidence rises to 84.9 from 82.6, the best since July ’07 and one yr inflation expectations fall to 3% from 3.1%.
4) Oct Trade Deficit at $41.5b is $3.5b below estimates as exports rise to record high and could lead to .2-.3% increase to Q3 GDP revision.
5) China’s IP, retail sales, and fixed asset investment all rise a touch more than expected in Oct. PMI services index up 1.8 pts to 55.5. CPI moderates to 1.7%, the slowest since June ’10.
6) Australia creates more jobs than expected in Oct.
7) RBA, Indonesia, South Korea and Malaysia all keep rates unchanged as expected.


1) Meet the new boss, same as the old boss. Pres insists again higher taxes on an economy that has risen 1.8% on average in 2012. Instead of “fiscal cliff,” “recession” will be the new saying in 2013 as he wants to redistribute our way to prosperity as its worked so well in CA.
2) Oct ISM services falls to 54.2 from 55.1 and below estimates of 54.4. New orders and exports fall.
3) Sept Job Openings fall to 5 month low.
4) German IP, factory orders and export orders all decline in Sept.
5) French and Italian IP also fall again.
6) UK PMI services falls to 50.6 vs 52, weakest since Dec ’10.
7) Australia, a Chinese proxy, exports fall to lowest since Feb ’11 with merchandise exports specifically to China down 6.5%, 8) Japanese machinery orders fall twice expectations.

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

43 Responses to “Succinct Summation of Week’s Events (11/9/12)”

  1. techy says:

    Negatives #1: its a standard GOP talking point. Higher taxes on wealthy wont work if that money is squandered. but saying that SS needs to be gutted, even th0ugh people paid into it say for 40-50 years, thats just ridiculous.

    If somebody is taking home $300k, is it too much if we ask him to pay another $10k. Or we want to target some one who after paying into SS for 40 years, is taking home $30k in benefits, do we want to cut this person benefit by $5k?

    if we just wake up and see how the bottom 50% has been destroyed that last 12 years, thanks to the top 1% making all the profit enjoying the high productivity and outsourcing.

    Unless we want to pretend that the resources of the planet belongs to only the lucky ones(who become rich), everyone else is to just serve them for pittance and be thankful that they are allowed to live.

    In a fiat based monetory system, I would just inflate and let all the owners of wealth pay the price. We just need to take care of the retirees.

  2. Mr Reality says:

    Techy, thank you! I was going to make a similar comment. What I find surprising is that Negtive #1 even got posted. Pretty damn tone deaf if you ask me.

    Mean while, OWS has come up with what could be a brilliant idea of rollingjubilee,org. Check it out and spread the word.

  3. Mr Reality says:

    Oops! make the rollingjubilee.orb

  4. techy says:

    CR has commented on this too: thankfully the poor will have some voice now.

    People fail to understand that fiscal conservatism only applies when democrats are in office, most of the republican voters only aim is to impose their religious beliefs on the nation. Scary part is around 40% of the country hates secular governance, and they are able to fool 8-15% of the people in the name of tax/deb/deficit.

    Right now every conservative house member from red states have full support of their voters to block all actions by democrats they dont care if the country suffers, their only goal is to win.

  5. 4whatitsworth says:

    @Techy I have an idea for a tax increase that would actually increase productivity and encourage work. When you die 100% of your estate, trusts, etc go to the government. The game is over you turn in your chips and the next person gets a level playing field.

    The young would know that if they worked hard they would get a chance (provided government did not squander the wealth) and if not there would be funding for the safety net.

    Of course this is un realistic the cast system in the U.S. will continue to advance the rich will be richer and the poor will be poorer. This is really unfortunate for the kids in the long run.

  6. Concerned Neighbour says:

    I’m surprised a point like Negative #1 would be made on this blog. The evidence indicates that tax cuts for the wealthy do little to spur economic growth, as does the theory. Obama’s plan to “redistribute” would bring taxes on the wealthy back up to levels seen during one of the greatest economic booms of the last century (Clinton), and keep them below levels seen in the majority of other developed economies.

    I wouldn’t expect a contributor to this blog, which typically appeals to reason and evidence, to support the House Republican position that the country should burn before the Bush “temporary” tax cuts on the wealthy expire.

