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Stealth IRS Changes Mean Millions of New Tax Forms

By Neil deMause

NEW YORK (CNNMoney.com) — The massive expansion of requirements for businesses to file 1099 tax forms that was hidden in the 2,409-page health reform bill took many by surprise when it came to light last month. But it’s just one piece of a years-long legislative stealth campaign to create ways for the federal government to track down unreported income.

The result: A blizzard of new tax forms that the Internal Revenue Service will begin rolling out next year.

“It was actually something that we were following back under the Bush administration under the 2008 budget — we started to see these kinds of rumblings about the ‘tax gap’ and whether or not businesses were paying their fair share,” says Tom Henschke, president of the Pennsylvania-based SMC Business Councils, which was one of the first organizations to call attention to the health care amendment when it was introduced last fall. “So two administrations can claim credit for this.”

The first tax-reporting expansion was buried in a different bill, the Housing Assistance Tax Act introduced by House Speaker Nancy Pelosi and signed into law by President George W. Bush in July 2008. Best known for its first-time homebuyers’ credit, the bill also created a new addition to the family of 1099 tax forms: the 1099-K.

The 1099 is a catch-all series of IRS documents used to report non-wage income from a variety of sources like contract work, dividends, earned interest and pension distributions. The new 1099-K aims to shine a light on a currently hard-to-track payment stream: credit cards. Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year’s transactions.

The rule comes with a floor to weed out the most casual retailers: The 1099-K is only required when a merchant has at least 200 payment transactions a year totaling more than $20,000. But it applies to all payment processors, including Paypal, Amazon.com, and others that service very small businesses.

The goal of the new regulations is to catch income that is going unreported to the IRS. The federal government loses an estimated $300 billion each year from the “tax gap” between what individuals and businesses owe and what they actually pay.

“Better information reporting helps the tax system work better by ensuring that everyone pays what they owe,” IRS Commissioner Doug Shulman explained last year as his agency unveiled the 1099-K. “The new law gives us an important new tool for closing the tax gap and also provides business taxpayers better documentation to compute and report their income and expenses.”

For companies that currently report all their credit card and Paypal sales to the IRS, the 1099-K requirement will have little impact. All the paperwork will be done by the bank or payment processing service, and business owners will simply receive a form at the end of the year listing their total receipts.

The 1099 changes attached to the health care reform bill are another kettle of fish. These massively expand the requirements for filing the “1099-Misc” form, which companies use for recording payments to freelance workers and other individual service providers. Until now, payments to corporations have been exempt from 1099 rules, as have payments for the purchase of goods.

Starting in 2012, that changes. All business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That means obtaining the taxpayer ID number of the individual or corporation you’re making the payment to — even if it’s a giant retailer like Staples or Best Buy — at the time of the transaction, or else facing IRS penalties.

In essence, the 1099-Misc is having its role changed from a form for tracking off-payroll employment to one that must accompany virtually any sizeable business transaction.

“Just with business travel it would include hotels, rental cars,” Henschke says. “Phone service: 1099. Computer service: 1099. Whoever does your postage meter: 1099. You do a little advertising, Yellow Pages: 1099. Your landlord: 1099. You might as well just keep them in your pocket and hand them out as you go around every day.”

How did this sweeping provision end up hidden in the health reform bill? No one is willing to take credit for introducing the new legislation, which appeared in the Senate Finance Committee’s version of the health bill last fall. Committee chairs Don Baucus, D-Mont., and Chuck Grassley, R-Iowa, both referred calls to committee staffers, who wouldn’t comment on the record.

But the provision appears to be a long-in-the-works change that was just waiting for the right moment to be attached to legislation.

Back in 2007, the Senate Finance Committee asked the government’s General Accountability Office to conduct a tax-gap study. The resulting report estimated that establishing additional 1099 paper trails for income could provide up to $345 billion annually in new federal tax revenues.

Enter the health reform bill. Last fall, as the debate raged over its projected cost, Congressional supporters of the bill began a desperate search for “revenue enhancers” to bring the net cost down — and eliminating the 1099 exceptions for corporations and goods was seen as an easy way to bring in more cash without raising tax rates.

