Best of the Week
Most Popular
1. Best Cash ISA Savings Account for Soaring UK Inflation - February 2018 - Nadeem_Walayat
2.Gold Price Forecast 2018 - February Update - Nadeem_Walayat
3.Bitcoin Crypto Currencies Crash 2018, Are We Near the Bottom? - Nadeem_Walayat
4.Trump Bubble Bursts, Stock Market Panic Dow 1175 Point Crash Analysis - Nadeem_Walayat
5.Gold Corrects, Bitcoin Markets Crash, Whilst Stocks Plunge - Nadeem_Walayat
6.US Treasury Bonds: Fuse to Light the Bonfire - Jim_Willie_CB
7.Dow Falls 666 Points As Cryptocurrencies Crash And Krugman Emerges From His Van - Jeff_Berwick
8.Stock Market Roller Coaster Crash Ride Down to Dow Forecast 23,000 - Nadeem_Walayat
9.Trading the Shadows - Oil, Dollar, Stocks, Gold Trend Analysis - B.R. Hollister
10.Stock Market Analysis: Baying for Blood - Abalgorithm
Last 7 days
Why You Should NOT Sub4Sub Free Youtube Subscribers - YTpals, Subpals, SubmeNow Test Results - 23rd Feb 18
One Belt, One Road, One Direction for Precious Metals - 23rd Feb 18
Gold’s Curious Sentiment - 23rd Feb 18
Relationship Between Crude Oil and U.S. Dollar in February 2018 - 23rd Feb 18
Why The Next Oil Boom Will Be Fueled By Blockchain - 23rd Feb 18
Gold Bull and Bear Markets - 23rd Feb 18
Why Recent Lows Are Crucial for US Dollar - 23rd Feb 18
Will Bitcoin be Larger Than NEO in 2018? - 23rd Feb 18
Stock Market SPX Probable Pop-n-drop - 22nd Feb 18
Stocks Fail to Hold Gains, But Still No Correction - 22nd Feb 18
Why We Should Buy Essay - 22nd Feb 18
The Latest US Debt Blow - 22nd Feb 18
6 Tips For Seamless Business Foreign Exchange - 22nd Feb 18
How to Anticipate Stock Market Trend Changes - 21st Feb 18
Gold Miners’ Rally? What Rally? Watch Out for More Fake Moves! - 21st Feb 18
5 Big Drivers of Higher Inflation Rates Ahead - 21st Feb 18
Goofy Indictments Divert Attention from Criminal Abuses at the FBI and DOJ - 21st Feb 18
Bitcoin or British Pound ‘Pretty Much Failed’ As Currency? - 21st Feb 18
Stock Market Waiting for the Fed - 21st Feb 18
National Identity Demands Restrictive Immigration - 21st Feb 18
Best Opportunities for Freelance Technical Writing Jobs - 21st Feb 18
4% US 10-year Treasury Note Yield Will Be a Floor Not a Ceiling - 20th Feb 18
Governments Are LYING about Their Gold Activities while Mining Companies Cower - 20th Feb 18
No Silver Lining Here - 20th Feb 18
Semi Conductor Stocks SEMI Bearish? - 20th Feb 18
The Prisoner Promised Land - 20th Feb 18
Best Car Dash Cam Review: Z-Edge S3 Dual Dash Cam - UNBOXING (1) - 20th Feb 18
How Inflation Reduces The Real Value Of Social Security Net Of Medicare Premiums - 19th Feb 18
Could Stellar Lumens be a Challenger to Bitcoin for International Payments? - 19th Feb 18
US-China Trade War Escalates As Further Measures Are Taken - 19th Feb 18
How To Trade Gold Stocks with Momentum - 19th Feb 18
Is a New Gold Bull Market on the Horizon? - 19th Feb 18
Stock Market Decision Point! - 19th Feb 18
An Inflation Indicator to Watch, Part 1 - 18th Feb 18
Get on Top Of Debt Before It Gets on Top of You - 18th Feb 18
Will the Stock Market Make a Double Bottom? - 18th Feb 18
5 Reasons Why Commodities Are the Investment Place to be in 2018 - 18th Feb 18
1 Week Later, Stock, Bond Market Risk Remains ‘On’ as 2 of 3 Amigos Ride On - 17th Feb 18
Crude Oil Prices: A Case of Dueling Narratives? - 17th Feb 18
Free 1000 Youtube Subscribers Services - YTpals, Subpals, SubmeNow Test - 17th Feb 18
How to Trade as We Near March Stock Market Top - 16th Feb 18
Bitcoin as Poison - 16th Feb 18
GDX Gold ETF Weathers Stock Market Selloff - 16th Feb 18
Casino Statistics and Demographics - 16th Feb 18
IS Today Thee Stock Market Turn Day? - 16th Feb 18
Huge SMIGGLE Shopping HAUL, Pencil Cases, Drinks Bottles, Back Packs, Toys.... - 16th Feb 18
Tesla Cash Keeps Burning at $320 a Share - 15th Feb 18
Big Conflict Ahead in the Financial Markets - 15th Feb 18
Stocks Extend Rally Off Friday's Low, But Short-Term Exhaustion Near - 15th Feb 18
Stock Market Out on a Limb... - 15th Feb 18
Things Only a True Friend Would Say About Gold - 14th Feb 18
Global Debt Crisis II Cometh - 14th Feb 18
Understanding Crude Oil Behavior - 14th Feb 18
Stock Market is Getting Scary... - 14th Feb 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Stock Market Fiscal Cliff Meltdown Countdown

