How will this affect investment?

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Industry thrives on investment. Individuals who back companies with their earnings and help them grow, allow companies to expand, create jobs, create wealth and produce.

So does anyone think that an extra 3.8 percent surtax on investment income and capital gains in order to pay for the politicians’ health care takeover just might affect investment?

And how much will it cost to expand the bureaucracy in order to enforce and clarify the mess ObamaCare has foisted upon us?

The tax applies to a broad range of investment securities ranging from stocks and bonds to commodity securities and specialized derivatives.

The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.

Released late on Friday, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.

Gee! Only 159 pages of rules to clarify one portion of the several thousand-page new law?

Gird your loins, America. It’s just the beginning.

Lars Christiansen On The Danish Experience With Socialism

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So, last Tuesday, I attended a very interesting lecture at the Heritage Foundation. It was given by a leading investment banker in Denmark, Lars Seier Christiansen. He is the founder of Saxo Bank. The bank still operates in Denmark, although Mr. Christiansen has since moved to Switzerland. More on that later. Yes, I know i should’ve posted this last week. I’m a blog slacker.

Morton Blackwell, one of the heroes of the fight at the Republican National Convention against Ben Ginsberg and the rest of Romney’s cronies, came out and gave a brief introduction of Lars, and told us that we were about to hear what socialism really does to a nation. He wasn’t kidding.

One of the first things Mr. Christiansen pointed out was that when you go so far as Denmark has down the path of socialism, it’s almost impossible to go back when so many become dependent on government handouts. Too many will be looking to get their ‘fair share’ of the loot, and will resist any real efforts to roll back the welfare state. He wryly obsetved that this was perhaps not the most friendly environment for an investment bank.

Next, he gave us a bit of background on his homeland of Denmark. It’s a monarchy, the oldest in Europe, with a standard Westminster-style parliament. If a party wins 2% or more, they are entitled to representation in the parliament. This creates a system where, much like many others of its type, minor parties can hold disproportionate power. There are eight parties that are represented in the parliament, so it is nearly always the case that a large coalition of parties is needed to build a majority. The worst news is that of these eight parties, only one could be described as right-wing in sense; the others express no interest in rolling back the welfare state at all.
Denmark had the highest taxes in the world, until recently being passed (barely) by Zimbabwe(!). The Danes also have the smallest private sector in the West, and one of the largest public sectors. Outstanding combination, no? As a consequence, even the most socialist politicians understand they need capitalists to generate revenue, but view them as very distasteful, sort of a regrettably necessary evil.
He also spoke about a very supervisory tone to Danish society. Hotlines where you can call and see if someone is cheating. Any payment above $1500 can’t be paid in cash. I am NOT making this up. Tax authorities wield exceedingly wide powers. For example, they can intern any kind of private property without court order,  and demand documents. This is not allowed to authorities imvestigating terrorism. Most Danes actually believe that anyone who is rich and successful cheated somehow. This is due in part to the makeup of the Danish parliament. It has almost no one with any appreciable amount of practical private sector experience. Many powerful goverment ministers are under 35, and very, very far left. Only 1.8 million of almost 6 million Danes are not dependent on the government. That’s staggering. And of course, everyone scraps for any entitlement they can get, due to the insane tax rates. Only 28,000 Danes make over a million krones ($150,000 or so). Massive envy and suspicion of these people.

Tax reform and government reform efforts are largely symbolic. “Tax reform” apparently means growing the PUBLIC sector. Six of the eight parties participated in this latest charade. The absolute furthest left party supports abolishing military and police and nationalizing the largest Danish companies, of which Maersk Shipping would be the most recognizable to Americans.