House and Senate staffers “essentially have a cupboard full of convenient revenue raisers that they can put into bills when they need it,” notes Chris Edwards, director of tax policy studies for the libertarian Cato Institute. In the case of the 1099 changes, he says, “this was sitting around, the IRS wanted it and had testified in favor of it, and they needed a revenue raiser. This was just a convenient thing.”

Still, the form the new law took was surprising — especially the requirement that businesses file 1099s when they purchase goods, which hardly anyone saw coming.

Henschke’s group had previously surveyed its members and learned that they average 10 filings a year of 1099 forms, each of which takes about half an hour to prepare. That’s in line with the GAO report, which found that a typical small business spent between three and five hours per year filing 1099s.

But SMC’s survey found that extending 1099s just to services purchased from corporations would push that number to at least 200 filings per year for a typical small business — adding an estimated $6,000 to the cost of preparing the average tax return. And that’s without even accounting for the requirement that 1099s be filed for purchases of goods, a provision that Henschke’s group didn’t see coming when it conducted its survey last year.

“These folks are doing their paperwork in the evenings and on the weekends already,” he says. “This certainly adds to the burden substantially.”

The IRS has a draft version of the 1099-K form available now for public feedback, and will begin requiring the form’s use next year. The additional 1099 requirements take effect in 2012. The agency is in the process of drafting its guidance on them. 

1099 Mandate from Hell Slipped into Health Bill; Global Warming Profiteering; Fannie Mae Owns Cap and Trade Patents; Shock and Pain Coming to UK, US

With news on Goldman Sachs and Greece dominating the news let’s take a look at some other significant stories the past week you may have missed.

1099 Mandate From Hell Slipped into Health Bill

The CATO Organization is noting Costly IRS Mandate Slipped into Health Bill

In a recent summary, tax information firm RIA notes the types of transactions covered by the new 1099 rules…

Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

Tax CPA Chris Hesse of LeMaster Daniels tells me:

Under the health legislation, the IRS could be receiving billions of more documents. Under current law, businesses send Forms 1099 for payments of rent, interest, dividends, and non-employee services when such payments are to entities other than corporations. Under the new law, businesses will be required to send a 1099 to other businesses for virtually all purchases. And for the first time, 1099s are to be sent to corporations. This is a huge new imposition on American business, costing the private economy much more than any additional tax that the IRS might collect as a result.

The Air Conditioner Contractors of America said:

The House bill would extend the Form 1099 filing requirement to ALL vendors (including corporate) to which they pay more than $600 annually for services or property. Consider all the payments a small business makes in the course of business, paying for things such as computers, software, office supplies, and fuel to services, including janitorial services, coffee services, and package delivery services.

In order to file all these 1099s, you’ll need to collect the necessary information from all your service providers. In order to comply with the law, you would have to get a Taxpayer Information Number or TIN from the business. If the vendor does not supply you with a TIN, you are obligated to withhold on your payments.

Clearly this is insanity. If enacted, it will be the most widely ignored IRS regulation in history.

Obama Administration Global Warming Profiteering

Pajamas Media is highlighting More Global Warming Profiteering by Obama Energy Official

Surprising documents made available to this author reveal that Assistant Secretary of Energy Cathy Zoi has a huge financial stake in companies likely to profit from the Obama administration’s “green” policies.

Zoi, who left her position as CEO of the Alliance for Climate Protection — founded by Al Gore — to serve as assistant secretary for energy efficiency and renewable energy, now manages billions in “green jobs” funding. But the disclosure documents show that Zoi not only is in a position to affect the fortunes of her previous employer, ex-Vice President Al Gore, but that she herself has large holdings in two firms that could directly profit from policies proposed by the Department of Energy.

Among Zoi’s holdings are shares in Serious Materials, Inc., the previously sleepy, now bustling, friend of the Obama White House whose public policy operation is headed by her husband. Between them, Zoi and her husband hold 120,000 shares in Serious Materials, as well as stock options. Reporter John Stossel has already explored what he sees as the “crony capitalism” implied by Zoi being so able to influence the fortunes of a company to which she is so closely associated.

In addition, the disclosure forms reflect that Zoi holds between $250,000 and $500,000 in “founders shares” in Landis+Gyr, a Swiss “smart meter” firm. She also still owns between $15,000 and $50,000 in ordinary shares.

