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

To: mishedlo who wrote (40488)	11/2/2005 4:53:09 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 116555

Who cares if these proposed changes are revenue neutral? Much as I detest Dick Cheney his comment a few years ago that "deficits don't matter" has been 100% on the mark these past few years. Some day, of course, deficits will matter again, but who knows when.

To: mishedlo who wrote (40488)	11/2/2005 5:20:00 PM
From: patron_anejo_por_favor	Respond to of 116555

>>Can someone tell me how this can possibly be revenue neutral?<< It's easy, LBJ explained it long ago: Don't tax you... Don't tax me... Tax the oil company behind the tree!

To: mishedlo who wrote (40488)	11/2/2005 6:09:24 PM
From: russwinter	Read Replies (1) \| Respond to of 116555

Mish, Ok know you've looked at this, but if mortgage convexity and duration extension is taking off, how will that play out in Treasuries? Wouldn't that tend to force selling in the long end, say 5 years and out, but possibly result in a scramble for shorter Treasuries (), say 3 and under, as short duration mortgage backed disappears (because of extension of duration, caused by fewer refis and transactions). In otherwords big curve steepening caused by a glut of longer dates, and fewer shorter or more accurately a disappearance of short maturities? All of a sudden, mortgage holders are going to own long duration portfolio, and of poorer credit. If so the paper to own would be T-Bills and 2 years, possibly 3 years. In the later, one would wait for prepayments to really tank (say below 1500 refi), avoiding anything longer. Can you find out how much mortgage duration has blown out in the last several weeks, especially this week? This could get interesting. () relatively, since the FCB activity has to be taken into account. FCB may have bought agencies ($391.6 billion), because they like short maturities, and now find they have longer maturities.

To: mishedlo who wrote (40488)	11/2/2005 7:21:21 PM
From: Casaubon	Read Replies (1) \| Respond to of 116555

Do you happen to know what provisions are made for recovering AMT already paid, under this proposal?

To: mishedlo who wrote (40488)	11/2/2005 10:28:39 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

The biggest "Revenue Neutral" mechanism behind Sen. Connie Mack's tax changes is the removal of the Federal subsidy of State taxes. State taxes would no longer be deductible from your Federal Taxes. While most people don't itemize deductions, those who do itemize, pay most of the State taxes. Its similar to the way that Reagan pushed more of the cost for Medicare onto the States. The easiest way to "cut spending" is to shift those costs onto someone else's budget. The individual home mortgage deduction is capped, and changed into a credit - that part is neutral. But the limitation on mortgage deductions hits large real estate owners quite heavily. .