Daily Thoughts

[Typhon]

Just wanted to wish everyone best of luck now that we are officially in the Biden Recession.  Things could get pretty tough, especially for those with families.

[Charger]

It's hard to believe there wouldn't be a global recession now...the inflation rates are through the roof and people are starting to lose jobs too again...

Not a lot to be positive about for the future that's for sure.

And here in Finland we will be paying an extremely high cost for the sanctions against Russia as it is predicted we will indeed run out of electricity next winter because we can't import from Russia anymore...and that is not a good thing...at all..

[Zzzptm]

Supply chain disruption has definitely made things hard around the globe, with prices going up on things like food and fuel that bite hardest on folks with the least. A lot of the global economy converted to a just-in-time and make-it-cheap-elsewhere model starting back in the 80s, which left us increasingly vulnerable to when shocks hit the system. The neoliberal economists that dominated economic thought for the last 40 years I liken to weathermen who are unable to tell the difference between a small shower or a hurricane when they predict "rain". For normal fluctuations, globalism didn't have a problem. But for major shocks (dotcom bust, Panic of 2008, COVID-19, Russian invasion of Ukraine) left their models in a shambles and those who depended on them out of luck.

For true supply chain security, we have to look inwards to what we can make locally, ask ourselves what we really don't need, and to be sure to keep physical stocks on hand.

[Vyn]

My folks bought a new house in 1974, I recall the mortgage interest rate they landed was 11%. That was considered GOOD. A lot of folks are not prepared for what's coming their way.

Edited to add:

As tight as things seem right now, we're only standing on the edge. At least in the USA, there are things our federal gov. can do to lessen the depth of the hole we're about to fall into. I don't have a lot of hope that reasonable people can make smart decisions in that regard. Our policy seems to be "print mo'money". Why these morons can't take the lessons of the past and do the right thing is beyond me. Same bullshit going on with the SW USA and the Colorado river. They think Phoenix will never be a dust bowl, when we have people with living memory of when entire states were devoid of soil. Fucking selfish, short-sighted, entitled assholes.

Same people driving our economy right into a decade of financial pain for those least capable of weathering it.

[KiloDeltaCharlie]

This is a world wide problem. The Bank of England have just forecast that the UK will be in recession from this Autumn, lasting for maybe a year with inflation hitting an expected 13% at some point. They've just put the basic interest Rates up to 1.75%.

I do believe the Government could do more, but they don't want to raise taxes on industries like those that have profited from the fuel crises.

[Vyn]

This is a world wide problem.

For sure.

I do believe the Government could do more, but they don't want to raise taxes on industries like those that have profited from the fuel crises.

Our gov is pretty much taking the same path currently. They did, however, authorize $45 Billion to be used by the IRS for audits & criminal proceedings of tax payers. They got the money by stating they figure to be able to recover around $200 Billion from tax payers, primarily middle and upper-middle class folks. So, there are going to be a lot more audits of folks coming soon. For perspective, the entire annual budget for the IRS is $12.5 Billion.

[KiloDeltaCharlie]

^^^
And they will find people paying the incorrect tax, either deliberately or by accident... but I doubt they will recoup the $45 Billion cost of those extra audits.

In this country they reckon that a few billion each year is wasted due to benefits cheats making fraudulent claims... they don't spend money on investigating the fraudsters... they just cut the benefits for everyone.

[Zzzptm]

The situation globally is further complicated by the levels of debt held by most sovereign nations. Back in the 70s, with debt levels much much lower than they are today, high interest rates were possible - nations could still service debt at those rates because the debt itself was much smaller.

After the financial shocks of 2000 and on, nations are at higher debt levels, themselves possible due to low - even negative - interest rates. Increasing interest rates will mean government debt would have to be shed, which is itself a shrinkage of the economy due to money that used to be spent now being absorbed. Japan is in the worst shape - has been for 20 years - and has skated by because interest rates stayed low. It would have to have a partial default at the very least if interest rates were to increase substantially. And a Japanese default would unpin a massive amount of financial forces that would unravel a good deal of the world economy - 2008 all over again is a best-case scenario.

I'd imagine the hope is that, by kicking the can yet again, supply issues unravel themselves and prices return to normal levels. Politicians love to kick the can down the road, saves them from having to take an action they could be held accountable for.

[Vyn]

The situation globally is further complicated by the levels of debt held by most sovereign nations.

...

After the financial shocks of 2000 and on, nations are at higher debt levels, themselves possible due to low - even negative - interest rates.

That's a good point. On a much smaller scale, when you consider an individual who is carrying a credit card balance, they're going to be facing the same issue. And when businesses start tightening their purse strings, the "Great Resignation" is going to turn into the "Oh Lord, Give Me Any Job".

[Typhon]

They got the money by stating they figure to be able to recover around $200 Billion from tax payers, primarily middle and upper-middle class folks. 

Meanwhile, way more money than that is wasted on ridiculous government spending. 

[Typhon]

Just saw this piece of news and was reminded of 1 of the many reasons I never buy a lottery ticket.

Some random person bought a MegaMillions ticket in Illinois and thought they'd won $1.28 billion. Then the IRS got involved.

If you take the lump sum, your $1.28 billion becomes $747.2 million. So, right away you are yeeted out of the billionaire class.  The first thing the government does is take up 24% of the winnings, for no other reason than because they can. Now, you're at $567.8 million.

Then because our "lucky" winner is in a new income tax bracket, since your winnings now become income, the government takes another 17%. You can deduct $97 million or so in income taxes. The silly lottery winner thought they'd get to hang out with Elon Musk. Instead, they just cross paths in the same tax bracket and pay as much in taxes as he does.

And THEN, because the winning ticket was purchased in a high-tax state like Illinois, another $37 million goes to Mayor Lori Lightfoot. This helps the mayor make up some of the revenue losses from all the businesses fleeing the state over high taxes, or the crime that Lightfoot blames on the businesses the crimes are being committed against.

Your $1.28 billion becomes $433 million. 66% goes to a government not smart enough to know raising taxes during an inflation crisis creates more inflation. Not that I'd say no to $433 million. But the government didn't do anything for that money. You at least bought the ticket and needed to think of numbers. All the government does is waste the tax revenue it already collected and demand more.

The IRS should be declared the winner. They just "won" $847,000,000.

[Charger]

Jesus fuck...that's ridiculous to say the least!

Over here all lottery winnings are tax free no matter how much you win!!

So that's pretty ass backwards...because everything else gets taxed to death over here compared to the US but lottery winners lose more than half of their winnings to the government....crazy...just crazy.

[KiloDeltaCharlie]

I was about to say the same thing. Over here the tax element is covered in the purchase of the the ticket not in the pay out. It's 10% of the purchase price if I remember correctly. The Lottery Runner gets about 3-4%, the shop gets about 5%, good causes get around 30%, leaving just over 50% to go in prizes which are all tax free.

[Zzzptm]

So don't take the lump sum. The annuity would allow you to get enough up front to move to a location with lower tax implications and maintain a lower bracket.

But yeah, lotteries are a tax on people who don't do math.

[Typhon]

So don't take the lump sum. The annuity would allow you to get enough up front to move to a location with lower tax implications and maintain a lower bracket.

But yeah, lotteries are a tax on people who don't do math.

There are plenty of problems with not taking the lump sum, as well. 

First off, suppose you are very happy where you are currently living and don't want to move.  Then there's the problem of waiting 20 years before you actually receive all of your winnings.  Hopefully you live long enough.  Plus you can't invest in anything or pay any debts with uncollected winnings.

Either way it's a rip-off for the lottery winner and nice payday for the government.