“Smart meters,” put simply, are electric meters that return information about customer power usage to the power company immediately and allow a power company to control the amount of power a customer can consume. These smart meters are a central component of the Obama administration’s plans to reduce electricity consumption as part of the “smart grid.”

Conflict of interest anyone?

Fannie Mae owns patent on residential ‘cap and trade’ exchange

The Washington Examiner reports Fannie Mae owns patent on residential ‘cap and trade’ exchange

When he wasn’t busy helping create a $127 billion mess for taxpayers to clean up, former Fannie Mae Chief Executive Officer Franklin Raines, two of his top underlings and select individuals in the “green” movement were inventing a patented system to trade residential carbon credits.

The patent, which Fannie Mae confirmed it still owns with Cantor Fitzgerald subsidiary CO2e.com, gives the mortgage giant a lock on the fledgling carbon trading market, thus also giving it a major financial stake in the success of cap-and-trade legislation.

The patent, which covers both the “cap” and “trade” parts of Obama’s top domestic energy initiation, gives Fannie Mae proprietary control over an automated trading system that pools and sells credits for hard-to-quantify residential carbon reduction efforts (such as solar panels and high-efficiency appliances) to companies and utilities that don’t meet emission reduction targets. Depending on where the Environmental Protection Agency sets arbitrary CO2 standards, that could be every company in America.

So Fannie Mae, a quasi-governmental entity whose congressionally mandated mission is to make housing more affordable, has been a behind-the-scenes participant in a carbon trading scheme that would do just the opposite.

Layoffs at casino in Bethlehem

Philly.com is discussing Layoffs at casino in Bethlehem

Less than a year after a grand opening that rivaled the glitz and glamour of a Las Vegas revue, Sands Casino Resort in Bethlehem is laying off 80 employees.

The 9 percent reduction brings the casino’s workforce to 780, down from its current 860, and nearly 200 fewer than when it opened last May 22 with 3,000 slot machines.

Slots revenue is taxed at 55 percent in Pennsylvania, compared with 9.25 percent in New Jersey. Pennsylvania uses the gambling proceeds toward property-tax relief (wage-tax relief in Philadelphia) and aiding the horse-racing industry.

Look at the insanity of it all. Imagine using slot revenue to prop horse betting. What’s next, using internet bingo to prop up casinos?

There are only so many consumer entertainment dollars out there. What people spend at the casino does not go to the horse track or to movies or to eating out elsewhere. No jobs are created out of these maneuvers although there may be some slight shifting of jobs from one community to the next.

Harrisburg, Pennsylvania, Council Told to Consider Bankruptcy

Bloomberg is reporting Harrisburg, Pennsylvania, Council Told to Consider Bankruptcy

Harrisburg, Pennsylvania, which has missed $6 million in debt payments since Jan. 1, should consider seeking Chapter 9 bankruptcy protection, City Controller Dan Miller told a three-hour special committee hearing.

Harrisburg, the capital of Pennsylvania, the sixth-most populous U.S. state, has guaranteed payments on $282 million in bonds on the incinerator, run by the Harrisburg Authority. The payments on the bonds and on a working-capital loan this year add up to four times the amount the city collects in property taxes each year, budget documents show.

The city this month skipped a $637,500 payment due on a loan to Fairfield, New Jersey-based Covanta Holding Corp., operator of the incinerator.

On April 23, the Harrisburg Authority told the city that it won’t make a $425,282 payment due May 1 on a $17 million bond issue the city has guaranteed, said Robert Kroboth, interim finance manager. Kroboth said it isn’t likely that the city will honor its guarantee, meaning the payment will fall to the bond’s insurer, Hamilton, Bermuda-based Assured Guaranty Municipal Corp.

A decision other than bankruptcy is lunacy. The sooner Harrisburg files the better. Los Angeles and Houston ought to do the same.

Union Prohibits Weekend Volunteer Work Party To Fix Elementary School

The News Tribune reports Union squelches Tacoma school volunteers at weekend work party

Volunteers at a weekend work party at Fawcett Elementary School in East Tacoma came prepared to get their hands dirty.

