{"id":2226,"date":"2010-09-15T00:01:00","date_gmt":"2010-09-15T06:01:00","guid":{"rendered":"http:\/\/ishmaels.net\/blog\/?p=2226"},"modified":"2010-09-15T00:01:00","modified_gmt":"2010-09-15T06:01:00","slug":"who-is-lying-to-who","status":"publish","type":"post","link":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/","title":{"rendered":"Who is lying to who?"},"content":{"rendered":"<p><span style=\"font-family: Verdana; font-size: 13px;\"> <\/span><\/p>\n<p><span style=\"font-family: Arial; font-size: small;\"> <\/span><\/p>\n<div>\n<div style=\"background-image: initial; background-attachment: initial; background-origin: initial; background-clip: initial; background-color: #ffffff; font: normal normal normal 13px\/19px Georgia, 'Times New Roman', 'Bitstream Charter', Times, serif; font-family: 'Times New Roman'; font-size: medium; padding: 0.6em; margin: 0px;\">\n<p>I guess that title should actually be &#8220;whom&#8221; for all those grammar cops out there&#8230; but I never professed to be totally literate!<\/p>\n<p>Well if you will remember I posted the other day (<a href=\"http:\/\/ishmaels.net\/blog\/?p=2139\" target=\"_blank\">7th this month<\/a>) about having done the company survey. \u00a0Maybe I should be working a little harder on my &#8220;Exit Plan&#8221;? \u00a0Well maybe not as I don&#8217;t think anyone reads this stuff but me. \u00a0Although this latest Dilbert really fits right behind that last one&#8230;<\/p>\n<div class=\"mceTemp mceIEcenter\" style=\"text-align: center;\">\n<dl id=\"attachment_2302\" class=\"wp-caption aligncenter\" style=\"display: block; margin-left: auto; margin-right: auto; text-align: center; background-color: #f3f3f3; padding-top: 4px; margin-top: 10px; margin-bottom: 10px; border-top-left-radius: 3px 3px; border-top-right-radius: 3px 3px; border-bottom-right-radius: 3px 3px; border-bottom-left-radius: 3px 3px; width: 570px; border: 1px solid #dddddd;\">\n<dt class=\"wp-caption-dt\"><a href=\"https:\/\/i0.wp.com\/ishmaels.net\/blog\/wp-content\/uploads\/2010\/09\/Blog-problems.gif\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2302\" style=\"padding: 0px; margin: 0px; border: 0px none initial;\" title=\"Blog problems\" src=\"https:\/\/i0.wp.com\/ishmaels.net\/blog\/wp-content\/uploads\/2010\/09\/Blog-problems.gif?resize=560%2C174\" alt=\"\" width=\"560\" height=\"174\" \/><\/a><\/dt>\n<dd class=\"wp-caption-dd\" style=\"font-size: 11px; line-height: 17px; padding-top: 0px; padding-right: 4px; padding-bottom: 5px; padding-left: 4px; margin: 0px;\">Maybe I should be careful what I put here ????? Naw &#8211; tell the truth is will set you free!<\/dd>\n<\/dl>\n<\/div>\n<p><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">Now, Some get smart statements, I collected these from my recent reading about the markets and trying to learn a little financial smarts. \u00a0The problem with this type stuff is now I need to try and digest this stuff? &#8211; WD0AJG<\/span><\/p>\n<p><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">================================<\/span><\/p>\n<p><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\"><span style=\"font-weight: bold;\"><span style=\"font-style: italic;\">Companies are NEVER going to come out and tell you the future looks like crap because they are compensated with stock options as part of their <strong class='StrictlyAutoTagBold'>pay<\/strong> package and are thereby enticed to keep the rose colored glasses on at least for public press releases.<\/span><\/span><\/span><\/p>\n<p><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\"><span style=\"font-weight: bold;\"><span style=\"font-style: italic;\">===============================<\/span><\/span><\/span><\/p>\n<p><span style=\"border-collapse: collapse; font-family: arial, helvetica, sans-serif; font-size: small;\">The ability of US corporations to maintain their bottom lines in the last two years has been remarkable due to massive cost cutting and layoffs. However, that strength in earnings will not persist without a rebound in revenues, which as we have stated many times, cannot happen in a <strong class='StrictlyAutoTagBold'>debt<\/strong> deleveraging, consumer saving environment.