Sunday, January 1, 2012

Mr Troll goes to Washington

Mitt Romney got called out by a Fox interviewer (of all places) for his promise to cut taxes for the middle class by eliminating the 15% tax on capital gains. You see the problem is that the average middle class taxpayer only pays $167 in capital gains tax. Mittens’ response was that “a $167 isn’t zero…”. A rich frat boy who has no idea how the 99% live, he actually thought this was a good idea. Half of the capital gains taxes are paid by the one percent, and most people only pay it when they sell their house at a profit. Thanks to people like Mitt, they don’t have to worry about that anymore.

This rant was inspired by an  anonymous comment to my blog: "[I'm] Part of the loser 99%. Yet, I made a bunch of $$$ buying Brigham Exploration for average $2.00 per share 3 years ago. ... Company [was] bought by Statoil for $36.50 this year. ... so even us losers can play the investing game. It is open to anyone with a few dimes, knowledge and balls to play. Yes, you can beat the big boys. My account up 18.6% this year, crushing the flat S&P 500. Don't let anyone tell you different, Losers."

Let's assume for the sake of augment that everything he said is true, and he's not just another troll making his living trying to create buzz for penny stocks at 5 bucks a post. In the first place, the stock market doesn't "make" money. The only money that comes into the market is from some sucker buying stock. "Profits" can only come from that sucker losing his money. The brokers make money on every transaction, and the high speed traders churn the market to shave off a slice from the stocks that they drive up. Then hedge funds bet against the stocks driving them down, they also make a killing, again the money comes from the suckers.

Government pension funds and 401(k)s were created to generate more suckers to funnel more money into the market. The Republicans want to do the same with your Social Security, so they can take it out of the market and put it into their pockets.

Then there is Mr Troll's claim that he made 18.6% profit this past year. The stock market as a whole was flat for the year. Hundreds of billions flowed in, but on the average nobody made money. The exceptions were the big Wall Street banks and hedge funds who made hundreds of billions. Again the money comes from the suckers and is subsidized by the government as the pension contributions are tax free, and Mittens want’s those profits to be tax free instead of paying the 15% capital gains tax. In the old days (ten years ago) capital gains were taxed at the same rate as earned income.

But let's say he's right about all us losers being able to beat the system as he claims he did. Fully two-thirds of Americans can't come up a $1000 cash to cover an emergency expense, let alone invest (he said “it only takes a few dimes”, but let's say they could come up with some dimes. If they royally beat the market as Mr Troll says he did, and they all made 18.6% profit, that would be $186 extra income from their $1000 investment, and tax free under President Mittens.  Boy that would really lift everybody out of poverty, if they had a $1000 to begin with and could beat the market the way Mr Troll says he did, which of course is absolutely impossible. Just as impossible as everybody being able to retire on their 401(k).

A 25 cent increase in the minimum wage would for anybody working full time (2000 hours/year) equals $500. In two years they would all have a $1000 to invest in Mr Troll's Ponzi scheme. Or maybe they would spend it back into the real economy and create jobs. “Job Creation“, it’s not just for rich people anymore.


Anonymous said...

In august I moved my 401k money from stocks to all us gov. Bonds. Not to make money but to keep from loosing it. So far I'm up 9% half of what the troll claimed but I took no risk.on a down day for the market I'm up and on a up day I haven't been hurt that bad. This I believe is due to the in flow of money to bonds. I see now why depression era people didn't risk any thing and where so damn cautious.

prairie2 said...

Let's be clear. Bond funds can lose money, but not the crazy amounts stocks certainly will. The only completely 'safe' investment is buy the actual bonds. This is beyond the reach of most small investors, but you can buy savings bonds that are inflation indexed. If you are trapped in a 401(k) and they have a Treasury fund option this would be safer than stocks and they are currently returning a nice yield as money is flowing in.

Anonymous said...

Yes,I'm traped in the 401k and this Is the best option advalible to me.looking at my statement this appers to to be a safer option than stocks. Thanks for all you do keep up the good work. Jeff.

Anonymous said...

Basically, after Wall Street has displayed the fact that our money is to be played with why would anyone want to chance fooling with the stock market!? At least you don't loose anything.

Anonymous said...

Missing in this equation is the fact most people with their 401k's or public employee retiree investment plans, all withdrawals are taxed as ordinary income even though some capital gains can be included. Only investers and hedge fund operators who make their living playing in the markets pay the lower capital gain 15% tax rate. Republican give the impression that the lower capital gains tax rate benefits the voters and most of them buy the fib.

prairie2 said...

A good point that I overlooked, Republicans only cut taxes for themselves. Saint Ronnie cut taxes on the rich from 74% to 28% but he doubled taxes on the working class that elected him, presiding over eleven tax increases. When Frothy Santorum was challenged on his recollection of Reagan's record his press secretary interrupted calling these facts lies that couldn't go unchallenged.

John said...

I think it was frothy Cantor's press secretary who interrupted to reconstruct Saint Ronnie's frothy record.

John Puma

prairie2 said...

John's right, I got confused by the rush from the clown car.

macnow said...

But does all that info boil down to a one sentence soundbite to convince the gullible otherwise.

My question answers itself probably.

This is where a lot of americans fail on such a utterly basic level.

To even try to start to talk about what is actually 3 or 4 points their eyes gloss over or they start burping up stale old Rethug/libertarian lines.

And when they do come to the realization that their hard in savings etc. is gone for good, they double and triple down and blame minorities, gays, unions or what ever else, never once hitting the real issues,
regulatory transparency (Glass Steagle), enforcement instead of gutting regulations so on and so on.

But again prairie2 I read your column (have spread it to others) and I recharge for the fight.