DoomwatchTM vs. Timesizing®
Collapse trends - Sept. 10-30, 2002
[Commentary] ©2002 Philip Hyde, The Timesizing Wire, Box 622, Cambridge MA 02140 USA (617) 623-8080 - HOMEPAGE
9/29-30/2002 today's headlines from hell - qikis -
9/27/2002 today's headlines from hell - qikis -
- 9/30 More people lack health insurance - Unemployment, premiums, sinking corporate revenue are cited by policy experts, by Spors & Lueck, WSJ, A2.
The percentage of Americans without health insurance shot up last year after falling the previous two years.... An estimated 14.6% of Americans - 41.2 million - went uninsured in 2001, up from an upwardly revised 14.2%, or 39.8m, in 2000, according to a Census Bureau report out today....
- [our clip re what induces mergers is on our mergers page under 9/29/2002.]
9/25/2002 today's headlines from hell - qikis -
- Sluggish U.S. economy a global concern - IMF and World Bank holding annual meetings in Washington - A fear that no other nation is able to take up the slack, by Edmund Andrews, NYT, A11.
[But then, the IMF and the World Bank are our little puppet dolls. Sigh, we're such a legend in our own minds, and those of our sycophants -]
Despite nearly daily news of economic strife in Brazil and Argentina, a growing number of economists and governments around the world worry that the biggest risks to the global economy are emanating not from Latin America or Asia but from the U.S. and Europe. Bankers and finance ministers will descend on Washington this weekend for the annual meetings of the IMF and the World Bank, anxious about economic imbalances in the U.S., the possibility of war in Iraq and foot-dragging on free-trade by rich countries....
[Free trade is just for poor countries. Whaddaya think we are, stoopid?! You think we wanna get reamed? Forget it! That's just for you unwashed hordes!]
- Bush's security strategy, letter to editor by Dr. Jack Geiger of Physicians for Social Responsibility of Brooklyn, NYT, A30.
The Bush administration's new national security strategy (front page, Sept. 20), despite its rejection of international cooperation, is the very opposite of isolationism. It is a declaration of intent for global domination.... It announces that we will strike pre-emptively and unilaterally against any nation that we define as a threat.... It proposes a global economic policy to be administered by instruments we control, the IMF and the World Bank. In sum, it asserts that American sovereignty trumps all other national sovereignties - America über alles.
- In broad daylight - The real mystery of California's [energy] crisis, op ed by Paul Krugman, NYT, A31.
...How could a $30 billion robbery take place in broad daylight?...
[And now, where are the indictments?]
9/24/2002 today's headlines from hell - qikis -
- The U.S. poverty rate rose, pointer summary (to D2), WSJ, front page.
...in 2001 for the first time in 8 years, the Census Bureau said, with 11.7% of the population, or 32.9 million, now classified as poor. Median household income fell 2.2%....
[The NYT version is -]
Number of people living in poverty increases in U.S. - Census Bureau finding - Report also says that income of the middle class fell for the first time since '91, by Robert Pear, NYT, front page.
...for the first time since the last recession ended....
- Right now, billions of dollars in personal assets are quietly gathering dust..., full-page ad for UBS Financial Services Group, NYT, C7.
[This refers to the fact that clearly, billions of dollars that were in the stock market are no longer in the stock market. And it reflects a basic condition of the Great Depression. It's not that the money wasn't (and isn't) there. It's just that it was neither in the stock market nor getting loaned out to help businesses expand - and hire.]
9/22/2002 today's headlines from hell - qikis -
- ["democracy" update]
Don't vote? - He wants to know why - Thomas Patterson examines the "puzzle" [our quotes - ed.] of public apathy at the polls, by David Mehegan, Boston Globe, E1.
[No big mystery to that -]
...Candidates attack one another instead of campaigning on deeply held views. The press tends to belittle or undermine all candidates, and its cynicism affects the public.
[He should mention first, polls, which by trying to remove the suspense, disempower the voter and ought to be completely banned.]
...And many people in states where one party dominates, such as Massachusetts, see no reason to vote when the Electoral College makes the outcome a foregone conclusion.
