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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (39041)	10/12/2005 1:49:52 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Tax Panel Says Popular Breaks Should Be Cut WASHINGTON, Oct. 11 - President Bush's tax advisory commission indicated on Tuesday that it would not propose replacing the income tax with a national sales tax or a value-added tax, but would recommend limits in the popular tax deductions for mortgage interest and employer-provided health insurance. The commission, scheduled to make its recommendations to the president by Nov. 1 on how to change the tax system, did not take votes or dwell on details, but its consensus on many important issues was clear. "We're getting focused on the income tax as a base," said the panel's chairman, Connie Mack, a former Republican senator from Florida. Many prominent conservatives have argued over the years that the income tax is a drag on the economy and should be scrapped in favor of a consumption tax, a tax based not on what people earn, but on what they spend. But the commission members concluded that consumption taxes like the value-added tax used in Europe had more drawbacks than advantages. Various proposals for a flat tax - an income tax with everyone paying the same rate - are still under consideration, said Jeffrey F. Kupfer, the commission's executive director. The proposals are to be discussed at a meeting next week. At its last meeting, in July, the commission agreed to recommend abolishing the alternative minimum tax for individuals, a step that would cost the federal government $1.2 trillion in lost revenue over 10 years. With a mandate to develop a proposal for changing the tax system that is revenue neutral - meaning it neither raises nor lowers total tax receipts - the commission must find enough revenue to offset the amount now generated by the alternative minimum tax. That is mainly what led to an examination of ways to modify the deductions for mortgage interest and health insurance, two of the largest tax breaks now available to individuals. Together, the two deductions will cost the treasury about $250 billion this year, with the benefits going disproportionately to the most affluent taxpayers. The commission members decided that another popular deduction, for charitable contributions, should be expanded rather than cut back. They are looking at how to give the tax break to taxpayers who do not itemize deductions. President Bush is not committed to adopting the commission's recommendations, and the prospects in Congress of limiting the mortgage and health insurance tax breaks, sure to be politically unpopular, are uncertain. The panel's vice chairman, John B. Breaux, a former Democratic senator from Louisiana, acknowledged the political difficulty but said, "We've got to make bold recommendations without regard to politics." Mr. Bush appointed the commission in January, largely so that Congress would concentrate first on Social Security. The panel was originally supposed to report on its recommendations in July, but the deadline was extended twice, first to Sept. 30 and then to Nov. 1. For mortgage loans up to $1 million, taxpayers can now deduct all the interest. One proposal discussed on Tuesday would cap the deduction at the maximum mortgage the Federal Housing Administration will insure. That level changes each year and varies depending on housing costs in each county, with a maximum loan limit now of $312,895 in communities where housing is most expensive and a national average of $244,000, according to the housing administration. Another proposal under consideration was to change the interest deduction to a credit, meaning that taxpayers with the same size mortgage payments would get the same tax break regardless of what tax bracket they were in. A third idea was to limit the deduction to 15 percent or 25 percent of a taxpayer's mortgage interest payments. The wealthiest taxpayers can now deduct 35 percent of the interest. The panel members said they had not calculated how much revenue any of these proposals would generate. But the Congressional Budget Office reported this year that a $500,000 ceiling on the mortgage principal for which interest can be deducted would raise $48 billion over 10 years. The panel members agreed that any of these changes would have to be phased in gradually to reduce the financial disruption for homeowners. In the case of employer-paid health insurance, the main proposal the panel discussed would limit tax-free premium payments to the average cost of the premium the government pays for federal workers. That is now about $11,000 a year for family coverage. (Page 2 of 2) Under the current law, employers can deduct every penny they pay for health insurance for their workers, and the workers are not taxed on this benefit. The panel did not agree on whether the employers or employees would be taxed if a ceiling were imposed, but as a practical matter, there would probably be no difference. The proposal the panel discussed would allow taxpayers whose employers did not provide health insurance to deduct the amount of the premiums they paid for themselves. The main proponent of the health insurance proposal, Timothy J. Muris, a former chairman of the Federal Trade Commission and a law professor at George Mason University, said limitless tax-free health insurance premiums encouraged workers to demand and companies to offer overly generous insurance and resulted in increased health costs. Mr. Muris said he did not know how much revenue his plan would raise. The Congressional Budget Office calculated this year that a limit of $3,720 in tax-exempt premiums for an individual and $8,640 for a family policy would raise $706 billion over 10 years. Mr. Mack and Mr. Breaux said the housing and health proposals they were considering would not raise enough to offset fully the cost of abolishing the alternative minimum tax. This left open the possibility that they would end up recommending a limit on the deduction of state and local income taxes, a proposal that would most likely cause a political uproar. Conservatives have long hoped to get rid of the progressive income tax. When the commission began work, there were three main possibilities: a value-added tax, a national sales tax and a flat income tax. After discussing a value-added tax, which is assessed on each stage of production and eventually paid by consumers, the panel members concluded that this would be what Mr. Mack called a "money machine," meaning that politicians could raise it at will without political pain. The commission members also agreed that a value-added tax would be a disproportionate burden on middle-income taxpayers and would complicate the tax system. Mr. Mack asked the commission staff to draft a proposal for a value-added tax, but that seemed to be a formality. "I think it's going to be very difficult to get a consensus," he said. As for a national sales tax, the idea was dropped after a commission member, Edward P. Lazear, a labor economist at Stanford University and the Hoover Institution, a public policy research center, reported that the sales tax would have to be as high as 87 percent on most goods and services if items like medicine, education, food and clothing were not taxed. A discussion of a flat tax at a meeting of the commission in July indicated that the panel would have difficulty reaching a consensus on the details. nytimes.com