  7. MikeNY says:

    Word, Techy.

    Peter B, if you think favelas for the 99% and gated communities and private police forces for the 1% are the way to go, yeah, let’s stick with the “cut taxes” and deregulation snake-oil. Worked real well for W, didn’t it?

    While I”m at it, when is anyone other than Jeremy Grantham going to get wise to reality that economic growth ad infinitum is not possible unless we colonize another planet? “Faster growth” is just a red herring to get people to overlook the fact that our distribution of wealth is more unequal than that of many third world countries.

    Or are we a third world country already? Kinda seems so lately.

  8. Disinfectant says:

    I’m surprised Barry keeps posting Boockvar’s commentary for two reasons: 1) his frequent GOP-inspired nonsense and 2) the rest of what he says is also pretty meaningless.

  9. Disinfectant:

    I don’t care what his politics are, I care about his process & insights.

  10. Lyle says:

    The CBO has weighed in on the high income tax issue and says raising taxes for the above 250k class wont kill growth : The difference in gdp growth would be from 1.5 % if all cuts are extended to 1.25% if the limit were 250k (OF course the 250 k folks do get the reduced taxes on their first 250k so they still get a smaller cut) But then are we surprised with this result since the rich spend less and save more.

  11. 4whatitsworth says:

    Nothing wrong with the top 1% paying more and yes agree data shows that the Clinton rates seemed to work in a time of peace. The problem is that is not going to stop the bleeding so get ready to lower the tax bar along with your expectations of the government.

    Pick your number, who should pay more?

    Good news don’t expect anything to happen right away after all Monday is holiday!

    Regarding public health care don’t expect the government to cut their benefits and be a part of that crazy system, hey have their own well funded plan. In addition government workers and congress have their own retirement system so don’t expect them to be genially concerned with social security and Medicare.

  12. denim says:

    “1) Meet the new boss, same as the old boss. Pres insists again higher taxes on an economy that has risen 1.8% on average in 2012. Instead of “fiscal cliff,” “recession” will be the new saying in 2013 as he wants to redistribute our way to prosperity as its worked so well in CA.”
    As an example, say two smart guys start up a tech company in a CA garage. I would presume that at some point they start to make enough profit from the business to contact a competent CPA who will help them set up an S corp, LLC, or sole proprietorship for tax benefit purposes. These business types pay no tax. Rather, the revenue minus expenses (profit in the vernacular) is passed on to the owners and it is they who pay the tax and at the rate of an individual taxpayer. So the more the owners plow into the business, the less profit is passed on to them to pay taxes on. As long as they keep the profit passed through as less than $250,000 they will not be in the personal, individual high tax bracket, but the business will not be hindered in its expansion at all…recall it pays no tax.

  13. franklin411 says:

    Hmm…California GDP = double that of Texas or New York. Must be a result of our famous “anti-business” climate!

  14. spooz says:

    Agreed, surprised and sad to see where BR stands on taxing the rich.

  15. Lukey says:

    I’m shocked that so many lefties read the blog of a 1%er money manager. Just kidding! First of all, the idea that Clinton era tax rates coupled with Obama era spending rates (and regulatory policies) is going to work is absurd. Lets all take a deep breath. The Bush tax “cuts” were tax RATE cuts. Taxes = Spending (current + deferred). So cutting tax rates and goosing spending to unprecedented levels is NOT “cutting taxes.” No one should have expected that to have had a positive effect on the economy. Bush was a Kloset Keynesian and Obama has continued and, in fact, doubled down on Bush era economic policies. And yet the left expects a completely different outcome? Mark me down as confused!

    And yes, we have just endorsed the policies that have put the Euro-zone on the economic ropes and the California economy into an economic tax and spend death spiral. Confiscating all your wealth upon death? Holy cow! This is radical leftism gone wild. That always works (not)!

    And California GDP per capita is not double Texas so lets try and focus on meaningful statistics, okay? And which state’s GDP growth rate the past 12 quarters is higher? Which state is headed in the right direction? You can really run your economy off a cliff while “proving” everything is hunky dory by citing statistics based on long dead trends. I fear that is what we are doing on a national level.

