Tag: Charles Schumer

Tale of ‘The Tape’

The markets referred to daily in the financial press are composed of Wall Street trading on regulated stock exchanges, less formal Over the Counter (NASDAQ) markets, organized commodity exchanges worldwide, and specialized trading in major financial centers across the globe.

Old timers often refer to price reporting as “the tape”, a reference to a 19th century telegraphic system that reported individual security transactions. By extension, one “fighting the tape” meant going against factual trends (i.e., the markets are poised to remain positive) because he presumes to be better informed. This also would be known as a contrarian.

In a vast industrial sector, price levels are indicative of anticipated corporate performance. Recent markets that have risen to record breaking levels have given huge thumbs up to GOP economics and the leadership of President Donald J. Trump.

High speed electronic data transfers have sent Edison’s ticker tape to museums. Modern trading desks are where authority to assume billions of dollars of risk is granted to alert young people who may not have reached their 30th birthdays.

Many believe the free market performance in a competitive marketplace driven by perfect competition is the most reliable indicator of future pricing of equities and commodities. Perfect competition is defined as the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent, and the market price of a commodity is beyond the control of any single individual buyer or seller. It is a classical economic theory.

The world’s trading in wheat, crude oil, strategic metals and international markets for a nation’s currency, provide spot pricing (today) or a fixed future price defined by delivery at distant point of time. A user of cotton, for example, will set his raw material cost by purchasing a given amount of the commodity at a fixed price for future delivery. Sellers of cotton, farmers for example, eliminate market risk by selling their anticipated production for future delivery.

There are many investors who enter the market as speculators and their risk is their own capital based on an individual analysis of market conditions. Publicly traded stocks anticipate corporate earnings and dividends and a rising equity price indicates belief in an enterprise’s growth over time. Collective wisdom, many economists believe, has a superior predictive capability.

So, today’s “tape” is saying that tax reductions, less regulation and decentralization of decision making is good for most Americans. Anticipated growth seems to be a more laudable goal than redistribution, espoused by the left.

Let’s turn to the anti-Trump political climate that emanates from believers in progressivism. They believe so strongly in government control they are unrealistic in their analysis of public data. They are fighting the tape.

The Trump assertive leadership, while something new to Washington, has found favor among Americans. Wall Street performance says so and all the tales of gloom and doom from the disciples of the FDR New Deal and the Johnson Great Society are clearly backward looking using faulty economic logic. Similarly flawed logic was expressed, ahead of Trump’s election, by Pulitzer Prize-winning New York Times columnist Paul Krugman, who predicted that a Trump victory would trigger an economic collapse from which the United States might never recover.

Current Democrat party leadership has adopted a policy they have called “The Resistance.” This is proving to be not very useful thinking to combat international threats stirring in North Korea and Iran to world peace and prosperity. It is a policy risk that is devoid of constructive thinking at a time when it may be clear to voters that policy changes are urgently needed.

The party of Sen. Chuck Schumer (D-NY), California Gov. Jerry Brown, and Rep. Nancy Pelosi (D-CA) is not the party of FDR, Kennedy, or even Barack Obama. It offers no ideas about production and preaches consumption with fairness predicated on a system that buries individual responsibility.

American success is due to creative individuals who shoulder responsibility, show up on time and take pride in a job well done. Collective performance leads to collective prosperity. Yet the Democrat Party continues fighting the tape.

– Walter B. Bull, Jr.
 

Reform terrifies tax addicts

High profile individuals in American society when caught engaging in criminal, deviant or unethical activity disappear into rehab programs, hoping to recast themselves as victims. Addicts are sympathetic figures, the thinking goes.

But how are we to feel about addicts who won’t/can’t seek treatment? In the case of tax addicted Washington politicians on the left, they should be judged as scoundrels, at the very least. How else to characterize tax-and-spend zealots such as Sen. Elizabeth Warren (D-MA), who says the Trump administration’s proposed tax cuts are “just plain immoral.”

Warren and her fellow tax revenue addicts break into sweats at the mention of tax cuts like alcoholics hearing suggestions of a return to Prohibition. They always fall back on the same tired rant. Tax cuts benefit only the richest Americans and give little relief to working class citizens (as if Warren, Senate Minority Leader Chuck Schumer, et al, actually know any such people). Corporate tax cuts only enrich the titans, not the factory workers. On and on they drone.

That’s why Republicans need to do a better job when it comes to promoting the actual effects of the tax cuts they propose under President Trump. They need to be very specific about the objectives of cutting taxes by drawing on jaw dropping data neatly summarized by columnist Walter E. Williams writing for DailySignal.com, “The Facts About Who Pays the Most in Taxes in America”.

Thirty-seven million tax filers have no tax obligation at all. (That’s 45.5% of American households). … These Americans become natural constituencies for big-spending (Democrat) politicians. After all, if you don’t pay federal taxes, what do you care about big spending?

But the average hard working American typically does not fixate on federal spending and national debt. That’s Washington insider stuff. Working class Americans want a path to higher wages and upward mobility within their chosen industry. The surest way to make that a realistic goal is to ease the tax burden on American corporations.

Williams deftly points out that the current 38.91% tax on U.S. corporate earnings, the fourth-highest in the world, is a tax on living, breathing people. A corporate tax cut potentially has more impact on a middle-class family than a tax cut on its take-home pay. Democrats refuse to acknowledge this because, of course, the narrative must always be that corporations are evil.

If a tax is levied on a corporation, it will have one of four responses or some combination thereof. It will raise the price of its product, lower dividends, cut salaries, or lay off workers. In each case, a flesh-and-blood person bears the tax burden.

The messaging is really simple. President Trump and fellow Republicans must not be trapped into using empty jargon when talking about tax reform.

More than 45% of American households pay zero federal income tax. Just say it. Less than 1% of the population, according to data Williams cites, pays 70.6% of federal income taxes. Just say it, while advocating for some relief for these folks, too. But most importantly, just say that a significant corporate tax rate cut from about 39% to 20% will open floodgates of higher wages and greater upward mobility for working class Americans.

If passing real tax cuts means that scores of Congressional Democrats disappear to enter fiscal rehab, just think of what that would do to ease gridlock in Washington.