But some say they felt like they were working with one grubby hand tied behind their backs last weekend due to school district and union rules.

“There was a lot of work that could have been done, but wasn’t,” said Ron Joslin, whose daughter is a third-grader at the school.

Tacoma Public Schools spokesman Dan Voelpel said the district appreciates volunteer efforts to help make schools better, but there’s a protocol for volunteer cleanups. First, volunteers must fill out a form detailing what the work party plans to do.

“Our buildings and grounds supervisory staff need to review it to make sure that what people want to do is safe and up to school standards,” Voelpel said. “And we have to, by union contract, notify the unions affected. They can determine if the work being performed substantially takes away from union labor. They can object to the work proposed.”

Mark Martinez, executive secretary for the Pierce County Building and Construction Trades Council, put it this way: “Sometimes people don’t appreciate our craft.” His union represents an estimated 60 Tacoma schools employees.

Parents say one of the vetoed Fawcett projects would have removed overgrown bushes that block views of the street from the school. Other proposed projects that didn’t happen include painting a Fawcett Falcons mascot on a school wall and spreading 40 yards of beauty bark on school playgrounds and elsewhere.

No, Mark Martinez, I do not appreciate your craft because your “craft” is nothing but bloodsucking.

Taxing Trip

Please consider KCTV5 INVESTIGATION: Taxing Trip

In 2001, Congress passed a law mandating every school district in America provide its homeless kids with a ride to and from school. For example, a school could be required to pick up a child at a shelter in Kansas City and drive them to an Olathe school every day.

While it seemed like a good idea in sound economic times, the recession has exploded the number of homeless students who need help.

But transporting kids to their original schools comes at a staggering cost. In Olathe, the district will pay $44,000 to transport kids this year. In Shawnee Mission, the tab is $150,000. The Kansas City, Mo., district will spend $194,000. And in Kansas City, Kan., the district served 471 homeless students and spent $295,000 transporting the kids.

Here is a 6 minute video that shows what the kids have to endure.

Mervyn King Warns UK Will Hate The Next Government, No Matter Who Wins

The Times Online reports Austerity Britain will hate its new Government, says King

The Governor of the Bank of England was at the centre of an electoral storm last night after saying that the austerity measures needed to tackle Britain’s budget deficit would be so unpopular that whoever wins next week would not get back into government for a generation.

The Governor’s prediction was made to the American economist David Hale, who passed on the remarks in an Australian television interview. Mr Hale, who has known Mr King for many years, was commenting on debt levels in major economies when he turned to the British election. “I saw the Governor of the Bank of England last week when I was in London, and he told me whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be,” he said.

Analysts have said that without commitment to severe austerity in the first weeks of a new Government, Britain could be heading towards a sterling crisis and a boycott of the gilts market.

The National Institute for Economic and Social Research said yesterday that whoever was in power by 2015 would have to raise the basic rate of income tax by 6p to reduce the budget deficit down towards 3 per cent.

That would be on top of cutting spending by an extra £30 billion in spending cuts and raising taxes to meet current targets. NIESR thinks the further tightening, in addition to what are expected to be the deepest cuts for half a century, is needed because the Government has been too optimistic about its economic assumptions. Simon Kirby, one of the report’s authors, said: “It will be a shock and very painful for almost everyone.”

Shock and pain for nearly everyone sounds about right. The same holds true for the US.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

 Congress Tinkers WIth Witholding Tax Tables for 2010 (Surprise You Have A Tax Increase)

Recently, retired military have received e-mail messages notifying them of a withholding tax increase. The email states:

NO ANNUAL COST OF LIVING ADJUSTMENT (COLA) WILL BE ADDED TO MILITARY RETIRED PAY IN 2010.

DUE TO RECENT LEGISLATION YOUR FEDERAL WITHHOLDING TAX HAS CHANGED.

After much investigating and several discussions with the IRS, it appears the Democrats have played a “cash-flow trick” on working Americans and are taking more out of American’s paychecks across the board–all the while touting the Making Work Pay tax credit.