[Or see no reason to vote in the November election when the September primary makes the outcome a foregone conclusion, thanks not only to the one-party stranglehold but to the media's particular focus of their belittling on small parties (including, in Massachusetts, the Republicans). Note -]
Afterthoughts - The media try to figure out a sensible way to cover the other candidates, by Dan Kennedy, Commonwealth magazine, summer 2002, 45.
[in which article Dan Kennedy manifests his complete cluelessness about the true simplicity of ideal political reporting = just cover each candidate's issues in equal space. Cut completely the silly emoting and thinly veiled attempts to manipulate the outcome, such as Dan's dumb beginning -]
Carla Howell [the Libertarian candidate for Mass. governor] has been avoiding me....
[And when they have absolutely nothing else to belittle you for, as they hadn't for Phil Hyde in 2000 vs. Ted Kennedy, they start calling you "perennial candidate" - though Phil had only run twice before - vs. Joe Kennedy. Where are the slurs against Carla for being a "perennial candidate" now she's run 3-4 times? Apparently Dan & ilk are finding enough other material to scorn her for since we're hearing nothing about "perenniality." And this pathetic article is being published in a magazine that purports to support real democracy? What a sick joke. Ask Tony Schinella his opinion about Commonwealth magazine, CPAX and the other self-serving posers as champions for democratic liberalism. The "champions of democracy" in Massachusetts have recently been excluding Carla, and Green Jill Stein, and independent candidate Barbara Johnson from debates, same as they tried for Phil Hyde and Tony Schinella in 1998 (Ted Kennedy wouldn't even debate in the Y2000 "race").]
- Our "war" economy [our quotes - ed.] is hurting the poor, by E.J. Dionne, Boston Globe, A19.
WASHINGTON - Perhaps the White House and Congress might take just a little time away from war planning to consider what the economic downturn has been doing to poor Americans, especially the working poor.
[What a disgrace. What a humiliation for our whole "intelligent" species - starting a new millennium with peace boredom and war lust. What a disgrace for the party of Lincoln, who with deep regret waged the most bloody war in American history up to that time. Humans that are so careless of life are not worthy of it. If Bush was playing Bucky Fuller's World Game, his resort to war would immediately brand him a loser and throw him out of the game. The most basic rule in Bucky's World Game is that anyone who resorts to politics and war, instead of economics and ecology, immediately gets branded the primitive loser that they are.]
The news is bad, well documented and little noticed. There is not much accountability for what is happening. And while Washington washes its hands of responsibility [and prepares to wash its hands in human blood - ed.], state governments have to do the worst of the dirty work in cutting off help for those who need it.
...The scandal is that few give a damn about any of this.
- Take health care. A report released last week by the Kaiser Commission on Medicaid and the Uninsured found that 41 states are cutting their Medicaid programs this year. Three have simply started kicking people out of the program - thus ending their health coverage.
Medicaid's troubles are especially alarming because as health costs rise, the states will be forced to take health coverage away from more and more children....
- Massachusetts eliminated 50,000 of the long-term unemployed;
- Nebraska will be cutting about 25,000 people, half of them children; and
- Missouri cut 32,600, though that reduction is being delayed in court.
[Thus a once-great nation devises its own decline, which will surely happen as these children grow up, and once again, "the first become last."]
The state's are in this jam largely because of factors beyond their control. As the Kaiser report points out, state tax revenues fell by 10% for the April-to-June quarter this year. It was the 4th straight quarter of declining receipts.
[Thus right when the wealthy have more unspendable money than ever before, their taxes fall, because we let the country get taken over by angry, bored, radical men (and women!) calling themselves "conservative" while breaking rules and acting radical. A gang of self-important ignoramuses who have learned nothing from anyone else's experiences or from history.]
- The cuts don't stop [there]. The Children's Defense Fund issued a report earlier this month documenting big state cutbacks in spending on child care. States don't get federal funds unless they also put in matching dollars of their own. In 2001, the fund reported,
couldn't meet their match requirements for the Child Care and Development Block Grant.
- Utah, and
[There was no excuse for Texas or Utah.]
The result? They "lost millions of dollars in federal funds available for child care." ...The kids getting hurt the most are from low-wage families not quite poor enough to get help under newlyl stringent rules. ...In state after state, waiting lists for childcare are growing longer while cuts are hitting programs for infants and toddlers, prekindergarten, and after-school activities.
