FedUpUSA

This sort of story makes my blood boil:

Generation X, the unlucky cohort of Americans who became young adults during the boom years of the 1990s only to suffer a midlife bust, is facing bleak retirement prospects, according to a study.

The Pew Charitable Trusts said the typical Gen X couple, born between 1966 and 1975, only has enough savings to replace half of its pre-retirement earnings. Married Americans born during the first part of the baby boom, from 1946 to 1955, can expect to retire with about 82 percent of their income. The younger boomers, born between 1956 and 1964, can expect to quit work and make about 59 percent of pre-retirement earnings.

That’s because they blew the damn money.

These are the same people who have incessantly demanded more and more government, more and more control over other people, more and more servicesand at the same time think an iPhone is more important than their retirement savings.

They’re the ones driving new cars every 2 years and pissing away money chasing after the Joneses.  They have no sense of reality, especially when it comes to personal responsibility over their lives and bodies.  They are the “young people” who pressed for “freedom” – from responsibility.

They’re the ones who flooded the market (and still do!) screaming for cheaper and more debt to buy houses, cars, cellphones and other alleged “badges” of prosperity.  They made up the majority of house-flippers, condo resale junkies and the schemers selling the nation on this crap.  They made up the majority of the Wall Street junkies pushing the credit heroin through the streets too.

In short many of them were the “I’m gonna get mine and fuck you” generation.  Yeah, many of the boomers were responsible for this too; in many ways they’re even more responsible.  The sense of entitlement has gotten worse, not better, as you move forward in generational terms.

There are exceptions, of course.  I’ve met plenty of people who have had their own personal “Come to Jesus” moment on these matters — who understand that economic surplus is first and foremost personal, and that the premise that someone else (including the collective “someone else” found in government) owes you something makes you their slave, as once you stick your hand out they get to dictate terms.

There’s a certain wry smile that crawls across my face when I run into someone learning that lesson the hard way.  But there’s a sadness that goes with it, because the fact of the matter is that until a critical mass of people return to being able to think things through logically and put the effort in to do so the net position of our nation and her people is destined to deteriorate rather than advance.

Ronald Reagan famously said that it was “morning again in America“; unfortunately what he allowed and what we got was a false dawn.  Rather than be the stern father who says “Yes, son, it’s morning, and this means you have 12 hours of daylight to bust your ass so after you buy your room for the night and food for your belly there is something left to save and thus invest in a future venture” he allowed Congress to fail to follow through on the bargain he struck and contract the size of government to fit the reduced tax revenues that were passed.

He could have done so but that would have been hard; simply refusing to sign any bills until the promise was kept would have been enough, but it also would have been politically nasty.

It’s easy to be loved when you’re handing out “free money.”

The problem is that you’re living an open and notorious fraud because there is no such thing as free money.

That fraud continues and has been amplified today.

Now here’s a first.

A federal judge on Monday made the rare move to stop the foreclosure auction of an Aurora woman’s house in a case that squarely takes on the constitutionality of Colorado’s foreclosure laws.

U.S. District Judge William Martinez issued a preliminary injunction against the sale of Lisa Kay Brumfiel’s four-bedroom home, scheduled for Wednesday in Arapahoe County, until the judge can decide whether parts of state law are unfair to homeowners facing the loss of their house.

JUDGE MARTINEZ RULING ON PRELIMINARY INJUNCTION

“Unfair” isn’t quite the word.

Colorado, for those who haven’t followed either the news or The Ticker, passed a nice law to “solve” the foreclosure problem for banks – they stripped the requirement that the banks actually have the mortgage documents to prove that they were the proper party to be able to foreclose.

Remember that the big issue a couple of years ago was “robosigning” — that is, document forgery.  Continuing the scam is, of course, the highest and best use of “lobbying” lawmakers, and in Colorado the banksters scored big, removing even the pretense that a foreclosing actor actually owned the mortgage through documentation – even forged documentation!

Now a simple statement became enough.