Politicians have walled themselves into having to promise more and more entitlements. Blue collar voters largely support “right” parties. This has all happened since 1960, when Denmark had a tax pressure lower than Switzerland, where Lars moved a few years ago, because of the insanely confiscatory and invasive Danish government. Since 1960, things have gone horribly wrong. No party has incentive to run on a small-government rollback platform,  so he doesn’t see how reforms will happen for a very,  very long time. They’re uncompetitive even with other socialist EU nations, due to high wages and lower productivity. Many young Danish people are leaving, and he figures they’re on the road to where Greece is now.

More fun facts: Property taxes average 3% of the full value of your home ANNUALLY. RIDICULOUS taxes across the board. Insane green taxes. Total tax pressure for upper middle class, he estimates at 80-85%. And he doesn’t see how it can be reformed, with everyone dependent on the government. He worries that we’re (the United States) headed in this direction. He emphasizes that it is NOT a system to emulate. He thinks it will collapse Europe-wide, bit by bit. Also, Euro politicians love the US going more socialist, so they can point it out when arguing against European pro-liberty advocates. He says we need to turn it around, before it’s too late. You can turn around freedom, but not democratic socialism. He believes it’s paramount to nurture free market values at home and in schools, and that may not be possible soon. He thinks European integration has been horrible due to mandates from Brussels, and erosion of national sovereignty, as evidenced by European politicians like van Rompuy.

So yeah, let’s not do that here. The man knows what he’s talking about.

The entitlement state vs. America

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Yes, you read that right. No, I don’t think it’s hyperbole. The entitlement state is as far from what the Founding Fathers had in mind as possible, other than perhaps Hamilton, who was a statist outlier.

As I’m sure readers of this blog are well aware, the Democrats have been the driving force behind the entitlement state and the government mechanisms that support it since the passage of the Federal Reserve Act almost a century ago, through the New Deal under FDR, the Great Society under LBJ, through to the passage of the monstrosity known as Obamacare in 2010. Granted, George W. Bush, the worst Republican President since Hoover, got in on the act with his Medicare prescription drug boondoggle in 2005, but the Democrats have carried the ball for the past century. Thanks, guys. Now that things have finally reached the point that we can’t afford them any longer no matter how we fudge the math and soak the productive and rich, the progressives are screaming and hollering like stuck pigs in defense of their venerated, precious, prized accomplishments. Case in point: everyone’s favorite former speaker, Nancy Pelosi, is squawking about how Democrats “created” (Gee, thanks!) Medicare and “will not let them (Republicans) take it away” (Kinda like not letting the doctor cure that infection!) and “We’re going to reject the Ryan plan, which is a transparent trick to end Medicare,” Pelosi said during a gathering over breakfast. “It’s just plain wrong to privatize, voucherize and end Medicare as we know it. So it’s just plain wrong to give insurance companies …more, charge seniors more, more than $6,000 a year. It’s wrong, it’s morally wrong, it’s economically wrong.”

Ah, if only it were so. Ryan, at best, wants to slowly privatize part of the program to help stanch the red ink bleeding out of the federal budget. Sadly, even this is beyond the pale to the Democrats. They’ve managed to hook enough Americans on the drug of entitlements that most don’t realize that the very nature of programs like Social Security, Medicare and Medicaid is to grow, grow and grow some more until they become unsustainable. I can hardly even address Pelosi’s assertion that it’s “morally wrong” to end Medicare, so I’ll just say it’s morally wrong to obligate your children to pay for your federal benefits as the so-called “Greatest Generation” did, and their children after them have to theirs… that would be my generation. I’ll be forty in January, and I know that I won’t see a dime of these programs, and from an ethical perspective, I don’t think I’d want to. So we need to kill these generational Ponzi schemes dead, dead, dead before they back the fiscal back of America as well as the spirit of self-reliance America’s known for, as Dan Mitchell sums up nicely.

It’s up to us, people. No one’s going to do it for us. We have to defeat ALL of one major party and much of the other to accomplish eliminating entitlements, but it has to be done.