[Why don't our bored and angry, testosterone-poisoned rulers just be honest and sterilize the poor, instead of hustling in more and more poor people by unpublicized contraception, unenforced immigration, and inconsistent and unfair "free trade" that sweeps in cheap imports (proxy immigrants), all the while sneering at Russia and Italy whose populations are declining? When will we move ahead by using our miraculous work-saving technology to reduce work (= timesizing) and make it easier for everyone to support themselves and their kids instead of harder and harder with downsizing?]
[One can easily imagine Bush saying, "Let the poor rot. Let's have a good big righteous war and kill them all off!"]
The indifference encompasses not just the White House but also many Democrats and the news media.
[What a bunch of cowards. Notice Ted Kennedy finally spoke out against the war lust - after many others had, though Ted has the least to lose, his seat is so secured by name recognition and the robotic voters of Massachusetts. His failure of leadership has resulted in the situation described in the neighboring op ed, "Where the Democrats are - Most of the Democrats don't oppose the use of force in Iraq," by Thomas Oliphant - in plain, they are just as suicidally bored and colicky as cowbabyboy Bush. Can you imagine such a situation if a real leader like Tip O'Neal were still alive?! Au contraire, what is tubby Ted doing? "Kennedy: State economy needs US lift," by Diane Lewis, Boston Globe, D2. So lardy Kennedy is begging for more federal taxpayers' money again, as if he hasn't leached enough for the ludicrous Big Dig. While Ted and most Dems sit on their hands, consider - if by some miracle this pResident was a Democrat, the Republicans would have been yelling "Impeach!" for months and months and months now.]
...The poor have to wait because we are at war. But are we? A few weeks back, Mitch Daniels, the pResident's...budget director, defended Bush's taxcut by arguing that "Americans are being taxed at the highest peacetime rates in history." Huh? "Peacetime"?
When taxcuts for the wealthy are concerned, [peace] is peace [so we can do it]. When it comes to spending on healthcare and childcare, peace is war [so we can't do it]. This is Orwellian budgeting, and its victims are the poor, especially poor kids.
9/21/2002 today's headlines from hell -
- Zany at the top - When CEO pay gets obscene, it's time for some curbs, by John Craig Jr., Pittsburgh Post-Gazette, B-3.
- Is Bush getting the whole story on Iraq? - Pentagon hawks are controlling the intelligence that the pResident receives, reports Eli J. Lake, pushing aside more cautious analysis from the CIA - and cutting off debate over crucial facts, New Republic via Pittsburgh Post-Gazette, B-1.
9/20/2002 today's headlines from hell -
- Debating the definition of 'poor', editorial, Chicago Tribune, A24.
When does a family fall into poverty?
[This should not be a debate. It should be a referendum of the population concerned - a regular yearly referendum. And in an economy as regionally diverse as the U.S., it should be region-specific, not nationwide. And more important than defining poverty is defining unemployment.]
The government defines the poverty line as the minimum amount of income a household needs for basic subsistence without requiring government help. That has been set since 1964 on a sliding scale, and the figure today is $18,100 for a family of four.
[Too low in most regions. Too high in a few regions.]
It is a powerful [benchmark]. It determines who qualifies for numerous programs targeted to help the poor. But experts in the poverty debate are raising questions about the [validity] of a poverty standard that was conceived some four decades ago....
- New U.S. military strategy: Pre-empt - Strike first replaces goal of deterrence, by Sumana Chatterjee, Knight Ridder via Kansas City Star, front page.
[Pre-emptive first strike is the strategy of aggressors. Saddam Hussein and every other dictator has been following the U.S. example of a strategy of deterrence for a decade. If the U.S. now switches to an aggressor's strategy, they will all change too, and the world will erupt in wars of aggression. And the biggest nation that started the strike-first stupidity will become the target of all the others. So much for "homeland security."]
...The 35-page document, "The National Security Strategy of the USA," marks the end to the deterrent military strategy that dominated the Cold War. It officially shifts the country to a pre-emptive policy that Bush first outlined at West Point in June....