<\/span><\/p>\n<p><span style=\"border-collapse: collapse; font-family: arial, helvetica, sans-serif; font-size: small;\">================================<\/span><\/p>\n<p><span style=\"font-family: Arial, sans-serif; font-size: 12px;\">A country&#8217;s economy divides into three sections: private, government, and exports. If you play with the variables a little bit you find that you get the following equation. Keep in mind that this is an accounting identity, not a theory. If it is wrong, then five centuries of double-entry bookkeeping must also be wrong.<\/span><\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\">Domestic Private Sector Financial Balance + Governmental Fiscal Balance &#8211; the Current Account Balance (or Trade Deficit\/Surplus) = 0<\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-family: arial, helvetica, sans-serif; font-style: normal; font-weight: normal; font-size: small;\">By Domestic Private Sector Financial Balance we mean the net balance of businesses and consumers. Are they borrowing money or paying down debt? Government Fiscal Balance is the same: is the <strong class='StrictlyAutoTagBold'>government<\/strong> borrowing or paying down debt? And the Current Account Balance is the <strong class='StrictlyAutoTagBold'>trade<\/strong> deficit or surplus.<\/span><\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">The implications are simple. The three items have to add up to zero. That means you cannot have surpluses in both the private and <strong class='StrictlyAutoTagBold'>government<\/strong> sectors and <strong class='StrictlyAutoTagBold'>run<\/strong> a <strong class='StrictlyAutoTagBold'>trade<\/strong> deficit. You have to have a <strong class='StrictlyAutoTagBold'>trade<\/strong> surplus.<\/span><\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">Let&#8217;s <strong class='StrictlyAutoTagBold'>make<\/strong> this simple. Let&#8217;s say that the private <strong class='StrictlyAutoTagBold'>sector<\/strong> runs a $100 surplus (they <strong class='StrictlyAutoTagBold'>pay<\/strong> down debt), as does the <strong class='StrictlyAutoTagBold'>government<\/strong>. Now, we subtract the <strong class='StrictlyAutoTagBold'>trade<\/strong> balance. To <strong class='StrictlyAutoTagBold'>make<\/strong> the equation come to zero there must be a $200 <strong class='StrictlyAutoTagBold'>trade<\/strong> surplus:<\/span><\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">$100 (private <strong class='StrictlyAutoTagBold'>debt<\/strong> reduction) + $100 (<strong class='StrictlyAutoTagBold'>government<\/strong> <strong class='StrictlyAutoTagBold'>debt<\/strong> reduction) &#8211; $200 (<strong class='StrictlyAutoTagBold'>trade<\/strong> surplus) = 0.<\/span><\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">But what if the country wanted to <strong class='StrictlyAutoTagBold'>run<\/strong> a $100 <strong class='StrictlyAutoTagBold'>trade<\/strong> deficit? Then either private or public <strong class='StrictlyAutoTagBold'>debt<\/strong> would have to increase by $100. The numbers have to add up to zero. One way for that to happen would be:<\/span><\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">$50 (private <strong class='StrictlyAutoTagBold'>debt<\/strong> reduction) + (-$150) (<strong class='StrictlyAutoTagBold'>government<\/strong> deficit) &#8211; (-$100) (<strong class='StrictlyAutoTagBold'>trade<\/strong> deficit) = 0. (Note that we are adding a negative <strong class='StrictlyAutoTagBold'>number<\/strong> and subtracting a negative number.)<\/span><\/p>\n<p style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">Bottom line: you can <strong class='StrictlyAutoTagBold'>run<\/strong> a <strong class='StrictlyAutoTagBold'>trade<\/strong> deficit, reduce <strong class='StrictlyAutoTagBold'>government<\/strong> debt, and reduce private debt, but not all three at the same <strong class='StrictlyAutoTagBold'>time<\/strong>. Choose two. Choose carefully<\/span><\/p>\n<p><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\">=============================================<\/span><\/p>\n<p><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\"><span style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-weight: bold;\"><span style=\"font-style: italic;\">the domestic private <strong class='StrictlyAutoTagBold'>sector<\/strong> and the <strong class='StrictlyAutoTagBold'>government<\/strong> <strong class='StrictlyAutoTagBold'>sector<\/strong> cannot both deleverage at the same <strong class='StrictlyAutoTagBold'>time<\/strong> unless a <strong class='StrictlyAutoTagBold'>trade<\/strong> surplus can be achieved and sustained. Yet the whole world cannot <strong class='StrictlyAutoTagBold'>run<\/strong> a <strong class='StrictlyAutoTagBold'>trade<\/strong> surplus.<\/span><\/span><\/span><\/span><\/p>\n<p><span style=\"font-family: arial, helvetica, sans-serif; font-size: small;\"><span style=\"font-family: Arial, sans-serif; font-size: 12px;\"><span style=\"font-weight: bold;\"><span style=\"font-style: italic;\">===================================================<\/span><\/span><\/span><\/span><\/p>\n<p>The Final getting smart is this &#8220;snip&#8221; from the recent post of a weekly letter (<a href=\"http:\/\/www.streettalkadvisors.com\/members\/xfactor\/2010\/091110-Things-I-Think-I-Think.pdf\" target=\"_blank\"> The X-factor from Street Talk Advisors<\/a>). \u00a0You do have to sign up to read this but it is free.<\/p>\n<p>Title is &#8220;Taxes \u2013 Who Pays It And What I Think About It&#8221;<\/p>\n<p>This one hits home on both Taxes and CEO <strong class='StrictlyAutoTagBold'>pay<\/strong> to a little extent. \u00a0Both seem to be out of control and disproportionate in what is paid and by who or to who. \u00a0 I once had a friend\/co-worker tell me that &#8220;America&#8217;s greatest pastime was not \u00a0baseball &#8211; it was big corporations or the <strong class='StrictlyAutoTagBold'>government<\/strong> screwing the workers&#8221; &#8211; I laughed it off at the <strong class='StrictlyAutoTagBold'>time<\/strong> but now, maybe I need to revisit that? \u00a0&#8211; WD0AJG<\/p>\n<p>&#8220;Let&#8217;s look at some facts:<\/p>\n<div id=\"_mcePaste\">1) If you earn 250,000 or more ? you are in the top 1% of wage earners and <strong class='StrictlyAutoTagBold'>pay<\/strong> 19% of the Federal Income Tax Burden. (Side Note: in 2007 this was $398,900)<\/div>\n<div>2) If you earn 110,000 or more ? you are in the top 10% of wage earners and <strong class='StrictlyAutoTagBold'>pay<\/strong> 37% of the Federal Tax Burden. (Side Note: in 2007 this was $155,400)<\/div>\n<div>3) By contrast the bottom 50% of wage earners <strong class='StrictlyAutoTagBold'>pay<\/strong> 13% of all the taxes collected.<\/div>\n<div>4) In 2009, it is estimated that 47% of filers owed <strong class='StrictlyAutoTagBold'>NO<\/strong> tax at all.<\/div>\n<div><a href=\"https:\/\/i0.wp.com\/ishmaels.net\/blog\/wp-content\/uploads\/2010\/09\/091110-Things-I-Think-I-Think1.jpg\"><img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-2318\" style=\"display: block; margin-left: auto; margin-right: auto;\" title=\"091110-Things-I-Think-I-Think\" src=\"https:\/\/i0.wp.com\/ishmaels.net\/blog\/wp-content\/uploads\/2010\/09\/091110-Things-I-Think-I-Think1.jpg?resize=483%2C291\" alt=\"\" width=\"483\" height=\"291\" \/><\/a><\/div>\n<div>\n<div>Of course, a dispassionate look, see chart above, shows that on a percentage basis the top wage earners ARE paying their fair share of taxes and the top 10% of wage earners are footing 56% of the bill. We have pointed out this little misstatement of fact by our President before; however, what is important here is to remember a couple of things. If you raise taxes on the people that are already paying MOST of the taxes on a per capita they will ultimately find a way not to. People that own businesses are smarter than the average bear and they will find a way to shelter income from taxation \u2013 out of necessity rises innovation.<\/div>\n<div id=\"_mcePaste\">Don\u2019t get me wrong. There are SERIOUS inequities of compensation in that top 1% particularly in the realm of corporate CEO\u2019s, however, those are only a few individuals when compared to the total <strong class='StrictlyAutoTagBold'>number<\/strong> of individuals that <strong class='StrictlyAutoTagBold'>make<\/strong> more than $250,000, and most of those are in the financial <strong class='StrictlyAutoTagBold'>sector<\/strong>. Those issues are a problem \u2013 not of inequity in <strong class='StrictlyAutoTagBold'>pay<\/strong> relative to the U.S. worker but more in terms of inequity to the shareholders of the company for whom these CEO\u2019s are supposed to be stewards of.