The trick, when looking at the new withholding tax tables for 2010 as compared to post-stimulus 2009, buries an increase in federal withholding taxes–for all income categories–basically giving the government an interest-free loan until current year taxes are filed next year. Some would blame the increase in withholding on the Making Work Pay tax credit being spread out over 12 months as compared to 2009, which was only over 9 months, but this would be impossible as some middle class wage categories carry an increase in the withholding tax of over $200 per pay period.

Unlike the middle class wage earners, who are going to see huge amounts taken out of their paychecks, unless they increase their exemptions on their W4 form, it’s an increase that most wouldn’t even notice–$10 or $20 in some cases. Here are some of the “highlights” of the new 2010 withholding tables:

1.) Congress has lowered the threshold to capture more wages that qualify to owe taxes–across the board. For example, in 2009 the withholding tax threshold began at weekly single wage levels of $138. In 2010, that same wage is lowered to $116. In short, instead of the taxable wage starting at $138, it is now down to $116–which changes the income threshold and taxes even poorer Americans.

For married couples, the change in the weekly base taxable wage changes from $303 in 2009 down to $264 in 2010. These lower wage thresholds can be seen throughout the new withholding charts for weekly, biweekly, semi-monthly, monthly, quarterly, semiannual, and annual, as well as daily and miscellaneous pay periods.

This across-the-board reduction in the initial wage threshold increases the number of wage earners who would have to pay taxes.

2.) Instead of seven (7) wage categories, there are now nine (9) wage categories. The new structure allows for direct taxation on the middle class with these wages broken out into smaller categories. The direct hit on the middle class withholding taxes can be seen on all of the new tables. Additionally, the IRS could not explain these changes.

Let’s look at the actual numbers for one category and compare them from 2009 to 2010:
2009 Biweekly, Single, Payroll Period, after subtracting withholding allowances

Not over $276: $0 in taxes
Over $276 – $400: 10% payroll tax
Over $400 – $1,392: $12.40 plus 15% of excess over $400
Over $1,392 – $2,559: $161.20 plus 25% of excess over $1,392
Over $2,559 – $6,677: $452.95 plus 28% of excess over $2,559 (Notice the large salary range)
Over $6,677 – $14,423: $1,605.99 plus 33% of excess over $6,677
$14,423: pays $4,162.17 plus 35% of excess over $14,423

Let’s look at the new numbers for 2010 Biweekly, Single, Payroll Period, after subtracting withholding allowances

Not over $233: $0 in taxes
Over $233 – $401: 10% payroll tax
Over $401 – $1,387: $16.80 plus 15% of excess over $401
Over $1,387 – $2,604: $164.70 plus 25% of excess over $1,387
Over $2,604 – $3,248: $468.95 plus 27% of excess over $2,604 (Notice the large salary range is gone)
Over $3,248 – $3,373: $642.83 plus 30% of excess over $3,248 (Notice the substantial increase and 30% tax rate on these wages)
Over $3,373 – $6,688: $680.33 plus 28% of excess over $3,373
$14,450: pays $4,169.99 plus 35% of excess over $14,450

These patterns of additional withholding can be seen throughout the new charts for the 2010 tax year for single and married persons. It appears that everyone earning a paycheck is affected, not just retired military; social security payments will remain the same.

Why would the Democrats tinker with the withholding taxes and, ultimately, cause more stress on Americans and businesses? Why would the Democrats create more wage categories and deliberately target the middle class with a huge withholding increase and 30% tax rate? Are the Democrats trying to backfill the deficits they created in 2009? Because taxpayers will have overpaid the federal government payroll taxes, will they be eligible to get back this additional withholding money in a tax refund when filing in 2011? Do taxpayers in the hardest-hit wage categories even realize that their paychecks are going to be significantly lower, unless they make the necessary changes?

Maybe there is a good explanation for the increase in the withholding taxes from 2009 through 2010, but I remain skeptical, because inherently, Democrats do not have the capacity to reduce taxes and typically make up the revenue somehow.

Get your calculators out and you do the math. Go here for 2009; start on page 4. Go here for 2010; start on page 39.