[Now we see the value of a cold war with a powerful rival. Unrestrained by a balance of power, obsessives like Bush push the envelope, just like the morons running Enron and WorldCom. Bush is the kind of dope who thinks he's the only one who's going to do it. Unless this suicidal cowboy gets reined in, the rest of the short history of this planet will be one of secret arms races everywhere and alliances of stranger and stranger bedfellows - against the world's most dangerous and arrogant nation, US. After all, the rest of the world does not want to be turned into what the US's pet pitbull, Israel, has turned their fellow Semites and neighbors, the Palestinians, into. And this ain't the 1848 level of weaponry when US aggression against Mexico inflicted only temporary and local damage and the whole conflict petered out quickly. With nuclear, biological and intercontinental-reach toys, peabrain usurper Bush is much more dangerous than Pres. Polk. "Sew the wind, reap the whirlwind."]
9/19/2002 today's headlines from hell -
- The vision thing - Like father, like son, by Paul Krugman, NYT, A29.
This is the way the recovery ends - not with a bang but...a whimper.
...Right now it looks as if the economy is stalling and also as if the people in charge have no idea what to do.
[This could be a version of The Big Question right here - and Krugman has no idea what to do either. His economics, uninformed by worktime economics, is as shallow as the rest.]
In short, it's feeling a lot like the early 1990's.
[Or for that matter, like 1929.]
It doesn't really matter whether you call what's going on right now a slow recovery or a recession. Most people don't care whether GDP growth is slightly above or below zero; what matters to them is whether they can find jobs and keep them.
And the job situation is increasingly dismal. A 5.7% unemployment rate doesn't sound that bad, but -
Should we be worried about the administration's lack of the vision thing when it comes to economics?
- an unusually large number of workers have given up searching for jobs.
- The overall unemployment rate doesn't reflect the rapidly growing number of people who are truly desperate, because they have been out of work for six months or more.
- And the employment situation has lately taken a significant turn for the worse: the number of people filing new claims for unemployment insurance, a leading indicator of future unemployment, has increased sharply over the past month....
[Again the Big Question.]
Yes, we should. The excesses of the 1990s dwarfed those of the 1980s....
[And Krugman is blissfully unaware of the cumulative buildup of surplus manhours in - or "beside" - the job market over the last 30 years as waves of efficient technology were injected into the economy. This is the real, deep-structure problem, solvable only by a major MAJOR war (the stupid way), or by designing and implementing a system such as timesizing to share the vanishing human employment and spread the concentrating income of the nation (the intelligent way).]
9/18/2002 today's headlines from hell -
- Industrials slip again following flood of bad earnings news - 'Asset allocation' talk sparks bullishness, but stocks falter; Treasuries have modest decline, by E.S. Browning, WSJ, C1.
[Same ups and downs as the first 3/4 of 1929 - and nothing substantial to sustain markets and earnings, such as centrifuging the stiflingly concentrated spending power of the nation by cutting the workweek, simulating a scarcity of labor hours, harnessing market forces to raise wages, and activating spending power by getting it into the hands of the multitudes who actually SPEND it. The economic prosperity of wartime and plague years works the same way but much more wastefully because the scarcity is actual, not simulated.]
- Failures of start-ups show an acceleration, Dow Jones via WSJ, C4.
NEW YORK - Marking the latest blow to the beleaguered venture-capital business, start-ups funded during the recent boom are going bust faster than their predecessors. According to new data from VentureOne, about 22% of the 1,842 fledgling companies that received an initial round of funding in 1999 have closed their doors, compared with an average of 15% for companies launched over the previous seven years. Start-ups initially funded in 2000 already have a casualty rate of 18%.
The amount invested in start-ups since 1999 that have since failed totals a whopping $15.3 billion, data from the San Francisco-based venture research group show....
- More families become 'child-care poor' as babysitting costs rival mortgages, by Sue Shellenbarger, WSJ, D1.
[How about shorter workweeks so parents can once again care for their own children instead of pushing them off on strangers?]
In a year of deflation fears, one consumer cost is [inflating] fast - childcare. For many families, it is outstripping housing, food and even a college education. Runzheimer International, a Rochester, Wis., relocation consulting firm, says childcare prices in 75 cities rose an average 6.4% last year, more than twice the consumer-price inflation rate, based on a survey of several hundred childcare centers.... Nanny salaries and fees for family childcare homes, where caregivers each take a few children into their homes, are rising, too - by at least 5% a year, nanny agencies and home providers say....