To: NOW who wrote (39041)	10/12/2005 2:07:56 PM
From: mishedlo	Respond to of 116555

KB Homes Will Sell Houses Designed by Martha Stewart; Her Tips on Traffic Flow By KEMBA J. DUNHAM and BROOKS BARNES Staff Reporters of THE WALL STREET JOURNAL October 12, 2005; Page B1 People who follow Martha Stewart's lead on decorating, cooking, gardening and entertaining will soon have a new option -- with four walls and a roof. KB Home, one of the nation's largest home builders, is expected to announce today the creation of a joint venture in which Martha Stewart will design a line of houses carrying her name that KB will build and market. KB plans to begin selling its "Martha" homes in early 2006 in a development called Twin Lakes in Cary, N.C., a fast-growing, middle-market suburb of Raleigh. If those houses sell well, KB says it will expand the line to other cities. The financial terms of the deal haven't been disclosed, but KB Home and Martha Stewart Living Omnimedia Inc. will share in revenue based on a pre-existing formula. KB Home's Katonah house is inspired by her own house in Bedford, N.Y. (above). Katonah will have up to six bedrooms and four baths. KB Home and Martha Stewart Living say they will initially build 650 houses, which will come in many different variations. The homes, which KB says are "inspired" by three of Ms. Stewart's own houses in New York and Maine, have names such as "Katonah" and "Lily Pond." The houses are meant to evoke the bucolic splendor of prosperous suburbia, though Ms. Stewart's homes typically sit on huge tracts of land and are worth millions of dollars. Still, one version of a "Martha" KB home has an exterior that resembles the outside of Ms. Stewart's Bedford, N.Y., estate, and it comes with up to six bedrooms and a third floor, which is common in older, affluent communities on the East Coast. Other design characteristics include high ceilings and particularly large laundry rooms and closets. Unlike most KB Homes, which are typically one- or two-story structures with simple features, the "Martha" homes are expected to have as many as 4,100 square feet, offer high-end features and range in price from just over $200,000 to about $450,000. Most standard KB homes in Cary cost quite a bit less. Ms. Stewart's houses have played a leading role in many of her projects. A line of furniture is modeled after the decor at Turkey Hill, her restored 1805 Colonial in Westport, Conn. A new color in her signature paints line is called Bedford Gray, after the 153-acre suburban New York estate she purchased for $15 million in 2000. (She lived at the Bedford spread during five months of house arrest following her stint in prison last winter.) Photo shoots for her five magazines are sometimes staged at her other properties, which include a 12-bedroom summer home in Seal Harbor, Maine, known as Skylands. Ms. Stewart is entering one of the nation's most profitable industries. Since the housing boom began five years ago, home builders have sold more than four million newly constructed single-family houses and many have consistently reported double-digit earnings growth. WALL STREET JOURNAL VIDEO WSJ's Connie Mitchell-Ford discusses plans for KB Homes to sell Martha Stewart-designed homes.Despite fast growth, mass marketing is relatively new in the home-building industry. But KB has taken branding and marketing a step further than most other builders. A few years ago, it worked with the "Live With Regis and Kelly" show to give away a house valued at up to $250,000. It gave away another house on ABC's "Extreme Makeover: Home Edition." "Marketing is definitely their strong suit," says Greg Gieber, an analyst at A.G. Edwards & Sons Inc. So it was a fortuitous encounter last July when the queen of homemaking was introduced to KB Chief Executive