Stock-Markets / Stock Markets 2012 Dec 31, 2012 - 06:50 AM GMT

By: PhilStockWorld

Stock-Markets

I'm not worried, are you?

Congress sure doesn't seem worried as they aren't even coming back to work until 11 am this morning with only 13 hours left until 2012 ends and all those horrible, nasty things kick in. Of course, those horrible, nasty things, in summary, amount to paying more taxes and spending less money – isn't that what we need to do if we are ever going to get serious about paying down our debts?


Fear of the Fiscal Cliff gave us a horrible day on Friday, more so in the Futures, after the markets closed, than during trading hours, where the S&P technically closed at 1,402, down 1.1% for the day. After the bell, the fireworks really began, as clearly Congress was not able to make a deal and that sent the thinly-traded futures flying down another 1%, with the S&P hitting 1,382.25 at the low and, even now (7:30), they are still trading at 1,387.

Fortunately, as I mentioned in Friday Morning's post, we had our DIA March $124 puts for a hedge (now $2.65) and, ahead of the close, I reminded Members they were still a good trade at $2.35 for nice cover into the weekend. We also have our more aggressive TZA hedges, of course, and they will keep us warm on cold winter nights if we have a proper market collapse.

We also discussed going back to the well on our disaster hedges and, in that same comment, I listed 8 more nice put plays our Members could use for protection should we actually go over the cliff with all the bad reactions the pundits are expecting.

I hear on CNBC that the the Defense Industry will lay off 800,000 people on Jan 2nd which would, if true, save an immediate $40Bn a year if those are all $50,000 jobs. Seems to me, it would have been easier just to not build 400 F-35 jets at $107M each as LMT only employs 123,000 total people so, even if they shut down the company due to the loss of the F-35, it would cost 677,000 less jobs that way.

Or maybe CNBC's numbers are complete and utter BS but they feel completely free to spread their propaganda because they know the American people can't perform simple math and that their Conservative viewer base never engages in any critical thinking – as long as what they hear reinforces what they already believe.

That's the essence of the entire fiscal cliff – we are simply going back to tax rates that used to exist at a time when this country was much more prosperous (cough, Clinton, cough, cough) as well as back to pre-pointless war levels of Military spending. The truth of the matter is that Defense jobs are not efficient jobs. In order to put a $30,000 salaried soldier in the field, our military spends $850,000 but it's $1.2M in Afghanistan due to the harsh conditions. Those are just 2011 figures, in 2012, the number is estimated to move up to $1.4M – none of which includes an improvement in the soldier's salary or benefits.