9/16/2002 this weekend's headlines from hell -
- Dollar finishes mostly lower amid doubts over Iraq situation, by Parry & Lifton, WSJ, C12.
Blue chips fall after brief jump on Iraq offer - Blue chips decline on economic jitters, continuation of article by E.S. Browning, WSJ, C12.
9/13/2002 today's headlines from hell -
- Prosecutors are investigating alleged fraud by Enron, pointer digest (to A3), WSJ, front page.
...in the manipulation of power prices in three Western states during the California energy crisis two years ago....
[and the main article -]
Enron is focus of U.S. inquiry about pricing - Alleged fraud investigated in trading of electricity during California crisis, by Wilke & Kranhold, WSJ, A3.
[then there's the related article -]
As California starved for energy, U.S. businesses had a feast - Companies shut power plants and manipulated [energy] auctions, as deregulation stumbled..., by Thurm & Gavin & Benson, WSJ, front page.
[So re-regulate them.]
California power failures linked to energy companies - Study cites the withholding of electricity, by John Broder, 9/18/2002 NYT, A16.
The state says power shortages in California were unnecessary [ie: artificial?]....
- Bush economic aide says cost of Iraq war may top $100 billion, by Bob Davis, WSJ, front page.
WASHINGTON - pResident Bush's chief economic adviser estimates that the US may have to spend between $100B and $200B to wage a war in Iraq.... Lawrence Lindsey, head of the White House's National Economic Council, projected that the "upper bound" of war costs at between 1 and 2% of US GDP during a single year. With the US GDP at about $10T, that translates into a one-time cost [no, a yearly cost] of $100-200 billion. That is considerably higher than a preliminary, private Pentagon estimate of about $50 billion....
[Either way, as colleague Kate points out, with that kind of money Bush could either pay off Saddam or distribute it equally to all Americans and create such a boomlet that he wouldn't need an absurd war of distraction. And how does Lindsey know this would be the "upper bound," pray tell? America is forever under-estimating wars. The Civil War was supposed to be "over by Christmas."]
9/12/2002 today's headlines from hell (real qikis) -
- What's news - Tyco's former CEO and ex-finance chief, pointer digest (to A3...), WSJ, front page.
...were charged with stealing over $170m. Prosecutors accused Dennis Kozlowski and Marc Swartz of running a "criminal enterprise" aimed at defrauding investors, saying the executives siphoned off company funds for their own use....
[Gee, just like at Adelphia.]
Mark Belnick, the former general counsel, was charged with falsifying business records.
[And the NYT version -]
2 top Tyco executives charged with $600m fraud scheme, by Andrew Sorkin, NYT, front page.
...Mr. Kozlowski is also accused of, among other things, having the company pick up half the cost of a multi-million-dollar 40th-birthday party on the Italian island of Sardinia for his wife, a former waitress at a restaurant near Tyco's HQ in NH....
- [it gets worse - the crap is seeping into the Dubya's State Dept -]
A simple click stirs a lot of outrage - Consulate's website had illegal link to Republican Party site - Offers of GOP mugs, ties, scarves and ballpoint pens, by Raymond Hernandez, NYT, A19.
[No mention of this in the WSJ!]
WASHINGTON...- For some time, travelers browsing the State Dept's website for helpful tips about Guadalajara, Mexico, found much more than they bargained for when they clicked on a photograph of pResident Bush. The click transported them to a partisan playground, where they were told how to get involved with the Republican Party and even how to donate money to it.
The State Dept. site, it turns out, had been providing a link to a website run by the Republican National Committee despite federal laws prohibiting government resources from being used for partisan purposes. The link was not removed until late this afternoon, after a reporter asked about it. ...One person who noticed it said it was operating as early as Sept. 5....
[Man, if this had been done by the Dems, the GOP would be yelling blue murder and calling for impeachment.]
- [and guess who's copying Dubya's attempted war of distraction -]
Russia wants U.N. support, pointer summary (to A8), NYT, A2.