So-called “financial news media” has ignored this, of course.  It’s in their “best interest” too; after all, you wouldn’t be able to sell ads on a TeeVee station talking about “together we’ll go far” if the people understood that how the stagecoach “went far” was by stealing all your property.

I thought I was disgusted in the 1990s when I saw company after company issue fanciful S-1s collectively claiming the GDP of the world a few dozen times over.  That was indeed quite the scam, and when it came apart everyone who believed in it lost all or most of their money.  Nobody was held accountable for that in the media either; witness Cramer.  He got a TV show out of it.  What did you get out of his list if you bought into it just weeks before it all blew up?  That’s simple: Bankruptcy.

But these guys were and are chumps.  After all, we’re just talking billions there.  No, the big enchilada is taking homes, the biggest asset that most Americans have, slicing and dicing that while turning it into “financial products” that the banksters can then skim off their “piece” of, taking what should be a durable consumer good and transforming it into the greatest heist of all time.

Nobody has put a stop to it, despite clear proof via admission that not only were thousands upon thousands of perjured documents filed with courts but in addition to that there is an email and other document trail that the banks knew they were screwing people as their own staff were calling these securities by such lovely and value-descriptive titles as “vomit” and “trash.”

Our local, state and federal governments have all been involved in what amounts to an organized looting operation.  As people have challenged the schemes the response has been for the banksters to go to the governments and get passed even more laws making legal what would otherwise be a raw abuse of process and even outright theft.

Now there may be one tiny bit of honest judicial intervention — in Colorado.

This problem is not about, at its core, whether someone paid their mortgage or not.  It is about whether a financial institution can take a debt instrument and pass it around in name only as the “footer” of a monstrous labyrinth of bogus securities and schemes from which they skim fees and costs while damning the ordinary people to bear those costs whether they are actually the proper party or not.

At its core this is about abuse of leverage and manufacturing a retroactive paper trail after the fact to cover up what were a host of improper and, perhaps, criminal activity beforehand.  It is a rank violation of the IRS code, not to mention Trust Law where these “securities” are bundled and packaged, to fail to transfer into the trusts these loans in a timely manner.  The tax implications alone run into the hundreds of billions of dollars and a huge part of why such “laws” were pushed and passed appears to be focused on preventing a meritorious defense from reaching into that cesspool and forcing out into the open the fact that these instruments do not in fact really exist as the requirements in the law to create them were not followed.

Now, finally, literal years after I and others started raising hell about this, there is one judge who has called “Bee Ess!” on this entire house of cards.  Perhaps — just perhaps — Colorado’s “law” will be ruled an unconstitutional piece of trash intended to steal homes from citizens at literal gunpoint.

When courtrooms are used to take property without the moving party having to produce the actual documentation proving their standing what has happened is that the party filing suit has managed, through legislative fiat, to obtain the guns and personnel of government as their own “private army” which they are then abusing to commit an act that is in form, substance and function virtually indistinguishable from old-fashioned armed robbery.

We are well past the point where the judiciary should have put a stop to this crap.

Here’s hoping that Judge Martinez does so.

So now the battle is joined.

The Senate has passed, sending to The House, a bill that would impose a requirement that online merchants submit to state tax collection in states where they have no physical presence.

To try to make this more palatable they are exempting businesses with less than $1 million in annual sales, but this doesn’t matter when you get down to brass tacks.

Amazon, WalMart and other large retailers with online presence are supporting this move.  This sounds insane, but it in fact is not — it is yet another attempt to destroy their competition using the jackboot of government rather than through free and open competition.

In the 1990s when I ran MCSNet we wanted to open an office in Wisconsin to serve Milwaukee business and residential customers.  There was an easy way to handle residential dial-in customers through what amounted to a “virtual POP” but doing so for business users was far more difficult as at the time the technology to do so at a reasonable cost was not “fully baked.”  If we wanted to implement our Cheapernet T1 service, for example, we neededequipment in leased physical space in-state.  This meant that we had our name on space and our own hardware present in the location, which under long-standing law created nexus.

