It won’t be much of a surprise to those living outside the Washington D.C. beltway
by CHARLES HUGH-SMITH | OCTOBER 9, 2015
If you make it so burdensome to operate a legit business, then you’re basically giving people without big lines of credit and capital few choices but to work in the cash-only underground economy.
It won’t be much of a surprise to those living outside the Washington D.C. beltway and the Unicorn Herd of start-ups selling for millions of dollars that the underground cash-only economy is one of the few bright spots in the U.S. economy. Correspondent B.U. recently submitted this report from rural America in response to my entry What Happens to our Economy as Millions of People Lose the Habits of Hard Work?, which mentioned those in the cash-only sector as not showing up in official employment statistics:
It is very common for folks where I live to get some form of subsidy be it SSI or WIC or whatever. Then they maintain their lifestyle by:
— Selling items for cash on Craigslist:
This is mostly sub $1500 cars, Building materials or scrap metal.
I know quite a few folks that are doing very well in this line of business.
–Selling at various ‘trades-days’:
A friend mine clears ~$100K just trading in gold, firearms and ammunition.
Others I know trade cattle and livestock.
Another friend repairs cars at his home. He has weeks of backlog and turns away work all the time.
The key to all of this is that these folks have no official business. They trade only in cash. They do not make deposits in the bank except for the government checks.
The point is that for these folks, unplugging was a pay raise just in the tax exposure. When they get sick, they claim indigent and get whatever they need.
The spread between the burden of regulation and taxes is getting so onerous that folks are just falling into the very solution you describe.
I believe your focus is more professional in nature in terms of folks being a hired gun (i.e. free-lancer/contract employee). But what I see are the non-professionals as the ones who are really moving to fill the void of value that is growing as deflation/inflation oscillate.
Thank you, B.U., for the straight-up report from the real world. Despite the fact I pay all my taxes (and am royally reamed as a result), I sympathize with those making tax-free incomes in the cash-only economy.
Back when I had multiple employees in the 1980s, I was basically working to pay workers compensation insurance (40% to 80% of the hourly wage for construction workers), liability coverage, unemployment insurance, disability insurance, FICA (employers’ share of Social Security), excise tax, income tax, rent on the office that we were required by law to maintain, healthcare insurance for all the employees, filling out HUD/FHA forms required when building homes with FHA loans, and so on. Then there’s the cost of accounting and tax returns (complicated when you’re operating a business), and a long list of other expenses I’ve forgotten.
My partner and I had a stock response when any employee griped about all the money we must be making: we’d take out our keys to the office and offer it to them, and say “payday’s on Friday. It’s all yours.” I’d have been relieved if any had been dumb enough to accept the offer. No one ever did.
It’s no wonder that legit small business and self-employment is often a struggle for financial survival. I’ve covered the travails of one serial entrepreneur in launching a new business in today’s America: the costs were so heavy that he gave up. It was impossible to actually make a living once you met all the absurd regulations, codes and requirements.
The people enforcing the regulations (“just doing my job”) are paid by taxpayers; their job is safe, their paycheck and benefits guaranteed.
Our Government, Destroyer of Jobs (August 12, 2015)
The Troubling Decline of Financial Independence in America (August 28, 2015)
The Fading American Dream of Working for Yourself (October 2015)
Financial independence is the American Dream because it gives us the freedom to say Take This Job And Shove It (Johnny Paycheck).
This chart shows the tax-paying self-employed as a percentage of those with jobs (all nonfarm employees). According to the FRED data base, there are 142 million employed and 9.4 million self-employed. (The incorporated self-employed, typically physicians, attorneys, engineers, architects etc. who are employees of their own corporations, total about 5 million.)
This chart depicts self-employment from 1929 to 2015. Self-employment is cratering in the “recovery” of high taxes, senseless regulations and burdensome report-filing (big fines if you don’t comply), tax preparation, business licence fees, fishing-expedition lawsuits, etc.
