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Savings In Cyprus are Under Attack, now the USA Options · View
Guest
Posted: Tuesday, March 19, 2013 6:52:00 AM

Rank: Lurker

Joined: 12/1/2006
Posts: 534,624
Sponsored by: Working America

Right now in this country, more than 26 million Americans are unemployed, underemployed or have just given up looking for work. Meanwhile, corporations are sitting on $2 trillion in cash. That just isn't right.

The working families who have shouldered the biggest burden throughout the recession are still struggling. Corporations need to step up and do their part to help us recover by using their massive cash reserves to put people back to work.

Corporate America is experiencing it's own private recovery, with record profits and exploding bank accounts. It has the money to start hiring and spread the recovery to the rest of us. But so far they are unwilling in invest in jobs.

Companies shouldn't be allowed to keep this money. Urge your state legislators to pass a "Hoarder's Tax" to make businesses either pay a small tax on their liquid assets or invest it to jump start our economy."

Companies in the USA are taxed under the current Tax Code on cash reserves, should they be taxed again or forced to hire people for work that does not exist?
ByronLord
Posted: Tuesday, March 19, 2013 8:38:50 PM

Rank: Forum Guru

Joined: 11/14/2010
Posts: 753
Location: Massachusetts, United States
Buc wrote:
Sponsored by: Working America

Right now in this country, more than 26 million Americans are unemployed, underemployed or have just given up looking for work. Meanwhile, corporations are sitting on $2 trillion in cash. That just isn't right.

The working families who have shouldered the biggest burden throughout the recession are still struggling. Corporations need to step up and do their part to help us recover by using their massive cash reserves to put people back to work.

Corporate America is experiencing it's own private recovery, with record profits and exploding bank accounts. It has the money to start hiring and spread the recovery to the rest of us. But so far they are unwilling in invest in jobs.

Companies shouldn't be allowed to keep this money. Urge your state legislators to pass a "Hoarder's Tax" to make businesses either pay a small tax on their liquid assets or invest it to jump start our economy."

Companies in the USA are taxed under the current Tax Code on cash reserves, should they be taxed again or forced to hire people for work that does not exist?


The Cyprus tax was 10%. A cretinous way to maintain faith in the banking system. If it hadn't been struck down there would have been runs.

For some reason, only Paul Krugman seems to be pointing out the blatantly obvious. But that seems to be because all the other pundits are completely invested in the Euro and can't see that withdrawal is the only viable option.

The Cypriots have rejected the deal which means that either Germany accepts setting a non zero target for inflation or Cyprus will leave the Euro which will cause Greece to exit as well. Both are highly desirable outcomes.

The only reason for avoiding a Grexit was the risk of a run on the banks. Now that has been put in play by Merkle and co.

hankyspanky
Posted: Tuesday, March 19, 2013 10:35:13 PM

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Location: wellington, New Zealand
Glad im not Russian!
MrNudiePants
Posted: Wednesday, March 20, 2013 7:12:36 AM

Rank: Forum Guru

Joined: 8/10/2009
Posts: 2,140
Location: United States
It's being bandied about that New Zealand is going to institute the same thing.


Link

Guest
Posted: Wednesday, March 20, 2013 8:06:35 AM

Rank: Lurker

Joined: 12/1/2006
Posts: 534,624
withdrawal is the only viable option.

The Cypriots have rejected the deal which means that either Germany accepts setting a non zero target for inflation or Cyprus will leave the Euro which will cause Greece to exit as well. Both are highly desirable outcomes."

I will have to read Paul Krugman, thanks for bringing that to my attention. Looks like the Russians are going to fund Cyprus for oil rights.
Guest
Posted: Wednesday, March 20, 2013 8:11:10 AM

Rank: Lurker

Joined: 12/1/2006
Posts: 534,624
MrNudiePants wrote:
It's being bandied about that New Zealand is going to institute the same thing.


Link



Wow, this idea as stupid as it it is catching on a bit. The point of this tax is just to extract the excess labor from the pockets of workers?

Killing off the idea of saving, in a bank?
MissDaisy1
Posted: Friday, March 22, 2013 8:31:57 PM

Rank: Forum Guru

Joined: 3/7/2013
Posts: 422
Location: United States
Buc wrote:
Sponsored by: Working America

Right now in this country, more than 26 million Americans are unemployed, underemployed or have just given up looking for work. Meanwhile, corporations are sitting on $2 trillion in cash. That just isn't right.