Justice Department seeks…

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Oh Great Pumpkin on a stick

Are you mentally challenged? Have mental “conditions” or partial / full paralysis? The DOJ seeks you! It wants you! It’s targeted your “disability” as one that’s obviously lacking at the department, and therefore it will likely be pretty easy for you to get a job there!  Our country also needs dwarves, psychos and people with missing limbs.

If you think I’m kidding, I’m not.

The Justice Department needs you!

This is what we’ve come to in this country. Skills don’t matter. The ability to do the job is secondary. Your scabs, shortcomings, deficiencies and other flaws will give you a leg up. Not your abilities. Not your hard work. Not your smarts. Hell, the DOJ apparently doesn’t want brains! It’s specifically looking for the mentally challenged!

Granted, the candidates will apply for non-attorney positions, but still… if you’re a midget, a loon or any other applicant that would otherwise qualify for the job you will have specific hiring preference over those who weren’t so “lucky” as to be afflicted with missing limbs or mental deficiencies.

Bend over, here it comes again!

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It’s commonly referred to as BOHICA – a military acronym that means you’re about to get screwed. Again.

This time, it’s the TSA and the Democrats (I know, you’re shocked!) getting you ready for yet another reaming up the patoot.

The agency, backed by Democrats in the Senate, wants to increase the security fee everyone pays with a ticket from $2.50 a flight. to $5.00 per one-way ticket. A total of $10.00 would be added to round-trip tickets.

Because getting violated, felt up, molested, bullied and abused in every way possible is just not enough. Now you need to also get mugged in an era when the airlines are screwing you for every conceivable fee from checked baggage to peanuts.

At what point will the public say, “ENOUGH IS ENOUGH?”

A Word On Federalism, For Those Who’ve Forgotten It

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Someone at Students For Liberty, a group which I am a big fan of, has taken a whack at the “states’ rights movement”, as he calls it. He rightly points out that Ron Paul is a huge believer in states’ rights, but wrongly believes that diminishes Paul as  a candidate and champion of liberty. This concept, my young friend, is called FEDERALISM. Our republic was founded on it, and, the excesses of the federal leviathan notwithstanding, it remains the bedrock of American governance. It’s the legal manifestation of the fact that the states CREATED the federal government, not the reverse, hence the name “United States of America”. Also note that the nation is often referred to, and has been since the earliest days of the republic as “these United States”. Plural. The idea is that the Founding Fathers understood that the states were and are very, very different from one another culturally, economically and politically, and brought about a weak, limited federal government to reflect that and limit its ability to arrogate power and authority to itself. This left the states to handle their own internal affairs, for the most part. The federal government really has a very limited purview, as one may note by reading our federal Constitution.

It’s also worth remembering that it is easier to petition your local or state government than it is the federal government. This has always been the case throughout human history; the bigger the government and/or political unit, the harder it is to influence, and the more power it aggregates as a by-product. It’s really easy to sit upon the libertarian ivory tower and say “…advocates of liberty should abandon the “states’ rights” movement—which is, at best, a potential cork in the hull of a sinking ship—and instead direct their efforts toward a long-term, lasting cultural and philosophical shift in favor of individualism and rights-respecting government.” Okay, but in a pragmatic sense, what sorts of governmental arrangements are most conducive to that? And perhaps more importantly, how do we relate the philosophy of liberty to the vast, vast majority of citizens who are unfamiliar with it, using institutions and ideas they ARE familiar with? I know! How about we have a conversation about bringing government as close to the people as we can… and that old saw “That government governs best which governs least?” Some old chap with a powdered wig said that… Jefferson, I believe, was his name. Smart guy.