I have no problem with paying all my taxes for a couple of reasons. One relates to “Render therefore unto Caesar the things which are Caesar’s.” That’s my view, but I don’t hold anyone else to it. That’s up to them to deal with.
I live by Andy Grove’s dictum Only the paranoid survive and for good reasons. (Intel co-founder Grove wrote a book with this as the title:Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company.)
Having experienced COINTELPRO in the early 1970s, I know what’s it like to be an enemy of the State. Violating tax codes makes you a very easy target for the state. If you want to draw a target on your back, be my guest. I’m going to pass.
(The FBI thug who “was just doing his job” snarled at me, “This isn’t the Sunshine Biscuit Company, this is the FBI!” Hopefully their witty-threat training has improved.)
Anyone who can’t find a state/Corporate America job or says Take This Job And Shove It has my sympathy. I’ve been down to my last $100, and it’s a lonesome, troublesome feeling. If you make it so burdensome to operate a legit business, then you’re basically giving people without big lines of credit or plenty of capital and regulatory expertise few choices but to work in the cash-only underground economy.
What the current market conditions mean for the future
by THE ALEX JONES SHOW | OCTOBER 7, 2015
Alex Jones talks with economic expert Harry Dent about the growing rumblings of the market.
BY MATTHEW BOYLE
GOP frontrunner Donald Trump is hammering President Barack Obama, his administration and Congress for completely failing the American worker when it comes to trade policy—whacking the Trans Pacific Partnership (TPP) trade pact with 12 Pacific Rim nations that the Obama just finalized in Atlanta as a deal that jeopardizes U.S. jobs.
“The incompetence and dishonesty of the President, his administration and—perhaps most disturbing—the Congress of the United States are about to place American jobs and the very livelihoods of Americans at risk,” Trump tells Breitbart News in an exclusive statement reacting to the news that the president and his negotiators have wrapped the highly secretive they have been negotiating for the past several years on Monday morning.
“The only entities to benefit from this trade deal will be other countries, particularly China and Japan, and big corporations in America,” Trump tells Breitbart News.
The small business operators, farmers, manufacturers and others will again be burdened with unfair trade practices, currency manipulation, exploitation of cheap labor, an onerous tax code and no help coming from the very people charged with putting America first. If crony capitalism were not bad enough, then sticking it to unions, small businesses and everyday Americans seems to be the new blood sport inside the DC Beltway.
Trump said that the lack of transparency throughout the secret negotiations should prove that the deal is horrendous.
“If this was such a good deal, why was there not more transparency?” Trump said.
Why are we striking trade agreements with countries we already have agreements with? Why is there no effort to make sure we have fair trade instead of ‘free’ trade that isn’t free to Americans? Why do we not have accompanying legislation that will punish countries that manipulate their currencies to seek unfair advantage in trade arrangements? Why has the Congress not addressed prohibitive corporate tax rates and trade agreements that continue to drain dollars and jobs from America’s shores?
Trump concluded by saying now is the time for real leaders like him to stand up for Americans in Washington against these special interests.
“It’s time for leadership in Washington,” Trump said. “It’s time to elect a President who will represent the only special interest not getting any attention—The American People. It’s time to send a real businessman to the White House. It’s time to Make America Great Again.”
The TPP trade deal negotiations—after nearly six years of secretive talks—were finalized this weekend in Atlanta, and the announcement of the deal came in on Monday morning. TPP is a massive deal encompassing 12 nations: the United States—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—and has come under serious fire from both populist and conservative Republicans and from most Democrats due to fear it will cost U.S. jobs.
Now that the deal has been cut with the foreign nations, Congress must approve it before it would take effect—something that is almost certainly going to be a bruising battle for proponents of the package. Nonetheless, Congress did—after a similarly bloody fight earlier this year—hand Obama Trade Promotion Authority (TPA), which helps with regard to fast-tracking this deal and at least two others still in negotiations through to approval. Congress cannot amend the deal under fast-track authority, and the Senate cannot filibuster as TPA lowered the vote thresholds down to a bare majority of 51 votes.