The working families who have shouldered the biggest burden throughout the recession are still struggling. Corporations need to step up and do their part to help us recover by using their massive cash reserves to put people back to work.

Corporate America is experiencing it's own private recovery, with record profits and exploding bank accounts. It has the money to start hiring and spread the recovery to the rest of us. But so far they are unwilling in invest in jobs.

Companies shouldn't be allowed to keep this money. Urge your state legislators to pass a "Hoarder's Tax" to make businesses either pay a small tax on their liquid assets or invest it to jump start our economy."

Companies in the USA are taxed under the current Tax Code on cash reserves, should they be taxed again or forced to hire people for work that does not exist?


Buc, at first I thought you wrote that!

Working America has an interesting philosophy, although it is quite flawed. I think the money they are referring to is cash held abroad- profits made in foreign markets. First thing I would suggest is to lower tax rates and encourage repatriation of corporate profits; this would only be for a limited time, and the tax rate cut would only be for corporations to repatriate their money.

Secondly, I would recommend encouraging retail banks to lend money.

For far too long, retail banks have been able to borrow money from the Federal Reserve and the Treasury would borrow the money at a higher interest rate; the banks get the spread. That is also how many banks are actually making large profits. Mortgage lending is currently bizarre; a couple years back, one could get a home loan for 0 down. Now, one has to have 20% down- who has that kind of downpayment on a 1st home loan? Both options are wrong for different reasons.

Final point, regarding the hoarder's tax. Corporations are already taxed on their earnings. Reserves are also subject to taxation when the reserves earn interest or appreciate from investing activities. In essence, corporations are already taxed for holding reserves. Also, dividends are subject to flat taxation when they are paid out to investors; therefore, the profits have been double taxed. Once at the corporate level and once at the individual level.

If a law were made to seize corporate cash, corporations would not repatriate their money. Any money held in accounts would be pulled from the US banking system. This in turn, would lead to a banking solvency issue. Not a good thing.
LYFBUZ
Posted: Saturday, March 23, 2013 9:45:07 AM

Rank: Forum Guru

Joined: 12/27/2012
Posts: 3,381
Location: 1st star to the left, Canada
Smart girls are sexy....
Taxing savings was ill advised at best though I suspect it was a deliberate pressure to get Cypress to play nice in the world sandbox. As MissDaisy points out there is a need for repatriation of corp profits, a wide problem in many tax jurisdictions. So called tax havens give the rich (individuals and corps) unfair advantage. Corporations are in business to make money, I don't think this is a bad thing but a little more responsibility on their part would be nice. I'm more outraged with exorbitant salaries, golden parachutes and massive bonuses than I am with hoarding cash. As a shareholder I want the companies I own stock in to make prudent investments. Spending corporate cash to kick start the economy may well work, especially in the short term but one of the biggest problems around the world is people (and especially governments) living beyond their means in lifestyles propped up by debt. At the other end of the spectrum are the massive holdings/wealth of a priviliged few. There needs to be a worldwide agreement that restricts "tax shopping" amongst various countries and redistributes wealth much better. I'm a massive capitalist....but there needs to be more fairness and compassion...
As for Cyprus by all means find a way to tax the rich and criminal holdings of mobsters ...but hitting up Joe Average is pretty outrageous....
Guest
Posted: Saturday, March 23, 2013 10:08:35 AM

Rank: Lurker

Joined: 12/1/2006
Posts: 534,624
Mortgage lending is currently bizarre; a couple years back, one could get a home loan for 0 down. Now, one has to have 20% down"

Traditionally that 20 % down was done in part for three reasons.
1, To have skin in the game
2, To lower monthly payments
3, Eliminate the requirement to pay PMI

MissDaisy1
Posted: Sunday, March 24, 2013 4:11:23 PM

Rank: Forum Guru

Joined: 3/7/2013
Posts: 422
Location: United States
Guest wrote:
Mortgage lending is currently bizarre; a couple years back, one could get a home loan for 0 down. Now, one has to have 20% down"

Traditionally that 20 % down was done in part for three reasons.
1, To have skin in the game
2, To lower monthly payments
3, Eliminate the requirement to pay PMI



Very true Lurker! You point out the benefits of the 20% down bank policy. However, 1st time homebuyers do not have 20% (100,000 X .2 = 20,000 cash!). What 22 year old has $20K cash? And, that is a modest home for a suburb in St. Louis. The FHA does provide lower down payments (3%), but one does have to pay PMI until reaching the 20% equity requirement.