Nexus is the principle of “ties” or “activity” in a given location; for a business it is important as it triggers the requirement to comply with state and local tax requirements.  In short, it brings you under the jurisdiction of that state.  During the 1990s we had received several “demand letters” from both New York and California insisting that we “give” their sales tax authorities data dumps of everything we had sold to entities in both states.  We had responded with “Bite Me!” to these demands several times; at one point I actually photocopied my butt-cheeks and sent that back in one of their demand letter reply envelopes.  Both states were on fishing expeditions; as a Chicago-area ISP we did not do a material amount of business with people in either state, and only physical sales of property would have been taxable anyway.  Nonetheless they were actually trying to audit us!  It was a pure harassment tactic but lacking jurisdiction there was nothing either state could do to force us to comply.

Wisconsin was a different matter since we wanted to conduct business there.  I investigated setting up a separate corporation to run that location and then engage in a business transaction with this “captive entity” such that the Wisconsin-registered corporation would show no net profit.  The idea here was to evade the “nexus” that would otherwise attach to MCSNet in Wisconsin, thereby evading the requirement to register in the state and expose ourselves to the Wisconsin tax authorities.

Before you start screaming “you dirty tax evader!” please realize something — MCSNet’s primary business was the sale of services that were not subject to sales tax.  We sold very few tangible goods; as a percentage of sales you couldn’t find them.  The only reason we stocked and sold such goods was that it wasconvenient for customers, especially high-speed dedicated line business customers, to be able to order up service and get the hardware (along with warranty repairs or swap capability) from us.

The issue from my perspective was the pain in the ass factor from the sales tax auditors.  They were real jackasses, and showed up every couple of years to harass us.  I understand the reason for their audits, as once you register and start collecting tax you also have an exemption certificate; the goods you buy for resale are not taxed when you buy them — you collect the tax when you sell them to the customer and remit it.  This provides a tremendous incentive to cheat by abusing your tax certificate to buy things without paying the sales tax that you intend to, and do, consume internally.  The audits are performed for the purpose of catching this and nailing the violators, of which there are many.

But the fact remains these guys would show up and consume what often amounted to a full day of time and sometimes multiple days from some of my critical employees.  Being a relatively small business of about three dozen employees to have one of my key people tied up “at whim” by these guys who wanted to riffle though our purchase orders to and invoices from suppliers, pointing at a random shipped item (say, a router) and demanding to know exactly where Serial #302052 went (and proof that the tax was paid if it wasn’t sitting in our inventory, whether we paid it when we put it to use internally or we billed, collected and remitted the tax if we sold it to a customer) was a royal pain in the ass.

We never cheated on our state tax obligations and despite these audits not once were we tagged for a deficiency.  But I was going to be damned to Hell if I was going to intentionally expose ourselves to this crap coming from another state if I could legally avoid it.

The advice I got from our counsel was that I could try a scheme like I described where a “captive corporation” rented the space and owned the gear, then engaged in what amounted to a zero-profit transaction with us, but if I did so I was risking at best a civil suit from the tax authorities in Wisconsin and if someone up there got aggressive I might even get indicted.

I passed as the cost of getting sued would grossly exceed the cost of compliance, never mind the (small but present) risk of a criminal indictment, and just set the thing up.  As it turned out Wisconsin was more-reasonable than Illinois in regard to deciding to show up and harass us — they didn’t during the remainder of the time I ran the place.  We did our paperwork and remitted what we owed, and that was that.

Amazon, for its part, has engaged in this sort of screwball deal with its distribution centers in various states, arguing that this doesn’t give them nexus and thus they don’t need to collect tax.  When threatened they reply with the threat to close the center and fire the employees (who are residents of the subject state) or sue, which effectively stalls the clock.  This set of tactics has “worked”, because Amazon (and similar firms) are huge corporations with internal legal staffing that can fight these things and, at worst, delay the outcome driving up the costs for the states and there is virtually no chance that the company or its officers will be indicted by the states in question for tax evasion, as is the case for a small business.  The problem is that as these cases have gone on over the years it has become increasingly apparent that Amazon and these other retailers will eventually lose and be forced to both pay and collect the taxes and might be exposed to penalties, interest and retroactive tax billing for willful evasive activity.

