While the Troika is arguing over Greece, US is debating it’s Taxes….
Washington Post reports; As President Obama and congressional Republicans argue over how to rewrite the U.S. tax code, the debate has revolved around “loopholes” for corporate jets and ending “carve-outs” for well-heeled special interests. But if the goal is debt reduction, that’s not where the money is.
Broad tax breaks granted to millions of families at all income levels dwarf the corporate giveaways. Over the past two years, largely because of these popular benefits in the federal income tax code, the government has reached a rare milestone in tax collection — it has given away nearly as much as it takes in.
The number of tax breaks has nearly doubled since the last major tax overhaul 25 years ago, with lawmakers adding new benefits for children, college tuition, retirement savings and investment. At the same time, some long-standing breaks have exploded in value, such as the deduction for mortgage interest and the tax-free treatment of health-insurance premiums paid by employers.
Full article here.
The man says; “No undue risk in our positions… one of the best risk managements in the business”
Must read piece on Gold, by Jim Richards via KingWorld;
Along with volatility in stocks and historically low yields in bonds, investor attention has recently been drawn to currencies. This is due to the currency wars that broke out in 2010 and have expanded lately. The recent Brazilian decision to cut interests rates to halt the appreciation of the real and the Swiss decision to peg the franc to the euro are both examples of countries cheapening their currencies against others, or at least halting their appreciation. The world is now in a beggar-thy-neighbor phase, last seen in the 1970’s and before that the 1930’s, where countries steal economic growth from neighbors by currency depreciation to cheapen exports.
The entire global system is at a critical juncture with sovereign bonds, currencies, stock markets and the fate of politicians all in play.
Although Barton Biggs proclaimed the new bull is here at the end of last week, the market has now reversed, back to the same levels as prior to Ben’s “flooding the European Banks with USD funding” levels. Ben’s actions impress the Market with diminishing enthusiasm. The only ones left trading positive news from Ben seem to be HFT, and we all know, these guys are not the “strong” hands.
Markets are once again spooked by the Greek Mess. With conflicting news from everyone, and no trustworthy plan, the Greek story won’t disappear. The Trader argues for the focus to be shifting to Spain shortly, as the Collapsing Economy on the Iberian Peninsula should make investors nervous. SPX is back in the trend channel. While the market lacks direction, it should be traded like short gamma, ie the market comes back from “extreme” levels, just give it a couple of days, until it breaks totally….
Bis Quarterly Review gives some insight into the European Mess;
Global growth and sovereign debt concerns drive markets.
Sharp downward revisions to the strength of recovery in several major economies, particularly in the developed world, drove down the prices of growth-sensitive assets during the review period. Market participants’ concerns about growth were amplified by perceptions that monetary and fiscal policies had only limited scope to stimulate the global economy. The negative news about macroeconomic conditions was compounded by concerns about euro area sovereign debt spreading from Greece, Ireland and Portugal to Italy and Spain. This led to tighter funding conditions for European banks and even affected pricing in euro area core sovereign debt markets. All of these developments led to flows into safe haven assets. Table 1 summarises the major events that affected expectations for global growth and sovereign debt markets during the review period.
Full BIS report here.