Pres. Vladimir Putin of Russia appealed to the United Nations to support Russia's threat of military strikes against the former Soviet republic of Georgia, accusing the Georgians of a "grievous failure" to comply with a resolution to combat international terrorism.
[Golly, maybe the fundamentalists are right. If Dubya keeps it up, we could turn the whole planet into a war zone, a playground for the "four horsemen of the apocalypse." Here's the main article headline -]
Echoing Bush, Putin asks U.N. to back Georgia attack, by Steven Myers, NYT, A8.
9/11/2002 today's headlines from hell (qikis) -
- Fed reports a slowing of economy over 6 weeks, Bloomberg via NYT, C4.
Fed says economy is sluggish, by Greg Ip, WSJ, A2.
- Cheap seats in private jets for executives on vacation - An[other] example of federal tax laws that grant favors to the wealthiest, by Johnston & Fabrikant, NYT, C1.
- Regulators find another analyst [Kevin McCarthy of Donaldson Lufkin & Jenrette] with questionable reports, by Gretchen Morgenson, NYT, C1.
9/10/2002 today's headlines from hell -
- No assessment of Iraq, pointer blowout (to A23), NYT, front page.
Although the administration is urging action against Iraq, intelligence officials acknowledge they do not have a comprehensive assessment of its arms capacities.
[America's choice = "let sleeping dogs lie" as we did for decades with Stalin, who was much more monstrous, or follow a radical, unelected pResident to "sew the wind and reap the whirlwind." The first thing Saddam is going to do if Dubya gets stupid is overrun Kuwait to move right into Saudi Arabia and nuke Israel. The main article is -]
Baghdad arsenal - US lacks up-to-date review of Iraqi arms, by Eric Schmitt & Alison Mitchell, NYT, A23.
The Arab world - Anger at the US said to be at new high - Hussein and US support of Israel are both unpopular in the region, by Jane Perlez, NYT, A23.
- Despite [$30m] overhaul of voting system, chaos triumphs again in a Florida election - Malfunctioning machines, closed polling places and frustrated voters, by Dana Canedy, NYT, A28.
[The Wall St Journal softpedals the whole thing for the sake of their other pet idiot, Jeb Baby -]
In Florida's primaries, voting mishaps linger, by Evan Perez & Jackie Calmes, WSJ, A4.
[More pointed skewering from the NY Times tomorrow -]
Again, Sunshine State is in dark a day after the vote, by Dana Canedy, 9/12/2002 NYT, A17.
A joke is wearing thin for voters in Florida - Why can't they figure out how to run an election? by Adam Nagourney, 9/12/2002 NYT, A17.
- [and another executive wrist slap in the offing? -]
Panel refers [Martha] Stewart probe to Ashcroft, by Chris Adams, WSJ, A3.
[the informative NYT blowout on this -]
No subpoena for Stewart, pointer blowout (to C1), NYT, front page.
The House committee examining Martha Stewart's sale of ImClone stock turned [the matter] over to the Justice Dept.
- Foreclosures hit record levels - More homeowners fall behind on mortgages, stoking concerns about housing market, by Queena Sook Kim, WSJ, D1.
...In recent years, the housing industry has bent over backwards to allow people...to buy houses they couldn't previously afford.
[Compare the auto industry.]
Lenders require smaller down payments and allow buyers to devote more of their income to mortgage payments. And many borrowers are being lured by adjustable-rate mortgages with low teaser rates that quickly climb, pushing up house payments.
Now the bill is coming due. In the second quarter, a record 1.23% of all home loans were in the foreclosure process, above the first quarter's tally of 1.10%, and surpassing the previous record of 1.14% in 1Q99, according to a report released yesterday by the Mortgage Bankers Assoc. of America, an industry group.
That same report found 4.77% of all home loans outstanding were at least 30 days delinquent. That's one of the highest rates of the last decade, though it's well below the record delinquency rate of 6.07% in 1985.
The growing number of distressed borrowers is heightening fears that the nation's red-hot housing market is poised for a correction. If the deliquency rate worsens, lenders could tighten lending standards, making it harder for many potential home buyers to get financing and resulting in a weaker overall housing market.
That would be bad news for the economy since surging housing prices are a big reason that consumers have kept spending even as the stock market has slumped....