So what Amazon appears to have decided to do is play screw the other guy by forcing them into having a “virtual” nexus that otherwise would not exist!  This is then sold to people as “fairness.”

It is nothing of the sort.

Amazon could choose to have distribution centers only in no-sales-tax states.  It could then tell the rest of the states to “pound sand.”  There is a long-standing US Supreme Court decision (“Quill”) that they can stand behind if they take this approach and are without question in the clear in doing so.  But by doing so Amazon would have a serious problem because transit time and cost become a big problem, and since everyone wants everything right now, shipping cost is a huge expense and getting larger, and Amazon sees both cutting that cost and increasing speed of delivery as a competitive advantage (it is) they want to open distribution centers close to the people who shop.

But that leaves them with a problem because to do that they create nexus, and with nexus comes compliance costs.  Since they’ve become increasingly unable to avoid this and meet their business goals they now seek to use the jackboot of government to shove it down their competitors’ throats!

That’s what this is about folks — audit and compliance costs.  It is not about “sales tax” per-se.  Those audit and compliance costs are a big problem and an open-ended channel of abuse from virtually every state.  Further, simply figuring out your liability accurately is a problem all on its own because there are not only state sales taxes in many states there are county and local overrides, leading to the need to accurately track and bill tax based on thousands of jurisdictions with rates that change on a pretty-frequent basis. The business selling on the Internet could easily find itself not only subject to something like 46State audits but also audits by counties and cities that impose “override” taxes, as many states allow.  This runs the number of potential audits into the hundreds or worse, all independent of one another, and forces said businesses to buy a service of some sort that can handle accurately tracking and computing the various rates in force in different places.

If you think these folks at the state sales tax audit departments won’t use this law to harass small businesses you’re dead wrong.  They will.  California and New York, in particular, are virtually certain to do so immediately — hell, they tried to force MCSNet to comply with their crap while we had no presence, no office, and sold essentially nothing into those states.  If they could have compelled MCSNet to show up in their state with our records for an audit they would have done exactly that.

This bill, if it passes into law, will impose that sort of crap on any business that both sells online and has more than $1m in revenue, which is in fact a pretty small number.  MCSNet passed that revenue number when we could still count our employees on my fingers.

Were I running MCSNet today and this bill were to pass I’d shut it down the next morning.  

It’s simply not worth it.

This isn’t about taxation — it’s about Amazon, WalMart and a handful of other large online retailers forcing others to bear compliance costs that they voluntarily assumed as a consequence of their business model and which these other firms have legally avoided through their business model.

When private enterprise starts using the guns of government goons to kill their competitors it’s time for those competitors to respond with this and go home:

Most people fail to understand basic mathematical concepts such as exponents and ratios as they apply to everyday life.  We usually “get it” when it comes to the mathematical facts that are taught in school (if we passed through basic Algebra) but nobody in our government schools ever teaches how these functions apply to the real world.

The reason they don’t, I assert, is that the educational establishment from the government itself on down knows full well how these functions relate to everyday life, and they also know that if you understood these facts there would be a revolution the next morning as you would understand exactly how you have been systematically and intentionally robbed by the mavens of finance with not only the consent but the active participation of your government.

With that in mind I wish to present two pieces of data today.  The first is “average hourly earnings”, which is  from the St Louis Fed, and the second is the total systemic debt, public and private, taken from the Fed Z1.

Why the second as a point of comparison?  Because as I have repeatedly pointed out “credit” (that is, debt on the other side of the balance sheet) spends exactly the same as does currency (emitted money.)  Therefore, when one compares earnings power in real terms one must look at the denominator that is in actual use, which is that currency + credit.

Over the last 30 years, from 1980 to today, the average production and non-supervisory employee earnings have gone from $6.61 to $20.09 (not seasonally adjusted.)  We will use the September 2012 cut-off for this because that’s where our Z1 data ends (for another few weeks), which is $19.83.

This is an almost-perfect triple, which sounds great at first — you’re making three times as much, per hour, today as you were in 1980.

But how far does that money go?