In a practical sense, the closer a government is to its people, the easier it is to influence, cajole, petition, or threaten. I can pick up the phone or send an email and actually reach the Arlington County Board, or even my state Delegate or Senator personally. Ever tried that with your U.S. Representative, to say nothing of U.S. Senators, or the denizens of the numerous unconstitutional federal departments and agencies we’re buried under? Right, that’s what I thought. States are merely smaller political units, and the author is correct in saying that they have no intrinsic rights as such. However, one look at the Constitution will tell you that they possess quite some number of enumerated rights. If you’re going to try and stand for liberty and against the massive federal leviathan state which is the REAL enemy of every libertarian, paleoconservative, objectivist and every other flavor of liberty activist, the states are the proper vessels for your ambitions. Let’s just agree that we want the local government to do only what we CANNOT do for ourselves, the state to do only what the local governments cannot, and leave the federal government to deliver the mail, provide for the common defense, handle foreign policy, resolve disputes between states, and sit down and shut up otherwise.

Our growing bureaucracy

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I’ve never been a fan of the bureaucratic mess we’ve created within our government. I’m not unrealistic. I do understand the necessity of having some government institutions.  Hell… I’m part of the machine, and I certainly don’t want to shoot myself in the foot!  But I have to agree with Dan Mitchell – our bureaucracy is out of control. It’s bloated, inefficient, and costly. 

With our debt threatening to surpass our gross domestic product, isn’t it about time we did something about it?

Now, to be fair, Obama is not the only one responsible for the unprecedented growth of the federal government, and neither is the current batch of Congressleeches, who passed measures that will create yet another bloated bureaucracy and give said inefficient beast control of our health care system.  Bush did his share, according to a 2004 article from the Independent Institute.


Since 2001, even with record low inflation, U.S. federal spending has increased by a massive 28.8% (19.7% in real dollars)—with non-defense discretionary growth of 35.7% (25.3% in real dollars)—the highest rate of federal government growth since the presidencies of Richard Nixon and Lyndon Johnson. This increase has resulted in the largest budget deficits in U.S. history, an estimated $520 billion in fiscal year 2004 alone.

This current administration, however, is doing absolutely nothing to remedy the situation. As a matter of fact, it’s getting worse!


In 2000, the federal government spent $1.8 trillion while debt held by the public stood at $3.4 trillion. A mere decade later, the federal government is on pace to spend $3.7 trillion while publicly held debt is approaching $10 trillion.

There’s no blame game left to be played. President George W. Bush left office having presided over one of the largest expansions of federal spending in history.

President Barack Obama appears intent on pulling off the amazing feat of making Bush look like a relative tightwad.

And Congress has become so addicted to spending that the new Capitol Visitor Center — itself a $600 million fiscal boondoggle — might need to be converted into a giant methadone clinic.

 I work here, and I never cease to be amazed by the sheer number of bureaucrats who inhabit federal agencies.  There’s a joke here that every presentation must include an org chart, and do they EVER!  The organizational charts give you a pretty good idea of just how much bureaucracy exists within any government agency!

Should I ever become a benevolent dictator, I’ll contribute to the short-term unemployment problem by slashing the bureaucracy by at least half.  And I do mean, at least.  I’ll start by eliminating redundant agencies and SES employees who do nothing but surf the web and look at porn all day. I’ll also eliminate the redundant “leadership” positions, which provide no actual leadership whatsoever.  I figure I’ll release several million federal employees into the market, forcing them to find jobs where they actually produce something. The billions spent on paying these losers will not be spent by the FedGov, but returned to the taxpayers. 

Oh, and redundant agencies? Gone. Education department? Gone. EPA? Gone. IRS? Gone.  IRS? Nearly gone. It will manage government revenue, which will be drastically reduced, and ergo, there will be no need to have one Leviathan agency with thousands upon thousands of employees with way too much time and power on their hands.  We will have a strong national defense, so I will keep the DoD.  DHS will be gone.  That’s why we have the DoD, and I’m sick and tired of the redundant incompetence of the new bureaucracy.  Interior, Health and Human Services, Agriculture, Labor, Commerce, Housing and Urban Development? Gone.

There would be a whole lot more cuts, and none of them will be pleasant for the millions of bureauleeches sitting on their asses daily and sucking up taxpayer resources.

Now, THAT’S what I call a stimulus, sparky!

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