[The stock market has little to do with it since only a minority of Americans own stocks and only a minority of them own stocks outside of pension plans and 401k's. The sentence should end, "even as layoffs have continued and unemployment, disability, homelessness and our prison population have risen."]
- A tax break for the rich who can keep a secret - Fewer than one in 1,900 Americans are said to qualify for exchange or swap funds, and all of them are very wealthy, by David Cay Johnston, NYT, C1.
When most Americans sell stock they must pay taxes on their profits by the following April 15. But a few Americans are delaying taxes on their stock profits for years or decades - or, in some cases, never paying at all.
It's all perfectly legal - but only if you have $5 million of stocks and bonds. And only if you promise to keep it secret. It's one example of how the tax laws currently grant certain favors only to the very wealthiest [who need it least].
[This is the so-called "tax reform" that was touted in the late 1980s??? The article goes on to describe exactly how it works. Then -]
The Eaton Vance mutual fund company in Boston and the Goldman Sachs investment house are by far the biggest operators of investment pools based on this tax avoidance technique, with at least $18 billion of stocks in what are known in the investment business as exchange funds or swap funds....
To get in on these tax avoidance deals, investors must sign statements promising never to disclose the terms to anyone except their financial advisors.
But the confidential offering for one such deal was provided to The New York Times by one investor and separately by two Washington tax experts to whom the document was leaked. They said they were offended by tax avoidance available only to the very rich. One of these people said he was also upset by advice in promotional literature for the Eaton Vance funds that shows executives how to disclose these transactions in a way that is legal but that investors who track sales by company executives are less likely to notice....
[= protection for insider trading]
The exchange funds are but one of a variety of techniques available only to the very wealthy to delay or escape taxes on their investment profits. Other techniques include certain kinds of insurance and offshore trusts.
Exchange funds have been around for decades. But they used to be open to everyone. Congress tightened the rules in 1967, 1976, and 1997 to gradually exclude all but the wealthiest investors. The 1997 change, detailed partly in a tax bill and partly in a securities bill, created a new class of investors, known as "qualified purchasers" [our quotes - ed.], whom the SEC defined as people with more than $5m of investable assets....
[Here then is concrete written proof of a class system in "democratic" USA.]
To meet the 1997 requirements, the operators of exchange funds must form partnerships that are not offered to the general public, only to "qualified purchasers." Other tax and SEC rules require that the partnerships be treated as private placements, rather than a public offering to investors, so no advertising is allowed and prospective investors must sign confidentiality agreements.
[This begins to look interesting to conspiracy theorists and possibly violates anti-conspiracy laws.]
...No one knows how much exchange funds cost the government in tax [revenues] because no official study of their costs has been made. But the Eaton Vance and Goldman Sachs exchange funds alone represent as much as $3.6 billion of deferred capital gains taxes at current rates..\..
Some years ago the exchange funds came to the attention of Rep. Richard Neal (D, Mass.). He introduced legislation to stop them. But the legislation never went anywhere.... The Congressional Joint Committee on Taxation, without any supporting data, has written to Mr. Neal to say that no revenues would be raised by closing exchange funds because "the class of investors engaging in swap funds" would find other ways to avoid the tax.
Mr. Neal said he pressed Mark Weinberger, who until recently was the chief tax policy official at the Treasury Dept., about why the Bush administration would not shut down exchange funds as loopholes, which the administration had said it opposed on principle. Mr. Weinberger...replied that "...we are against taxes on capital gains in general and so we will not take any action against the funds."... A Treasury spokeswoman, Tara Bradshaw, said the Bush administration was not currently considering any action on exchange funds and therefore had no policy position on them.
[This administration is lookin' sleazier and sleazier, if that's possible. Better: sex in the basement of the White House and word gaming about it, than this kind of national-income compacting, market-strangling corruption.]
For earlier collapse stories, click on the desired date -Sept. 1-9/2002.
July 1-15/2002 + Jun 30.
Earlier Y2000 months accessible via links at bottom of Dec.1-10/2000 page.
Earlier 1999 months accessible via links at bottom of Dec.1-15/99 page.
Earlier months accessible via links at bottom of Dec/98 page.
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