And you should remember this and the fact that House and Senate Republicans united against the stimulus bill, which may have been the trigger to all of this. And Obama and Congress should remember this from December 21, 2009:

After years of irresponsibility, we are once again taking responsibility for every dollar we spend the same way families do. It’s true that what I’ve described today will not be enough to get us out of our fiscal mess by itself. We face a deficit that will take some tough decisions in the next year’s budget and in years to come to get under control. But these changes will save the American people billions of dollars. And they’ll help to put in place a government that’s more efficient and effective, that wastes less money on no-bid contracts, that’s cutting bureaucracy and harnessing technology, that’s more fiscally responsible and that better serve the American taxpayer.” ~President Obama

Responsibility. Really?

I was down in Washington on a business trip. That ended at four and I
headed for a bar. I found a spot between Pennsylvania and Kentucky
Avenues. Nice place. Two barkeeps, me and another guy who looked like
he had been drinking gin for the past few hours. Quiet, just the way I
like it.

Sure enough, at five the place fills up. It’s a young crowd. Good
looking. Well dressed. This looked like an Ivy League group. I was
thinking that they could be DOJ, possibly IRS (they looked too happy,
but who knows). They could have been Treasury folks; the headquarters
is not far off. Anyway, they had two drinks gossiped for and hour and
left. I stayed.

At one point I happened to look under the now empty stool next to me.
Some folded up papers. Being the nosey S.O.B. that I am, I picked them
up and took a look. Bingo!

I am just guessing, but these initials could stand for Geithner,
Volker, Summers, Goolsbee and Romer. Of course they could stand for
anything. I will leave it to you to draw any conclusions that might be
appropriate after a look at this. Judging from the notes that were
taken, this must have been an interesting meeting. I am using the
Scribd format so you can enlarge this. Enjoy!

Found Memo

If you haven’t as yet, take a look at the ‘labels for this post’. Life is a comedy. We’re all a part of it. Happy Holiday.
bk

Good morning, worker drones: This Week in Mayhem

by Project Mayhem

Project Censored releases top censored news stories of 2009, Market Skeptics highlights catastrophic fall in global food production, gold bounces off $1100, Copenhagen succeeds in building global governance framework, Pakistan and Yemen sink further into chaos..

LAST WEEK IN MAYHEM

Project Censored releases list of 25 censored news stories of the past year

* 1. US Congress Sells Out to Wall Street
* 2. US Schools are More Segregated Today than in the 1950s
* 3. Toxic Waste Behind Somali Pirates
* 4. Nuclear Waste Pools in North Carolina
* 5. Europe Blocks US Toxic Products
* 6. Lobbyists Buy Congress
* 7. Obama’s Military Appointments Have Corrupt Past
* 8. Bailed out Banks and America’s Wealthiest Cheat IRS Out of Billions
* 9. US Arms Used for War Crimes in Gaza
* 10. Ecuador Declares Foreign Debt Illegitimate
* 11. Private Corporations Profit from the Occupation of Palestine
* 12. Mysterious Death of Mike Connell—Karl Rove’s Election Thief
* 13. Katrina’s Hidden Race War
* 14. Congress Invested in Defense Contracts
* 15. World Bank’s Carbon Trade Fiasco

http://www.projectcensored.org/top-stories/category/two-thousand-and-ten-book/

2010 Food Crisis for Dummies

The countries that make up two thirds of the world’s agricultural output are experiencing drought conditions.

The following article is HIGHLY recommended for anyone trading in the commodities futures markets or interested in possible future outcomes in 2010.

“If you read any economic, financial, or political analysis for 2010 that doesn’t mention the food shortage looming next year, throw it in the trash, as it is worthless. There is overwhelming, undeniable evidence that the world will run out of food next year. When this happens, the resulting triple digit food inflation will lead panicking central banks around the world to dump their foreign reserves to appreciate their currencies and lower the cost of food imports, causing the collapse of the dollar, the treasury market, derivative markets, and the global financial system. The US will experience economic disintegration.