Bruce Karatz and took a tour of a KB new-home development in Raleigh. Ms. Stewart made some "smart comments" about design changes to improve the homes' function, Mr. Karatz says. For example, she marked up several sets of blueprints with suggestions for traffic flow, air conditioning and even the best place to locate a cutting block in the kitchen. Analysts say the venture could help KB Home, which is mainly known as a builder of starter homes, attract more "move up" and luxury buyers. Although the company has been trying to expand into those markets, it still has one of the lowest average selling prices among top builders -- $254,100. Since the Raleigh market is highly competitive, it makes sense for KB Home to try to introduce a higher-priced product there to differentiate themselves, says Banc of America Securities analyst Dan Oppenheim. In addition to getting a chance to branch into a lucrative new business, Martha Stewart Living hopes to use the partnership to boost sales of its furnishings and household products. The model homes will be stocked with Ms. Stewart's products -- everything from dish towels to sofas -- and buyers will be able to buy extras such as Martha Stewart-endorsed faucets for the kitchen sink and flower pots for the front porch. John Grace, president of Brand-Taxi, a Greenwich, Conn., consultant, say a house line makes "perfect sense" for Martha Stewart Living. Ms. Stewart "has touched so many parts of the home, why not put it all together," he says. But he also notes that the project isn't without risks. "It will all come down to the execution," he says. "People will need to believe that Martha herself is making decisions for them, looking out for their best interests." Ms. Stewart, who is usually intimately involved with the development of her products, could also be stretching herself very thin. Aside from the rigors of filming a daily hourlong TV show, she is working on a flurry of new projects, particularly in her company's high-margin merchandising segment. A new business book, "The Martha Rules," will hit stores this week, and her first new cookbook in six years will arrive next month. A newly created unit, Martha Stewart Living Music, will release a line of holiday-music CDs starting Oct. 18, while a line of how-to DVDs will be launched near Thanksgiving. Meantime, a 24-hour Martha Stewart Living Channel is planned for Sirius Satellite Radio. Even for a woman who professes to sleep only four hours a night, that's a lot. In addition, Ms. Stewart's power to motivate the masses hasn't always matched projections. "The Apprentice: Martha Stewart" on General Electric Co.'s NBC, for example, was heralded as a slam-dunk hit. But in its third week, the program ranked No. 4 in its time period, with 6.3 million viewers. Ms. Stewart's new daytime how-to show, "Martha," has attracted about two million viewers an episode, 10% less than the number guaranteed to advertisers, says Mike Meltz, a Bear Stearns & Co. analyst. But a Martha Stewart Living spokeswoman denies that "Martha" is underdelivering and says the company is pleased with the extra brand awareness delivered by "The Apprentice." Sales of Martha Stewart-branded merchandise at Kmart stores are up by double-digit percentages over the past few weeks because of her TV exposure, the spokeswoman says, while third quarter advertising pages in Martha Stewart Living magazine are expected to rise 48% from a year earlier. The alliance has already been foreshadowed on the KB Home Web site. A head shot of Ms. Stewart appears on the builder's home page, with the tagline "look who's house haunting at KB Home." A company spokesman says a Halloween promotion with Ms. Stewart involves decorating one model house in each KB Home community with Halloween items sold at marthastewart.com.