TPA, when it passed the House and Senate earlier this year, barely squeaked through with just 218 votes for it to 210 votes against in the House and the bare minimum 60 votes for it in the Senate to 37 votes against. House Ways and Means Committee chairman
—who has been one of the donor class’ chief advocates ever since he, alongside Mitt Romney, lost the 2012 presidential election to Obama—helped champion the TPA portion of Obamatrade through the House earlier this year by consistently and repeatedly fighting for it.
Ryan’s counterpart in the Senate,
, pushed the deal as hard as he could as well—and eventually became the critical 60th vote that secured final passage of TPA. While Rubio claims he read the text of TPP—which was being kept in a classified reading room in the basement of the U.S. Capitol building—before voting to fast-track it, he continually refuses to prove he did so. Since the text was 800-plus pages long according to
, Rubio would have had to spend at least two calendar days inside the room reading it before he would know what he is voting for—and his staff won’t answer when asked what days he spent in the room. After getting National Review to print a story claiming—without any evidence whatsoever—that Rubio did read TPP before voting for fast-track, Rubio’s campaign hired the National Review writer who wrote the story to work for the Floridian’s presidential effort.
Since TPP was announced on Monday morning, at least one of TPA’s supporters
came out guns-a-blazing against the deal.
“Breaking the long-standing tradition of not picking winners and losers in trade agreements, the Obama Administration has decided to use the TPP as a laboratory for partisan politics by discriminating against specific agricultural commodities,” Tillis said. “This sets a dangerous precedent for future trade agreements, and I will not only vote against the TPP, but actively work to help defeat its ratification in the Senate.”
If nine more TPA supporters join Tillis, the deal wouldn’t pass the Senate. Similarly, with more pressure expected to build in the House—especially with Trump and other presidential candidates on the GOP side including Dr. Ben Carson, former Hewlett-Packard CEO Carly Fiorina, Sen. Rand Paul (R-KY),
, Louisiana Gov. Bobby Jindal, former Arkansas Gov. Mike Huckabee, former Pennsylvania Sen. Rick Santorum and more opposed to the deal—the president can’t afford to lose many TPA supporters when TPP comes up for a vote in that body eventually. The Democratic presidential primary, with Obamatrade opponent
surging against former Secretary of State Hillary Clinton, threatens similarly to derail already scarce Democratic support for Obama’s trade agenda.
This issue coming up now—and with the timing of votes in Congress on it at least 60 days, but perhaps as many four months, away under the terms of TPA—could decide the presidency itself. Congressional voting on Obamatrade will be happening at a critical time on the campaign trail, sometime in December or January most likely, meaning that votes on this deal will likely coincide with the critical final weeks before the Iowa caucuses and the New Hampshire and South Carolina primaries.
Trump is a master at messaging on trade, and has used the issue—and his expertise as a business deal negotiator which he highlights frequently by citing his book “The Art Of The Deal”—alongside immigration to shoot up in the GOP primary polls. His position aligns with most of the Republican voting base, despite the fact that many in the donor class and establishment side of the GOP don’t support tough negotiations when it comes to trade policy. A recent Pew Research Center poll shows that the majority of GOP voters—51 percent—believe that trade agreements are going to lead to U.S. job losses. A whopping 50 percent of GOP voters also believe that trade agreements like this one will lead to depression of American workers’ wages.
Trump’s decision—a natural one for him, as a highly successful businessmen—to zone in on concerns about these deals could help him enormously in the final stages of the GOP primary before voting. The next GOP debate, in Boulder, Colorado, will be hosted by CNBC—and will focus on fiscal policy like trade deals. And while Trump has learned to use the issue of immigration to his advantage substantially—something he’s done from his announcement of his presidential campaign all the way until now, and continues to do with his immigration reform plan that would deport all the illegal aliens in America, build a Mexican-funded wall on the U.S. border with Mexico and institute controls on immigration levels designed to get Americans back to work instead of bringing in more cheap foreign labor—trade is even more in his wheelhouse.