So far the crisis has been driven by the slow and steady increase in defaults on mortgages and other loans. This is about to change. What will drive the financial crisis in 2010 will be panic about food supplies and the dollar’s plunging value. Things will start moving fast.”

http://www.marketskeptics.com/2009/12/2010-food-crisis-for-dummies.html

Gold bounces off $1100

Gold has bounced off $1100, as expected, but the question  is whether this level will hold.  This is almost impossible to predict…what we do know is that gold is going much higher intermediate-term.  Short-term, we could see pricing pressures on gold until we get a new leg down in the economic crisis and/or war in Central Asia.  Things are heating up around the world, particularly in Yemen and Pakistan.  Regardless, we expect a hard floor for the gold price in the range of $1000-1050.  We will watch carefully for the next two business weeks leading into Jan 1st, as this will involve year-end mark-to-market for gold on many balance sheets so expect volatility.  In terms of the next year (2010) we are expecting a dollar crisis so it would be wise to own gold under such circumstances.

Tarpley – Hyperinflation possible in 2010
http://eclipptv.com/viewVideo.php?video_id=9059

Gerald Celente – 2010 – Prepare for the Worse
http://eclipptv.com/viewVideo.php?video_id=9060

Copenhagen Treaty yields start of Global Governance

The Copenhagen treaty was a success despite the massive scientific scandal; the global bankster-gangsters got precisely what they wanted.  The objective was to establish the framework for a world government, which is often called ‘global governance’ in policy planning circles. The seeds of this were successfully planted.  There were two main accomplishments at Copenhagen:  1) agreement on a global transaction tax on GDP, paid to the World Bank  and 2) agreement on preliminary funding for global governance, conservatively $100bn by 2020 but we believe this number will be much much higher (probably in trillions).

“In 2004, it was less than $300 million. But in 2005, the trade really started to soar, ending the year with $10.8 billion-worth of transactions. A year later, in 2006, the “carbon” market had grown to $31 billion. In 2007, again it more than doubled its turnover, to $64 billion. Last year, it did it again, reaching a colossal $126 billion. By 2020, some estimates suggest the annual value will reach $2 trillion.”

http://eureferendum.blogspot.com/2009/12/protecting-big-carbon.html

“This is the biggest heist in history. As they poured carbon over snow-covered Denmark from their gas-guzzling jets, world leaders were congratulating themselves on securing a deal which will make their backers and financiers a trillion pounds a year. These riches will come from buying and selling permits, the so-called ‘carbon credits’ which allow industry and electricity generators in developed countries to emit carbon dioxide.

The frenzied negotiations we have just seen were never about ‘saving the planet’. They were always about money.”

http://www.dailymail.co.uk/debate/article-1237235/ANALYSIS-Saved–trillion-pound-trade-carbon.html

Copenhagen accord keeps Big Carbon in business

“The part played at Copenhagen by all the tree-huggers, abetted by the BBC and their media allies, was to keep hysteria over warming at fever pitch while the politicians haggled over the real prize, to keep the Kyoto system in place.

The only tree they were concerned with hugging was the money tree and all the vast political apparatus that now supports it, allowing governments to tax and regulate us into handing over ever more of our money, largely without realising it, every time we drive a car, fly in a plane, pay our electricity bill or carry out any of a vast range of activities that involve the emission of CO2. ”

http://www.telegraph.co.uk/comment/columnists/christopherbooker/6845686/Copenhagen-accord-keeps-Big-Carbon-in-business.html

Saudis rain missiles down on Yemen

Saudi warplanes rain ’1,011 missiles’ on Yemen
“Houthi fighters say Saudi warplanes have fired some 1,011 missiles on the borderline with Yemen where the Shia population is already under heavy state-led and US-aided bombardment. “

http://www.presstv.ir/detail.aspx?id=114162&sectionid=351020206

US air raids kill 63 civilians in Yemen
“Yemen’s Houthi fighters say scores of civilians, including many children, have been killed in US air-raids in the southeast of the war-stricken Arab country.”
http://dprogram.net/2009/12/19/us-air-raids-kill-63-civilians-in-yemen/

Obama Ordered U.S. Military Strike on Yemen Terrorists
“The Yemen attacks by the U.S. military represent a major escalation of the Obama administration’s campaign against al Qaeda.”