The problem with 0% down is loaning money to riskier consumers. Obviously, a retail bank would require the purchase of PMI. Higher risk = higher defaults/higher interest rates.

My generation is called the boomerang generation. Many go to college and end up moving back home because they cannot afford a house and have to save money. Rental is an option, but financially one builds no equity. Personally, I believe in a culture of ownership, not rental.
VanGogh
Posted: Sunday, March 24, 2013 6:26:50 PM

Rank: Sarcastic Coffee Aficionado

Joined: 2/10/2012
Posts: 3,035
Location: Vancouver, Canada
This is pretty standard in Canada ......

Quote:
The size of a down payment can vary. Depending on the type of mortgage, down payments generally range from 5% to 20% of the purchase price.

To obtain a conventional mortgage, home buyers are required to put down at least 20% of the purchase price or appraised value (whichever is less) as a down payment. If you don't have the necessary time or resources to save a full 20% down payment, you can choose a high-ratio mortgage and buy a home with as little as a 5% down payment. This option is called a high-ratio mortgage and it requires you to purchase default insurance.

Whether you choose a conventional or a high-ratio mortgage, one thing is almost always certain: the larger your down payment, the more you save in the long run. A larger down payment --

- Reduces the amount of your monthly principal and interest payment
- Reduces the total amount of interest you pay over the life of your mortgage


Imagine the 20% required by who-ever (certainly not a just-out-of-school single person anyways) in Vancouver where the average Vancouver HOUSE is outrageous - with the weakness in the real estate market is projected to be softest in single detached houses next year, with a 2.7 per cent drop to $1.09 million in the average price paid in Greater Vancouver in 2013. 20% on $1M .... A far cry from the $20,000 down payment in St. Louis [cited by MissDaisy1 above]. If a first time buyer can't afford the 20% downpayment, that means they just have to figure out how to save for longer or get the buck$ from mom&dad (I noticed many young people are taking/borrowing from mom&dad's retirement funds).

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starting with The Secretary and The Student - first part

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ByronLord
Posted: Monday, March 25, 2013 10:06:55 AM

Rank: Forum Guru

Joined: 11/14/2010
Posts: 753
Location: Massachusetts, United States
MissDaisy1 wrote:


Very true Lurker! You point out the benefits of the 20% down bank policy. However, 1st time homebuyers do not have 20% (100,000 X .2 = 20,000 cash!). What 22 year old has $20K cash? And, that is a modest home for a suburb in St. Louis. The FHA does provide lower down payments (3%), but one does have to pay PMI until reaching the 20% equity requirement.

The problem with 0% down is loaning money to riskier consumers. Obviously, a retail bank would require the purchase of PMI. Higher risk = higher defaults/higher interest rates.

My generation is called the boomerang generation. Many go to college and end up moving back home because they cannot afford a house and have to save money. Rental is an option, but financially one builds no equity. Personally, I believe in a culture of ownership, not rental.


If someone does not have $20K cash then they probably should not be buying a house at all. Most 22 year olds should not be buying.

Buying a house is a big financial commitment. There are costs that you would never expect when you are renting.

The big problem for your generation is that most of you overpaid for a college education that was overpriced to start with and you probably won't see a return on. I have no idea why college costs so much. They pay the staff almost nothing and the students pay top dollar

LadyX
Posted: Monday, March 25, 2013 5:43:11 PM

Rank: Artistic Tart

Joined: 9/25/2009
Posts: 4,827
MissDaisy1 wrote:


Very true Lurker! You point out the benefits of the 20% down bank policy. However, 1st time homebuyers do not have 20% (100,000 X .2 = 20,000 cash!). What 22 year old has $20K cash? And, that is a modest home for a suburb in St. Louis. The FHA does provide lower down payments (3%), but one does have to pay PMI until reaching the 20% equity requirement.

The problem with 0% down is loaning money to riskier consumers. Obviously, a retail bank would require the purchase of PMI. Higher risk = higher defaults/higher interest rates.

My generation is called the boomerang generation. Many go to college and end up moving back home because they cannot afford a house and have to save money. Rental is an option, but financially one builds no equity. Personally, I believe in a culture of ownership, not rental.