To: NOW who wrote (39041)	10/12/2005 2:19:39 PM
From: mishedlo	Respond to of 116555

Katrina and Socialist Central Planning by Llewellyn H. Rockwell, Jr. mises.org

To: NOW who wrote (39041)	10/12/2005 2:33:48 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

TNX stockcharts.com I fully expected that I also think it is a headfake FNM will be shorting treasuries now as a hedge Their stupid hedging practices short breakouts in yield and buy breakdowns in yield It can get nasty but…. I think it will be one more buying opportunity Mish

To: NOW who wrote (39041)	10/12/2005 3:18:17 PM
From: mishedlo	Respond to of 116555

Bank of England governor dents rate cut expectations By Sumeet Desai and Ross Finley LONDON (Reuters) - Expectations of another interest rate cut this year fell on Wednesday after Bank of England Governor Mervyn King said policymakers are keeping their options open because economic data are sending mixed messages. Financial markets have become increasingly sure in the last few weeks the central bank is poised to repeat its quarter-point August rate cut to counter slow economic growth. But in a speech late on Tuesday and a newspaper interview on Wednesday, King, who opposed the August rate reduction, said central banks could not be expected to control every fluctuation in economic growth. "So I can't promise an interest rate cut, but what I can promise is that we won't make up our minds until we meet in November," he said in an interview published on website of The Journal, a Newcastle upon Tyne newspaper. Dealers immediately marked down the price of interest rate futures as they bet the Monetary Policy Committee would hold off from cutting interest rates again. "Overnight and this morning BoE Governor Mervyn King has underscored scepticism about further rate cuts in the UK," said Ian Stewart, economist at Merrill Lynch. But the clamour for further rate cuts is unlikely to stop. Official data on Wednesday showed unemployment rising for the eighth month running in September -- the longest stretch of increases since the economic slump of the 1990s -- though it left the jobless rate at just 2.8 percent. Nor were there any signs that King's fears of high oil prices pushing wage deals up in an inflationary spiral were about to materialise. The Office for National Statistics also reported that annual average earnings growth in the three months to August remained static at 4.2 percent, still easily in the BoE's comfort zone. "This doesn't look like a labour market about to enter a wage explosion," said Philip Shaw, chief economist at Investec. SLOW GROWTH But as King noted on Tuesday, the data are sending mixed messages. The ONS also reported employment soaring in the three months to August to a record 28.76 million people in work. Consumer spending, however, has clearly slowed down from the heady rates seen in the last few years when it powered the world's fourth largest economy through the global downturn. MPC members like Richard Lambert, however, appear to be worried that lacklustre spending means economic growth will disappoint in the months ahead. But targeting retail sales or short-term movements in growth is not the central bank's job, according to King. "Expectations of its ability to stabilise the economy must be realistic," he said on Tuesday. Nor did the Governor think it was possible to be certain about what British consumers will do next. On Wednesday, GUS, owner of catalogue retailer Argos and home improvements chain Homebase reported falling sales, but Britain's top clothing retailer Marks & Spencer on Tuesday delivered its first sales increase in two years. "There is uncertainty about the rate of spending in recent quarters, let alone where it is likely to go in the near future," King said on Tuesday. For now, the Organisation for Economic Cooperation and Development said the risk of a severe consumer slowdown had eased as the housing market appeared to be headed for a soft landing after years of double-digit price growth. It cut its forecast for UK economic growth to just 1.7 percent this year but said there was no need for further BoE rate cuts. "We await further commentary from MPC members later this week with interest -- Paul Tucker and David Walton will be testifying at the Treasury Select Committee on Thursday," said Sandra Petcov, economist at Lehman Brothers. today.reuters.co.uk