<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<\/p>\n<p>I guess that title should actually be &#8220;whom&#8221; for all those grammar cops out there&#8230; but I never professed to be totally literate!<\/p>\n<p>Well if you will remember I posted the other day (7th this month) about having done the company survey. Maybe I should be working a little harder on my &#8220;Exit Plan&#8221;? Well maybe not as I don&#8217;t think anyone reads this stuff but me. Although this latest Dilbert really fits right behind that last one&#8230;<\/p>\n<p> Maybe I should be careful what I put here ????? Naw &#8211; tell the truth is will set you free! <\/p>\n<p>Now, Some get smart statements, I collected these from my recent reading about the markets and trying to learn a little financial smarts. <\/p>\n<p><a href=\"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/\">&#8220;And Now the Rest of the Story &#8211; &#8220;Who is lying to who?<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[13],"class_list":["post-2226","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-bbs","odd"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Who is lying to who? - And That was How it Went<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Who is lying to who? - And That was How it Went\" \/>\n<meta property=\"og:description\" content=\"I guess that title should actually be &#8220;whom&#8221; for all those grammar cops out there&#8230; but I never professed to be totally literate! Well if you will remember I posted the other day (7th this month) about having done the company survey. Maybe I should be working a little harder on my &#8220;Exit Plan&#8221;? Well maybe not as I don&#8217;t think anyone reads this stuff but me. Although this latest Dilbert really fits right behind that last one&#8230; Maybe I should be careful what I put here ????? Naw &#8211; tell the truth is will set you free! 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- And That was How it Went","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/","og_locale":"en_US","og_type":"article","og_title":"Who is lying to who? - And That was How it Went","og_description":"I guess that title should actually be &#8220;whom&#8221; for all those grammar cops out there&#8230; but I never professed to be totally literate! Well if you will remember I posted the other day (7th this month) about having done the company survey. Maybe I should be working a little harder on my &#8220;Exit Plan&#8221;? Well maybe not as I don&#8217;t think anyone reads this stuff but me. Although this latest Dilbert really fits right behind that last one&#8230; Maybe I should be careful what I put here ????? Naw &#8211; tell the truth is will set you free! Now, Some get smart statements, I collected these from my recent reading about the markets and trying to learn a little financial smarts. \"And Now the Rest of the Story - \"Who is lying to who?","og_url":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/","og_site_name":"And That was How it Went","article_published_time":"2010-09-15T06:01:00+00:00","og_image":[{"url":"http:\/\/ishmaels.net\/blog\/wp-content\/uploads\/2010\/09\/Blog-problems.gif","type":"","width":"","height":""}],"author":"wd0ajg","twitter_card":"summary_large_image","twitter_creator":"@wd0ajg","twitter_site":"@wd0ajg","twitter_misc":{"Written by":"wd0ajg","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/#article","isPartOf":{"@id":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/"},"author":{"name":"wd0ajg","@id":"https:\/\/www.ishmaels.net\/blog\/#\/schema\/person\/e09620d4264e5cd90e30305809ea2462"},"headline":"Who is lying to who?","datePublished":"2010-09-15T06:01:00+00:00","mainEntityOfPage":{"@id":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/"},"wordCount":984,"commentCount":0,"publisher":{"@id":"https:\/\/www.ishmaels.net\/blog\/#\/schema\/person\/e09620d4264e5cd90e30305809ea2462"},"image":{"@id":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/#primaryimage"},"thumbnailUrl":"http:\/\/ishmaels.net\/blog\/wp-content\/uploads\/2010\/09\/Blog-problems.gif","keywords":["BBS"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/","url":"https:\/\/www.ishmaels.net\/blog\/2010\/09\/15\/who-is-lying-to-who\/","name":"Who is lying to who? 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