Are we a bunch of idiots or what? Republicans are fighting to cut off unemployment benefits and keep the military spending even though extending unemployment benefits for 10M families will cost $30Bn – about the same as it costs to keep 30,000 soldiers in harm's way. Idiots, definitely idiots…

Why do they do this? Because nobody in the top 1% makes any money helping 10M families avoid poverty – the unemployed take that $300 a week and just waste it on things like food and heat and clothes for their kids, and most of that money filters back into the local economy and helps other local merchants while $26,000 per week, per soldier, goes to fatten the wallets of all sorts of GOP contributors in highly concentrated payments for items with huge profit margins. What could be more American than that?

And, by the way, the WSJ wants people to stop thinking they are in the top 1% and has conveniently broken down the numbers so you people can learn your proper place and stop thinking you're as good as those of us in the top 1%. According to the WSJ (via Barry Ritholtz):

“The top 1% of U.S. households have a net worth above $6.8 million or at least $521,000 in income, according to data from the Federal Reserve and the Tax Policy Center in Washington. The cutoffs for the top 5% are $1.9 million in net worth, or $209,000 in income.”

That's right, $521,411 a year is the cut-off for the top 1% and you have to fall another 9% just to be earning $148,688 a year so stop putting in applications at our club – you're just embarrassing yourself!

Even the WSJ is being disingenuous here though, because the top 5% includes the top 1% and the top 10% includes the top 5% because the reality of how much richer the top 1% are than everyone else would really make you sick. How do we figure it out? Well, if the top 1% have an average of $6.8M and the top 5% have an average of $1.8M then we can multiply the $1.8M by 5 and we get $9M and then subtract the $6.8M that the top 1% have and that means the next 2-5% (4 brackets) get to share the remaining $2.2M and, in fact, have just $550,000 each in net worth so the WSJ is lying to you by a factor of 3+ even if you are in their core top 5% readership. Anything to perpetuate the myth that America has a fair distribution of wealth.

Why does the media keep lying to us? Because the media is controlled by the same wealthy people who LIKE making 10x more than the people just a couple of percent below them and 100x more than the people who are 10% below them but they also realize that this is so ridiculously unfair that those people would eventually revolt if they knew the ugly truth and they may also, in fact, expect those people in the top 1% (and I include our Corporate Citizens in this group) to pay their fair share to support this nation that gives so much to them.

You can't balance the budget when people who make 10x more than the average household are taxed at the same rate as the people below them. Do you know what that leads to? It leads to them accumulating assets that are 1,000x more than the people below them and, at that rate, it doesn't take very long before the people who "only" make 10x more than the average person to have ALL the assets and then it doesn't matter whether they pay the bottom 99% or not – as they can only use their money to buy what the top 1% are selling – because they have nothing of their own.

Think of it like a game of Monopoly, where you all do the same job (play the game, roll the dice) but 1 person out of 10 gets 10x more money when they pass go and 10x more money whenever they get bonuses from Chance or the Community Chest. Why? Because they were born that way, mostly. How long will it take before they wipe out all the other players?

Can you "work harder" than them and win the game or is it fairly inevitable that they will win because the rules are set up to give them a tremendously unfair advantage? And, more than that, are the rules set up to give you a tremendously unfair DISadvantage?

Ain't that America?

That's what this Fiscal Cliff BS is all about – the rich don't want to pay more taxes and they don't care if the whole country goes to Hell in a hand-basket because all those programs they are so eager to cut don't affect them or the rest of their 1% friends and family, nor do they much affect the next 4% who they generally rub elbows with in their day to day life.

And they'll keep playing that game and do everything they can to convince you to keep playing that game because it's their game and they know that, as long as they can keep finding suckers to play by their rules – they are going to get richer and richer and richer and that makes them more powerful and lets them make more rules that favor themselves.

So happy, happy new year – same as the old year most likely – unless you do something about it.

- Phil

Click here for a free trial to Stock World Weekly.

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2012 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

PhilStockWorld Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules