NYT: Who is the One Percent?

Just who makes up the One Percent?   What are their hopes and fears, their dreams and failings, their favorite sports teams?   .... Do we care?  No -- just tax the hell out of 'em!

Seriously though, I suppose regional cost of living differences do matter.  So we could easily take the upper East/West Coast bound of, say, over $1 million income per household, and raise taxes on them to post-WWII levels.  

(We are still paying for two long-term wars, by the way, don't forget!  The post-WWII/post-Depression era comparison is totally appropriate.)

Among the Wealthiest One Percent, Many Variations

By Shaila Dewan and Robert Gebeloff 

January 14, 2012 | New York Times

URL:  http://www.nytimes.com/2012/01/15/business/the-1-percent-paint-a-more-nuanced-portrait-of-the-rich.html?pagewanted=1&_r=1

Reuters: 'Zombie banks' try to fool markets to delay inevitable

Publicly traded banks which come clean about the real value of their bad loans get punished by the market, so they have adopted a "delay-and-pray" strategy.

How many "zombie banks" are still out there? As long as they keep playing tricks and papering over their losses, we won't know for sure... until it's too late and it causes a financial crisis and a call for another expensive government bailout.

Why Zombie Banks Hate to Write Off Bad Loans

By Jonathan Weil

January 12, 2012 | Reuters

URL: http://www.bloomberg.com/news/2012-01-12/financial-frankness-is-a-bad-dream-for-a-bank-commentary-by-jonathan-weil.html

Reuters: Who profits from Greek debt deal?

Greece's government is asking its creditors to accept a 50 percent reduction (haircut) in the principle amount owed to them.

The major creditors, mostly hedge funds, are still holding out, they won't accept Greece's offer.

It's interesting to note that the original creditors or holders of Greece's debt got out a long time ago and sold their bonds for anywhere from 20-45 cents on the euro, depending on the maturity of the bond, to these risk-loving hedge funds. So if the new owners of the debt accepted a 50 percent haircut, they would still make a profit.

It's just important to keep in mind that many of those who originally took the risk of buying Greece's debt have left the picture, and took a 55-80 percent loss just to be done with it. That is, "the market," which knows everything, has already written down the street value of Greece's debt.

Hedge Funds Are Positioning To Profit From Slashing Greek Debt

January 13, 2012 | Reuters

URL: http://www.huffingtonpost.com/2012/01/13/hedge-funds-greek-debt_n_1203867.html

CEA Chair Kreuger: Inequality hurts us all

It's not up for debate anymore whether income inequality has been growing in the United States since the 1970s, (with the exception of the Clinton years). America's level of inequality more closely resembles Brazil or Russia's than Germany, Japan or Great Britain's.

Apropos, here are some excerpts a recent speech by Alan Krueger, the chairman of the White House Council of Economic Advisers, to the Center for American Progress, a left-leaning think tank. I encourage everybody to read it.

Here Kreuger debunks the myth of income-mobility in the United States:

"Studies that use income data averaged over longer periods of time for parents and children tend to find higher correlations between parental and children's income. A reasonable summary is that the correlation between parents' and their children's income is around 0.50. This is remarkably similar to the correlation that Sir Francis Galton found between parents' height and their children's height over 100 years ago. This fact helps to put in context what a correlation of 0.50 implies. The chance of a person who was born to a family in the bottom 10 percent of the income distribution rising to the top 10 percent as an adult is about the same as the chance that a dad who is 5'6" tall having a son who grows up to be over 6'1" tall. It happens, but not often."

Here Krueger debunks the myth that our tax system redistributes wealth on par with "socialistic" countries: "Of all the OECD countries, only Chile, Korea, and Switzerland have tax systems that reduce inequality by less than the U.S."

And here he explains how greater income equality would be beneficial for all Americans:

"... restoring more fairness to the economy would be good for all parts of American society. This is not a zero-sum game. The evidence suggests that a growing middle class is good for the economy, and that a more fair distribution of income would hasten economic growth. Businesses would benefit from restoring more fairness to the economy by having more middle class customers, more stable markets, and improved employee morale and productivity."

Moreover, a recent study by the IMF covering countries from 1950 to 2006 found that a 10 percent decrease in inequality increased the expected duration of economic growth by 50 percent. Inequality hurts us all in the long run.

The Rise and Consequences of Inequality in the United States

By Alan B. Krueger

January 12, 2012 | Whitehouse.gov

URL: http://www.whitehouse.gov/sites/default/files/krueger_cap_speech_final_remarks.pdf

America's hidden social welfare state

"Once tax expenditures for social welfare programs are included in social spending figures, the U.S. welfare state is a similar size to those in Europe."

You don't hear about that every day! Here are some details:

"Based on direct spending on social welfare programs as a proportion of the total economy, the U.S. (at 16.2 percent) lags behind every country in Europe except Slovakia, according to data analyzed by the Organization for Economic Cooperation and Development. By contrast, when it comes to tax breaks with a social purpose, the U.S. -- at 2 percent of gross domestic product -- leads the pack."

You also don't hear that those tax expenditures go to the middle class and especially to the rich.

Social Welfare State, American-Style, Means Relief For The Rich

By Dan Froomkin

January 13, 2012 | Huffington Post

URL: http://www.huffingtonpost.com/2012/01/13/american-social-welfare-state-mitt-romney_n_1205357.html