    But I must admit, you guys won the election. You are running the show and the problems are yours to solve. I think all these Keynesian tax and spend on steroid policies and the atavistic wealth redistribution are only going to make our problems worse. But you all have the keys and I’m in the back seat, along for the ride. Here’s hoping you know where you’re going!

  16. Livermore Shimervore says:

    Thinking out loud…

    1-made in the usa with net higher workers over 2011? steep reduction in taxes for each new hire.
    2-Bush tax cuts expire on all incomes above $500K unless they hire domestic help, education tutors for kids, etc. or provide receipts of contracting domestic labor for personal expenditures (home improvement, etc.) proportional to the previously untaxed income. Force them to spend the cut here at home.
    3-Big,big tax increases on foreign made luxury goods in the plus $100K aisle (cars, art, jewelery, furnishings).
    4-tax deductions for domestic tourism by travellers with incomes under $200K.
    5-No taxes on LTCG for incomes under $250K. Tax increase for LTCG for income over $500K, certainly carried interest for total annual incomes over $1 million.
    6-Buffet Rule kicks in unless you increase payroll (proportional to the tax increase) for domestic jobs paying at least the avg U.S. wage.
    7-100% tax on any political TV add.
    8-30% additional tax on any income by a former politician working in the following sectors: banking, finance, pharma, agriculture, energy, defense, insurance.
    9-100% tax on any speech given by a former politican turned bullshiter.
    10-100% tax on any Super Pac contributions.

  17. Livermore Shimervore says:

    11- Volcker Rule kicks in unless your bank shuts down foreign call centers and hires some damn Americans to answer my calls!

  18. Livermore Shimervore says:

    Now that Romney lost, can we now see the notes that spelled out where deductions were going to be capped? Felstein said $100K households “are not middle class”. And the only way to arrive at a budget balance with a 20% rollback would be to eliminate all deductions (yes all) and probably start taxing all health benefits. Clearly Romney and Ryan sat down, put pen to paper and came up with a figure for the deduction cap, that of course also factored in current entitlement spending increases, increases in defense spending, and permanent expiration of the 01 and 03 cuts.
    I mean let’s just see those notes for purely academic analysis. I can’t recall another election where middle class voters were pulling a lever for a candidate without the slightest idea if their candidates tax plan would spell a net increase or decrease in taxes. And that’s on top of the increase we all know is coming.

  19. With this week’s economic data releases, the Debt Wall model calculates Congress will be stymied by its $16.4 Debt Limit on Jan 7th, while the TRI model gauges Nov GDP is on a 1.8% pace. TRI’s measure of animal-spirits-plus continues to signal corporate revenue and guidance outlooks are about to turn more positive … en route to an approaching S&P500 record high.

    With new net monthly jobs consistenly exceeding the 100k required to meet labour force growth, the unemployment rate is on a glide path to equilibrium (6%) by 2016Q1. This indicates the FOMC’s discount rate will commence rising in 2014Q2.

    After a 2011 trough, Existing Homes are today selling $16k above this season last year. After a 2009 trough, New
    Home prices are $21k above last Summer. Both have returned to within a mere 2% of their long-term Price/Income trend lines. The record New Home price ($248k) set in 2007 will finally be surpassed next year.

    the charts:

  20. Iamthe50percent says:

    Add my voice to all the others. Techy and Lyle said it best.

  21. JimRino says:

    The problem with your capital gains tax is it rewards UNPRODUCTIVELY. While you wile away your time contemplating your next consumption spending purchase, Rollex, new Yacht, got your eye on a Yellow Lamborghini, had the tax been Exactly Equal to the Working Man’s Tax, then you’d find a way to make your company More Productive.

    The taxes would be used for Productive Spending on Roads, Bridges and Schools, funding an Economic Recovery.

    The higher Taxes would give the World CONFIDENCE the US isn’t run by Drunken Spending Sailors who can’t Add.

  22. brianinla says:

    If BR can post Invictus’ nonsense he can post Boockvar to balance it out.

  23. brianinla

    Invictus does excellent econometric analysis, and while he is a Democrat (and I am not) his work speaks for itself. Just for this comment, I am going to have him write something on Ohio!