He’s comfortable talking about trade day in and day out, even more so than immigration, and as this issue becomes the centerpiece focal point of the election, he’ll be able to effectively dismantle GOP establishment attacks on him regarding his alleged lack of substance as beltway pundits and some of his opponents like to say. Most importantly for Trump, though, talking about an issue with which he’s very comfortable is going to help him stay on message and on offense between now and February–when the polls open in early states.
With Rubio’s involvement in pushing and support of Obamatrade key to its success to this point a major focus of the issue, as well, Trump’s bitter feud with the junior senator from Florida will likely turn even uglier—especially as Rubio continues to refuse to answer which days he spent in the room reading the TPP deal text as he claims he did.
“No I don’t really believe him,” Trump told Breitbart News in a recent interview when asked if he believes Rubio read the TPP text, as he claims he did, before voting for fast-track.
“I think he’s a man who doesn’t show up to Congress to vote, to the Senate to vote,” Trump added of Rubio in that Breitbart News exclusive interview backstage at the Family Research Council hosted Values Voter Summit.
When you’re a member of the Senate, when you’re elected to the Senate, you’re supposed to show up to vote. He’s got the worst voting record in all of the Senate by far. That means he’s either a not hard worker or he’s maybe even something worse than that. But what you’re supposed to do if you’re elected, you’re supposed to be voting. There’s no excuses for that.
Meanwhile, on the Democratic primary side, this deal could cause serious problems for Clinton as Sanders keeps surging—and it could also hurt Vice President Joe Biden, who’s expected to make a decision imminently about getting into the race. Biden, who’s Obama’s number two official, could be saddled with defending the administration’s massively unpopular deal—something that could keep him from, as many have expected should he run, crushing Clinton once and for all.
If it feels like you’re reliving the market jitters of the Great Recession and eurozone crisis, it’s probably because you are.
During this week, global risk appetite dropped to “panic” levels for the first time since January 2012, according to Credit Suisse’s Global Risk Appetite Index. That was back when investors feared a breakup of the euro bloc, grappled with unsustainably high sovereign borrowing costs and freaking out about the spillover from Greece.
Before that, the index reached panic state around the onset of the 2008 financial crisis, after the Sept. 11, 2001 attacks on the U.S., during the dotcom bubble and after Black Monday in 1987. Get the picture?
This time, Credit Suisse’s Global Risk Appetite Index slipped into panic territory just as global equity markets were wrapping up their worst quarter in four years. That came as investors feared a sharp slowdown in China’s economy and a collapse in commodity prices.
“Global growth is not a strong supportive factor for risky assets right now,” said the analyst team led by the bank’s chief economist, James Sweeney.
“Weak Chinese growth has had very negative effects on general emerging market performance and commodity prices. And a strong dollar has caused many exporters around the world to see declining trade revenues, even if actual activity has not fallen off a cliff,” they added.
Indeed, the U.S. economy may not even have grown 1% in the third quarter, according to the Atlanta Fed’s GDPNow tracker.
But here’s for the good news: panic equals buying opportunities. The Credit Suisse analysts said panic usually is an overreaction to short-term events, providing a chance to buy risky assets at a cheaper price.
There’s a caveat for the current panic state, however. Because of the murky global growth outlook, investors should only use this as a short-term opportunity, rather than going in for the long haul, the analysts said.
“If panic persists, it could alter the global growth outlook for the worse. Ongoing panic and weak global growth would likely influence Fed behavior. But history suggests rebounds often occur when they are least expected,” they said.
“That’s why we see the current panic as a tactical opportunity, even if it does not point to a lasting boom in risky assets.”
For a third month in a row, native-born Americans saw their job numbers tumble while immigrants experience solid gains.
According to the montly Bureau of Labor Statistics numbers just released, “foreign-born” jobs numbers increased by 14,000, while those for “native-born” Americans fell off a cliff, by 262,000.
Over the past three months, the job numbers for native-born have dropped by nearly 1 million, exactly the number of jobs President Obama promised to add when he ran for re-election in 2012.
During that period, jobs for immigrants grew 218,000.