Found this out firsthand not long ago. I'm 22, and if my circumstances were slightly different, I'd qualify for an FHA loan, which gets me in the door for about 3% of the total cost. So on a $150,000 home, that's just $4,500 down. The FHA is widely available, and geared toward both first time buyers and high-income/low-cash-reserve buyers.

Byron's point is well taken, but the large-scale problem of foreclosures and defaults has more to do with the predatory $0-down and ARM loans. If and when I go the FHA route (assuming it's still available, of course), I'll keep a few thousand on hand, hopefully, and if the worst happens, then the worst happens. But there's no way in hell I'm going to amass 30k before I buy a house, nor will I buy something shitty just to get that 20% number down to something reasonable for me. If that's what the market coerces me to do, then I'll happily rent, just as I do now. Given the choice though, I've seen the light: it's better to buy.

ByronLord
Posted: Friday, March 29, 2013 1:16:56 PM

Rank: Forum Guru

Joined: 11/14/2010
Posts: 753
Location: Massachusetts, United States
LadyX wrote:


Found this out firsthand not long ago. I'm 22, and if my circumstances were slightly different, I'd qualify for an FHA loan, which gets me in the door for about 3% of the total cost. So on a $150,000 home, that's just $4,500 down. The FHA is widely available, and geared toward both first time buyers and high-income/low-cash-reserve buyers.

Byron's point is well taken, but the large-scale problem of foreclosures and defaults has more to do with the predatory $0-down and ARM loans. If and when I go the FHA route (assuming it's still available, of course), I'll keep a few thousand on hand, hopefully, and if the worst happens, then the worst happens. But there's no way in hell I'm going to amass 30k before I buy a house, nor will I buy something shitty just to get that 20% number down to something reasonable for me. If that's what the market coerces me to do, then I'll happily rent, just as I do now. Given the choice though, I've seen the light: it's better to buy.


The problem that arises with zero downpayment loans is that they allow house prices to spiral out of control because nobody is actually grounded. Houses are usually a constrained resource so there are always more potential buyers than sellers. There isn't enough housing stock for people to buy their own at 22 so the question is not whether you will be able to buy but how people like you are going to be squeezed out of the market.

During the bubble the almost the only people who could get a house were those people rash enough to over-extend themselves with a mortgage they couldn't afford. A 20% downpayment may seem to be an unfair means of rationing houses but it is a lot more stable than the previous attempt.

The other problem with zero downpayment loans is that they enable all sorts of anti-social speculation. Sales of new condos being a case in point. The school next door to us closed down and the building was turned into condos. The cheapest 2 bedroom condo cost more than I paid for our 7 bedroom house. The most expensive 2 bed condo was three times the price of the five bed house on sale across the street from the development.

The developer knew that the prices were ridiculous. But the reason he thought he could get that much was that pretty much every condo development in the area was sold out before the project was complete as speculators piled in to buy properties and then 'flip' them at a tidy profit due to the appreciation in house prices while the project was being built. The speculators didn't know or care what the places they were buying were actually worth because they thought they would be selling them on to a bigger fool than them. So people who wanted to buy a place to live in just saw the prices going up and up.

The other pernicious effect is 'home equity loans'. A lot of people lost their houses because they borrowed against the equity of the house rather than paying their mortgage down. When I bought this house the deeds showed that the previous owner had done just that. All of the money (and more besides) had gone to the bloodsucking cult they were members of.

Adamagic
Posted: Friday, March 29, 2013 3:42:38 PM

Rank: Active Ink Slinger

Joined: 3/29/2013
Posts: 10
Location: United Kingdom

Yeah that's why I feel kinda bad for America. There's almost no collective collaboration. All you have are the jackasses in power with their outdated ideals which aren't working & the public who quite frankly are mostly a case of the quiet ones are the smart ones but never get make their ideas heard mixed in with about 10 fools to each one of them which make whole nation look stupid.

For me I think the biggest problem is the fact the younger generation isn't given nearly enough chance to put their intellect to good use as opposed to the old prats who've caused so much damage to the nation (Militarily, Economically & Politically) that admitting they've failed is a far bigger price to pay then causing even more damage. I mean granted we in Britain are going through something similar but we're quite a small nation so the damage isn't as widespread and I'll be honest it really hasn't affected my own personal earnings at all as opposed to the governments who've wasted so much money on absolutely nothing that I couldn't care less. dontknow
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