Welcome to tax week, are you aware that as you were growing up School House Rock was programming your young mind regarding taxes?
Hey, "be happy they don’t tax it all, ‘cause he’s the tax man." And since he is we’re going to be harping on him all week long!
Remember this little gift from heaven, The American Recovery and Reinvestment Act of 2009? Yeah, the one that was going to save you soooo much money in taxes that they adjusted all the withholding tables to take less out of your paycheck? Guess what, it’s now time to pay up.
After completing my 2009 taxes I can attest that they under withheld to a very large degree. If I’m even close to what others are experiencing, then expect a surge in IRS receipts and expect the consumer to have less money than they thought they did.
So you had Easter shopping come in March, that will be a drag on April, and you are going to have a big tax anchor moving forward, both as people send in what little money they possess, and readjust their withholdings going forward. This to send money to a government that passes it along to the banks who control the world and collect interest from the bonds they issue all while robbing Americans every step along the way – the Jefferson County example is a good one. Wonder why your utility bills are so high? Wonder why we are spending hundreds of billions on interest expense while losing funding for actual things that benefit the majority who comprise society?
This will all be coming to a head soon. The math that was created is quite literally impossible and it won’t take many more years of this type of action to produce some pretty wild results – as if watching the markets cliff dive and moon shoot isn’t wild enough. I can tell you that from my perspective it is intolerable already and quite apparent how working Americans have been turned into little debt/tax slaves. All that School House Rock programming is going to come undone. Look no further than the activity of groups like TaxFree15.com and you’ll see that there are groups actively working to wake people up.
For those that can handle reality, I will blow your paradigm by stating that under a proper sovereign money system there is no need for income taxes at all. I know that sounds nutty with our conditioning that we’ve all been exposed to, but it’s the truth and someday when I have a few more hundred hours left over, after spending days calculating what I owe the tax man, I’ll write about it and why that’s true.
Equity futures jumped yesterday on the supposed arrangement of bailout money for Greece. Well, that they don’t really have an agreement came out later, just another little detail to go with the fact that Greece said they need twice as much as they were talking about anyway. And the one question I never hear asked by anyone is where do the bailout funds come from? Everyone is led to believe that the banks just have billions laying around in order to “bail out” someone. Ah, that’s not the way it works. “Bailout” money is generated simply by generating instruments of indebtedness – bonds. New bonds get stacked on top of the old bonds, prior debt instruments that got them into trouble in the first place, only at a higher rate of interest this time. Oh yeah, it’s reaaaalllly hard to see who wins and who losses playing that game. The Greece, the PIGS, or any country including America is nuts to play that game – not that it can continue too much longer.
No meaningful economic data is released today, later in the week we’ll get some inflation data, Citizen Confidence, Retail Sales, and importantly International Trade and TIC flows. Today opens the Q1 earnings season, Alcoa is first at bat and there will be a lot of large companies reporting all week. Remember that year over year comparisons are going to be easy, but there are huge anchors, like taxes, that are going to be weighing on consumers going forward. And the pressure on the debt markets is going to be simply unrelenting. This will continue to pressure taxes upwards and the real productivity of America downwards.
Turning to the markets, the dollar has broken beneath its upchannel and below its 50 day moving average for the first time since early December. The Euro is up a very large amount, debt on top of debt, oh yeah, that’s going to work out well. Meanwhile our long bond has risen back above its large neckline.
The markets are pressing up against very heavy resistance. The wave B rising wedge has given way to a large megaphone and we are pressing the upper boundary of that now. The 61.8% retrace of the entire bear market decline is in the DOW 11,100 to 11,200 area and for the SPX it’s just above 1,220 – not far from where we are now:
Everywhere I look it’s a mess. City, County, State, Federal governments – deeper in debt forced to look for higher taxes and cuts. Commercial Real Estate still a mess. Residential real estate, a complete disaster and going to get worse with Option ARM resets in progress and much larger numbers coming. Financial sector that is INSOLVENT were it not for false accounting and mark-to-fantasy. Higher energy costs, insolvent retirement plans, broke entitlement programs, sky high but under-reported unemployment, misreported economic statistics, a media that no longer performs its watchdog function and can’t even tell the truth, co-opted government. Man, do I sound like a curmudgeon or what? Too bad that’s simply the truth, handle it or not. Either way get ready because here comes the tax man!
Artwork by AZ Rainman