In January of 1980 (in other words, the end of Q4 1979) the total systemic debt was $4.274 trillion.  Were that to have tripled, that is, your purchasing power was to remain exactly constant then systemic debt would be about $12.82 trillion.

It is in fact $55.358 trillion, or 12.95 times greater.

Now to be fair we adjust for the population change.  It has gone from ~227 million to about 314 million; roughly a 38% increase.  In other words on a per-person basis the increase in debt has been a bit over 9x.

You got 3 of the multiples in increased dollars in your paycheck.  You went backwards at three times the rate of “nominal” acceleration unless you were somehow able to glom some of the debt cycle “profits”, all of which were factually illusory.

This is what “drove” you into the stock market.  It is what “drove” you into “investing” rather than saving. But since you can only pick up small crumbs even if you do so, and even if you’re right more often than wrong, the fact remains that you are still behind.

Who stole your purchasing power via this mechanism?

That’s simple — the 0.01%.  The Wall Street Banks.  The politicians.  Their friends.

Everyone but you.

But — but — but you say, how about since 2006?

Ok.  2006, incidentally, is when the BLS started tracking all employees, not just non-supervisory ones. At the end of the first quarter of 2006 the average hourly earnings were $20.38.  Again, as of 10/1/2012 (last update for the Z1) they were $23.55, or an increase of 15.6%.

At the end of the first quarter of 2006 systemic debt was $43.16 trillion.  As of the end of the third quarter of last year it was $55.36 trillion, as noted before,an increase of 28.3% while population only increased about 5% during the same period.

In other words you are still going backward and in fact your hourly earnings are decreasing in purchasing power terms and have been since 2006, just as they have been since 1980.  In fact GDP has “increased” by 20.1% over the same period (2006-Q1 to 2012-Q3) yet debt has gone up by 28.3% (22.2% population-adjusted), which means that GDP has actually declined in real terms on a per-capita basis over that period, not advanced.

The so-called “increase” in your wages are an intentional chimera which is thrown to you to make you “feel good” about your earnings “going up.”  But in point of fact they’re not going up at all, they are going down because the divisor, the total number of dollars in the system that are available to buy the goods and services are rising much faster than your earnings are.

The fraud you’re being sold is exactly identical to going into a bakery and ordering a sheet cake.  The baker asks you how many pieces you would like the cake cut into; your options are 2, 4, 8, 16 or 32.  He then tells you that if you’re really hungry you should choose 32, because that way you can eat more pieces.

You’d either laugh at the baker or string him up by his necktie were he to pull that crap, yet this is exactly what Ben Bernanke along with all the politicians have been selling you for the last 30 years.

Incidentally the S&P 500 stood at about 107 at the start of 1980.  If it increased at the same rate as systemic credit it would stand at 1385, which is not all that far from where it actually is.  “Greatest Bull Market in History” or outright fraud due to credit manipulation by a 0.01% of the population who have systematically and intentionally lied to you while skimming off 90+% of the so-called “gains” of said “bull market”, leaving you with scraps — if you’re fortunate enough to be able to participate at all.

There is no answer to these problems found in “redistribution” or “entitlements.”  There is only one answer available, and that is to stop inflating the monetary system through fraudulently unbacked emission of credit and remove same from the system, forcing those who unjustly stole your effort to eat the losses that will ensue and go bankrupt, deflating the price level and restoring balance to the economy so that your purchasing power is also restored.

Would doing that result in a large amount of short-term economic pain?  You bet it would.  But that pain would fall disproportionately on those who stole from you in the first place, exactly as it should.

There is no other means by which you can restore your purchasing power; all other schemes to “increase credit”, “increase lending”, “lend support through QE” or “tax and redistribute” will simply steal more through the exact mechanism that has been used to rip you off thus far.

I can understand how someone might not “get it” when it comes to how they’ve been robbed if it has not been clear to them, and they simply didn’t know where to look to find the truth.  But after seeing this (and verifying it for yourself, which is not very hard), exactly what excuse do you have for continuing to play the puerile game run by both the banksters and the politicians of all stripes?