To: NOW who wrote (39041)	10/12/2005 3:22:46 PM
From: mishedlo	Respond to of 116555

European Economies: U.K. Jobless Claims Rise for Eighth Month Oct. 12 (Bloomberg) -- U.K. jobless claims rose for an eighth month in September, extending the longest run of increases in almost 13 years and signaling a deepening slowdown in Europe's second-biggest economy. The number of people claiming unemployment benefits increased 8,200 to 875,500, the highest since March 2004, from August, the Office for National Statistics said in London today. The unemployment rate was unchanged at 2.8 percent. Companies such as Boots Group Plc and Kingfisher Plc are shedding workers amid a slump in consumer spending, which accounts for two-thirds of the economy. The decline in economic growth may add to chances the Bank of England will reduce interest rates for a second time this year. Governor Mervyn King last night signaled opposition to another cut. ``Somebody should wave these numbers under Mervyn King's eyes,'' said Rob Carnell, senior economist at ING Bank in London. ``You can't keep denying the U.K. economy is weakening. There's a fairly clear case for a cut in rates'' next month. King voted in the minority in August when the central bank lowered the benchmark rate by a quarter point to 4.5 percent, saying he was concerned about a pick-up in inflation. The pound rose against the dollar to $1.7505 as of 12:36 p.m. in London from $1.7450 before the report. The implied rate on the interest-rate future maturing in June 2006 was 4.33 percent, down from a high this year of 5.2 percent on March 10. King Speech King said in a speech to the Confederation of British Industry in Gateshead, northeast England, yesterday that he expects inflation to remain above target, and that monetary policy should not be set to bolster short-run economic growth. For the time being, wage growth has ``remained stable,'' King said. That conclusion was borne out by today's numbers, which showed that excluding bonuses wages grew 4 percent in the three months through August compared with the same period last year, the same rate as the prior period. Including bonuses, the rate was unchanged at 4.2 percent. The Organization for Economic Cooperation and Development said in a survey of the U.K. economy today there is no ``compelling case'' for another interest rate cut as inflation has accelerated and economic growth may rebound. ``Output growth has moderated,'' the Paris-based agency said on its Web site. ``However, given that the level of output is still close to capacity, that inflation has been increasing and short-term indicators suggest growth will return to trend, there is not a compelling case for further rate cuts.'' Boots, Kingfisher Boots said Oct. 4 that about 1,000 jobs will be lost in its merger with Alliance Unichem Plc. Kingfisher is cutting 400 jobs at its main office in Southampton, England, after quarterly profit fell, the company said Sept. 6. It also said on Sept. 15 that it plans to shut 22 B&Q stores in the U.K., although most of the 1,250 workers employed at the outlets will be relocated to nearby branches. Jobless claims in September exceeded the 3,300 forecast increase, according to the median estimate of 32 economists surveyed by Bloomberg News. The U.K. economy grew an annual 1.5 percent in the second quarter, the slowest pace in more than 12 years, the government said on Sept. 28. The slowdown comes as oil prices surged above $60 a barrel, the housing market stagnated following a decade- long boom and manufacturing slumped into recession. Layoffs Increase Some 151,000 workers were made redundant in the three months through August, the highest number since the period ended November 2003, the statistics office said today. Jobs are being shed in a number of regions and are principally being driven by layoffs in manufacturing, the government office said. The factory workforce shrank by 99,000 in the three-month period compared with the same time last year to 3.18 million, the lowest since records began in 1978. While jobless claims are increasing, the overall level of employment in the country is still expanding ``roughly in line with the population,'' the statistics office said today. Working age employment was 74.8 percent in the three months through August, while the employment level reached a record 28.76 million. British growth in the second quarter outpaced that of the euro region, which expanded 1.1 percent in the three-month period. The European Central Bank on Sept. 1 trimmed its forecast for economic growth in the dozen nations that share the euro to about 1.3 percent, which compares with the Bank of England's forecast of 2 percent for the U.K. European Jobless According to International Labor Organization measures, the unemployment rate in the euro area is almost double that in the U.K., at 8.6 percent. The U.K.'s rate was unchanged at 4.7 percent in the three months through August, the lowest among the Group of Seven industrialized nations with the exception of Japan, which has a rate of 4.3 percent. Ross Walker, an economist at Royal Bank of Scotland Group Plc, played down today's increase in jobless claims, arguing that the record levels of employment suggest migrants to the U.K. may be taking up more jobs and displacing local workers, who are eligible for unemployment benefits. ``Jobs are being generated at near-record rates, more or less in line with the increase in the working age population,'' Walker said in a note to investors. ``The larger than expected rise in the claimant count may get the attention, but when set against the much more buoyant ILO data, it suggests some inward migrants are displacing domestic workers (who can sign on) rather than any fundamental weakness in labor demand.'' The growth in the claimant count may also be coming as more members of the inactive population, citizens who are out of work and not looking for a job, sign up for jobseekers' support, the statistics office said. The number of working-age Britons who were economically inactive in the three months through August fell by 20,000 to 7.91 million. bloomberg.com