Pakistan on brink ;  Obama feigns surprise

Internally displaced Pakistani women and children, aka alQueda

Pakistan continues to deteriorate, as we have been expected since the election of Obama.  There is definitely a new war brewing in the region.  The most likely conflict is either an event justifying going into Pakistan, or an event justifying going into Iran.  In either case, doing so would land us in deep deep trouble, and would escalate into a regional war.  Pakistan is a nuclear-armed country, with ballistic and cruise missiles, and Iran has advanced Russian weaponry.  War in either country would be a big mistake with catastrophic consequences for the world, but our fearless leaders do not seem to care about the people of the world or their lives.  Regardless, the CIA and ISI are doing an excellent job of destabilizing Pakistan, which seems to be the policy objectiive.

Pakistan political crisis deepens

“THE political crisis in Pakistan has deepened after the Government’s anti-corruption agency sought a warrant for the arrest of the country’s Interior Minister.”

http://www.theage.com.au/world/pakistan-in-crisis-as-creeping-coup-unfolds-20091219-l6lf.html

Symptom of a Deeper Malady Pakistan’s Refugee Disaster

In the meantime, with the winter months fast approaching, hundreds of thousands of “unintegrated” refugees who do not find more durable shelter, even as military sweeps continue, could face exposure and starvation. Some aid groups are demanding that the United States pressure Pakistan to respect international humanitarian law and allow independent access to the refugees.

THIS WEEK IN MAYHEM

source: cmegroup

Not much happening this week due to the Christmas holiday. Tuesday brings us the GDP number and existing home sales, Wednesday is new home sales, and Thursday is durable goods orders and jobless claims.  This week we are watching Yemen and Pakistan.

Have a great week and Merry Christmas

Project Mayhem Research (PMR) is a DC/Baltimore-based grassroots think tank dedicated to exposing corruption worldwide. PMR is affiliated with Zerohedge.com, a popular and growing anti-corruption site, through contribution of free articles for the public. Topics include the politics of war and weapons systems, unexpected applications of cybernetics, the growing international surveillance state, global warming ‘deindustrialization’ economics, broad systemic international corruption , in-depth policy analysis of studies from bank and military funded research groups, genetic analysis and surveillance of pandemic influenza, corruption in the international gold market, the power structure and history of the global elite, and analysis of their political objectives expressed through monopolistic international finance capital (read: powerful banks) between now and 2050.

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In his pre-budget report, British Chancellor Alistair Darling said that he will now levy a 50% tax on banker bonuses. The new tax will be effective from today until April 5.The tax will hit virtually all financial companies, including subsidiaries of foreign banks . Thus a Goldman banker working in London will suddenly be faced with a much higher marginal tax rate that his associate in New York. This will either generate much transatlantic resentment, or expect a comparable move to the replicated by the IRS with the President’s blessing, who has already lost control of the unemployment picture, so the last thing he can do to regain some popularity is to take Main Street’s outcry direct to the southern tip of Manhattan.

More from the FT:

“We hope it will be a disincentive for banks to pay bonuses,” said one Treasury official.

The
windfall tax – which politicians argue is justified, as banks have
generated excess profits as a direct, or indirect, result of the
bail-out of the banking system – will apply to all banks and building
societies, including groups that operate in the UK under a European
Union branch system.

The banker response did not come as a surprise:

Bankers reacted with shock to the measure. “This is extreme
victimisation,” said one senior investment banker. “A lot of people
have been working their tails off, never seeing their families to try
and fix the problems of the past and now they are being discriminated
against. It just makes me want to quit the job.”

Didn’t the AIG General Counsel say the same thing? Alas, the same gambit did not work out too well for her.

The government is convinced that banks are unlikely to consider
shifting headquarters away from the UK as a result of a one-year tax of
this kind. But there is a widespread expectation in the City that the
windfall tax will prompt London-based bankers to ask for their
contracts to amended to attach them to other financial centres, such as
Zurich, Paris and Frankfurt.

“It is completely naïve to think
this will have no effect,” said one banker. “The Treasury, the FSA, the
Inland Revenue and politicians are all being very aggressive across the
board. The UK is making itself business unfriendly. A huge number of
colleagues will get themselves relocated.”

Yet even as the likelihood of a copycat tax in the U.S. is increasing, the question is do the domestic trading desks now drop the market and show the administration who is really in charge? Because even the President’s working group can not survive a concerted attack from every single financial entity in the world. And bankers are nothing if not efficient at marking their territory in the protection of take home pay. If that requires a 200 point drop in the S&P, so be it.