  24. cmurphy9059 says:

    re Negative#1. This is really a rather silly,intellectually lazy statement. Califiornia’s fiscal problems do not arise from some sort of wildly socialistic “redistributionist” agenda but from the fiscal idiocy of Proposition 13 and the requirement of a supermajority on tax measures, both beloved ideas of the right. In fact Califiornia was most prosperous when it followed mildy redistributionist policies which created the best state university system in the country, which in turn created the tech industry.

    As to the alleged negative effects of allowing the Bush tax cuts to expire; CBO estimates the difference between continuing all the Bush tax cuts and just the cuts for income under $250k at just .1% of GDP ( 1.4 – 1.3) in the fourth quarter of 2013.

    Restoring some measure of justice to the tax system is worth far more than that .1%

  25. theexpertisin says:

    My daughter-in-law, a successful CPA, is excited about many client inquiries for tax shelters. Those of us with a few decades of life experience well remember the decades mid 50s-mid 80s when tax shelter experts were in higher demand than stock pickers.

    The affluent will always find a way to pay taxes at a niggardly rate.

  26. Zach says:

    “redistribute our way to prosperity”

    What is this hacky-ass garbage? Where’s Barry?

    I don’t come to this blog to read BS. Do you have a real analysis as to why taxes lower than the 1990s are “redistributive”? Or why they would cause a recession? How big is the deadweight loss of a small marginal increase on a small portion of the tax base? Pretty sure it’s not big enough to impact the growth rate!

  27. beaufou says:

    8 – psychotic billionaires can’t buy elections.

    And the new boss thing, please… speculation represents 99% of the activities of our equity market system, with capital formation accounting for 0.8 percent. That’s mooching.

  28. Stella says:

    Why do you even stay with this Boockvar fellow? “silly,intellectually lazy” captures him perfectly. His poorly conceived comments detract significantly from your website’s overall credibility.

  29. riverrat says:

    RE negative point #1: Agree with many others that its sad to see that kind of crap posted here on TBP.

  30. seekye says:

    I agree with “theexpertisin” comment above regarding tax shelters.

    One thing I’ve noticed about the rich, at least the few I’ve been exposed too, the rich know how to work money. The high income earners may not be able to dodge the tax bullet the first year but I bet by the third year or so the actual tax revenue received from the high income earners will be a lot smaller that what was budgetted.

    Some peeps are born with a silver spoon, it’s not their fault and I wish I was one of them. Some peeps do a good job of figuring out how the system works. And still other are just lucky. I still have a little time to figure out how the system works but I’ll take lucky if I can get it.

  31. noahmckinnon says:

    Mr. Ritholtz, do you share the sentiment expressed in Negative #1?

  32. I am happy the election is over as well . . . but I do not expect to be crying about it on YouTube.

  33. New to these boards and happy to be here. Thanks for the opportunity. RE: Neg.#1 Almost 6,000 Americans died in Iraq/Afghanistan. The 20-year-olds who put it on the line are generally not from rich and educated families. One percent of Americans doing 100 percent of the fighting. The rest of us were not asked to make a single sacrifice for that war. Not one. As a nation we decided to fight a war on two fronts without paying a nickel. Not a single damn nickel. The cost — $2 to $3 trillion and another $1 trillion in next few years — depending on who is doing the estimating, should be paid up in full right now. The rich and the rest of us enjoy the fruits of their sacrifices. Is it too much to ask each of us to help foot the bill, and because of their luck, fate or hard work, that the rich might chip in a little more?

    Tax and spend? Not hardly, far worse, we spent and never taxed.

  34. ZenRazor says:

    How about a little intellectual honesty? Raising taxes only on the $250K+ crowd isn’t remotely enough. All of the Bush tax cuts should be allowed to expire if the U.S. is going to make a dent in its budget problems. Likewise, the sequestration numbers are trivial relative to the cuts that are necessary over the next decade. Would going over the fiscal cliff lead to a recession? Probably, but that’s coming one way or another and irresponsible fiscal behavior will compound the problem with time. Far better to hit the wall with your foot on the brake than on the accelerator.

    Bowles-Simpson would be a good start, but likely much more needs to be done. Unfortunately both the White House and Congress are too gutless to deal with these problems honestly. The truth is unelectable in the U.S.