To: NOW who wrote (39041)	10/12/2005 3:37:48 PM
From: maceng2	Read Replies (1) \| Respond to of 116555

Like most people in Britain, I am an expert in listening to news from government experts and scientists who argue up is down, left is right, and black is white. We all listened to this talk for quite some period of time.. news.bbc.co.uk The problem was identified in 1984, no proper action was taken until 1996. During the time up till 1996 there was numerous government officials and scientists who argued that there was no problem. Marc Siegel sounds very much like those "experts". From his link. And even if we accept the Spanish flu scenario, health conditions in 1918 were far worse in most of the world than they are now. Many people lived in squalor; 17 million influenza deaths occurred in India, versus about half a million deaths in the U.S. There were no flu vaccinations, no antiviral drugs, and containment by isolating infected individuals wasn't effective, largely because of poor information and poor compliance. Today's media reach could be a useful tool to aid compliance. Of course, the concern that air travel can spread viral infections faster may be valid, but infected migratory birds were sufficient in 1918. In some monstrous bending of the truth he suggests that, in this modern high tech age with cyber phones and TV's, we would be safer then in 1918, or those in the USA would be safer. The facts available paint a very different picture. Using his words.. If we accept the Spanish flu scenario... -We now have both wild birds AND modern air travel as spreading vectors. The wild birds were more then sufficient in 1918. -Healthy young humans were vunerable as the over reaction by thier immune systems killed them. We have lots and lots of young healthy people today. -Only about two billion of us have proper sanitation, modern living styles, good food etc. That leaves more then 4 billion (more then twice the population of the world in 1918) who live lives without any of our modern advantages in life. That is one huge pool of people for a virus to tune into, who do not have access to proper health facilities. -Even in Western countries, there are not sufficient supplies of drugs to treat a whole nation under threat. -We (UK and USA) currently do not demonstrate any ability to organise defences or containment for many problems, never mind a pandemic. As said, BSE was discovered in the UK in 1984. No effective action was taken until 1996. Marc Siegel suggests we're all ready to go to deal with any problem. I see nothing in the news to suggest either the governments of USA or UK are ready and able to deal with a serious outbreak. So do you see why I am most skeptical of anything says? He talks a soothing talk, but the facts tell a different story. The same sort of B/S went on for years in the UK with BSE.