    As for the question of marginal rates and redistribution, I wouldn’t mind paying more in taxes if the money was put to good use rather than just pissed away. As an ex-Californian I’ve watched several friends and their businesses pack up and move not so much because of the current level of taxation and hostility to business, but because of the sense that the problems will only continue to get worse. From my perspective the federal government hasn’t yet reached the same level of hopelessness, but it is on the same course and neither of the major parties has a remotely realistic idea how to implement a course correction while bribing the clueless electorate to keep them in power.

  35. spooz says:

    Seekye, what I object to is that a lot of those peeps who figured out how the system works are responsible for Libor and muni bond rigging, bankster fraud, JP Morgan’s whale trades and Corzine, not to mention high frequency trading. It seems like the easy way to make a buck these days is to be part of the corrupted financial system. The “conservatives” seem perfectly happy with our countries direction of creating economic royalists as the wealth continues to flow up to the elites and inequality grows. This financialization of our economy has cost us jobs, homes, retirement savings and healthy municipalities. Why should financial gains, which do more harm than good to our economy, be given a tax break? Just letting the tax breaks expire for incomes over $250,000 isn’t enough, but its a start. We also need to raise the rate on capital gains, add a financial transaction tax and get rid of some of the ridiculous loopholes granted to corporate benefactors.

    I understand the frustration conservatives have with govenment spending. I hate that the only way we fund food stamps for the poor is by subsidizing Big Ag, for instance. The process is corrupted, but the need for a safety net in the new reality of part time, no benefits employment is growing.

  36. Jim67545 says:

    Sorry to pile on to Negative #1 but it sounded too Norquist-like. Cannot we be nuanced a bit here and recognize that increasing taxes is not an all or nothing thing? Has a 20% tax increase the same impact as a .0020% tax increase?

    Nationally we are in a serious box. If we cut federal spending OR increase taxes too much we will weaken an already weak recovery. And we are dealing with heightened expenditures for unemployment, health care (via Medicare/aid and government retirement), the remaining war expenditures, and economic problems overseas, etc. Before spouting off look at what POTUS has been dealt and decide where you would cut or tax and the impact of that. We actually have only a little maneuvering room and so cannot change the direction of the ship radically – though we may wish otherwise.

  37. Greg0658 says:

    honesty 250K+ isn’t remotely enough

    rates and redistribution – isn’t remotely enough

    we need a jubilee
    to set a workable fiscal behavior

    bankers and rent seekers – if you think that a mountain of debt imbalance will be allowed and you will live on its rent for the rest of your life and your childrens children then .. well jubilee it

    a quarter of 1% to the in-club upwards to 29%+ to the out-club .. well Jubilee it

    a niggardly rate – new 1 – had to see if you was joshin “Not generous; stingy”
    urban dictionary says a legit word but could get ya fired in the wrong house


  38. Concerned Neighbour says:

    The reality is that two of the largest economic forces of our time – international trade and technological development – are concentrating wealth to an extent rarely seen in history. We need to have an intelligent discussion about whether this is what we want as a society, and if not, what we will do about it. I don’t see either of these forces letting up.

    @4whatitsworth, I do not support a 100% estate tax, but do think it should be pretty high. Why? If you don’t, you promote the development of a permanent aristocracy, and lazy/unproductive inheritors. No doubt you’ll hate me bringing up a lefty (BTW, I consider myself a moderate) example, but Buffett recognized this and only gave his children a relatively small amount. Trump, as a counter example, was given $200M, and look how he turned out.

  39. ilsm says:

    Does the author work for Adelman?

    Longer form meme of “redistribution”: “defend fascism, defeat humanity.’


    BR: Bio here

  40. ilsm says:

    Cut the 50% too large war machine:

    Raise taxes.

    No vouchers for schools or medicare.

    Boehner/Cantor/Ryan forced sequestrations from their 2011 hostage crisis must happen and then some.

  41. [...] *Conventional Super-Conforming cap = $625,500. FHA Super-Conforming cap = $729,750. ___ Reference: – Succinct Summation Of Week’s Events (TheBigPicture) [...]

  42. tippet523 says:

    So sick of the whining on both sides of the aisle. When our debt hits 20 trillion and rates go up by 2-3 points we will have to cut many things and raise taxes considerably higher than 39.6. The math dictates this