Q&A With Shah: Now Is a Time to Come Together
We've got some really good Q&A today, thanks to some really good comments and questions from you folks.
But before we dive in, I want to say something about the storm that hit the U.S. this week.
Personally, I was lucky: Hurricane Sandy only brushed by my home in the Northeast.
But there are so many individuals, families, and businesses that weren't so lucky. They are dealing with everything from serious inconveniences to horrific tragedies.
My heart and prayers go out to all of you who are trying to recover from this truly devastating storm. I especially feel for those of you who lost family members, friends, partners in life, and your beloved pets.
I've had a glimpse of the devastation you're feeling. My girlfriend's amazing mother, sister, family members, and many, many dear friends live in Breezy Point and in the Rockaways. I was just there for her brother Johnny's wedding.
The home on the beach I stayed in is flattened. Her mother's house is a wreck. And many, if not most, of their other family members' and friends' homes burned to the ground, were flattened, or drifted out to sea.
Between the loss of lives and the horrific devastation, there's nothing much left of this once beautiful community where everyone knows everyone else and no-one locks their doors.
Breezy and the Rockaways will rebuild. That's what New Yorkers do.
They fight for their neighbors, their communities, their city, their state, and America. Their citizens will come together as neighbors and friends to help each other.
Because that's what Americans do. This is who we are.
In the meantime, I send my sincerest regards and deepest sympathies to those of you suffering tragic losses.
Okay. Now let's get started with your comments on "Big Bank Protectionism."
Q: What happened to our antitrust laws? ~ Ron
A: Good question, Ron. They are there to be used when competition is deemed to be in the public's best interest. In the case of big banks, "too big to fail" is what's in the public's interest – at least, if you go by what politicians are doing, as opposed to what they are saying. Get it? They're all for big banks because those monsters pay them monster amounts of hush money to leave them alone.
Q&A: Shah on The Mess We're In
I've got some more Q&A for you today.
Remember, you can share your own comments and questions with me by posting them to the bottom of any article, or emailing them to firstname.lastname@example.org. I may not be able to respond to everybody, but I read everything you have to say.
Let's start with your very interesting response to "How Our Markets Got So Politicized." A lot of you offered solutions.
Q: To me, there's one answer and one answer only. A tax revolt, no taxes being paid to any level of government. And it has to be led by someone knowledgeable like you, Shah, along with others with courage and credibility. ~ Art
A: I love that you're a revolutionary, Art. But I don't think stopping the wheels of government and commerce by cutting off the government (including state and municipal governments) is in all our best interests. We'd be more disrupted than we can handle.
However, we definitely need a tax revolt! I'm 100% with you there. The problem, maybe the biggest one we face, is the inequity inherent (on purpose) in the tax code. There's a reason the tax code is as thick as it is; all those rules and regulations are there to be manipulated. The more rules we have, the more loopholes there are to be created. That's the game. That's why "the strong seem to get more, while the weak ones slave."
A flat tax is the way to go. It can be a flat and progressive tax. I like federal rates of 5% on gross income of less than $20,000, 7% on gross between $20K and $30k , 9% on gross between $30k and $40k, 11% on gross between $40k and $50k, 13% on gross between $50k and $75k, 15% on gross between $75k and $1m, and 17% on anything greater than ordinary income of more than $1m. I like a flat corporate rate of 20% after expense deductions. I'd like to see dividends be allowed to be 100% deducted as an expense to any company paying them and have dividends taxed at half everyone's ordinary income rate.
That's my starting point to what would be a long discussion. The rest of it would be all about limiting the growth of government spending and having balanced budgets… or else.
Q: If you want to reduce the problem in this situation, you don't need to re-write or amend the Constitution. Instead, you need to follow it. This would result in elimination of the Federal Reserve and the abolition of legal tender laws. These two steps would result in the end of control of the money-men on our society. ~ Kevin B.
Q&A: Kent On Where Energy Goes From Here
It has been some time since I've had a chance to answer a few questions from the many you've sent in. Let's not waste any time and get right to them.
Tom H. writes:
When the euro collapses (only willpower is holding it up, logic died months ago!), oil usage will drop off a cliff. It may be balanced by new users in the other growing economies, but their markets overseas will be minimal.
A: Well, Tom I am not as pessimistic as you are on the euro front. There will be several years here of weakness and instability, but the real key is whether the political will remains to support the continental currency.
The European Central Bank has now fashioned the bond structure; it remains for the governments to structure the fiscal policies to support the ECB. That will take some time, but it will happen.
What we are likely to see in the interim is a euro trading in a rather narrow range of $1.20 to $1.35. That will actually provide a floor to oil pricing. Demand is another matter. Here, the Western European picture remains restrained.
However, the broader global picture is not. That market is not "minimal;" it is actually expanding rather quickly. The non-North American, non-European sector is driving the oil market and will not be slowing anytime soon.
McKinsey & Company issued a report this week warning that the expansion is now expected to accelerate, with the worldwide supply surplus in danger of disappearing by 2016.
That will certainly send prices higher.
Okay, who's up next?
Enthusisceptic sends along this question:
What about North American natural gas and exporting it from 2014 on?
Vehicles in many countries are powered by natural gas because gasoline is too expensive. The search for shale gas resources in Poland and other parts of Europe has disappointed.
Can this mean that gas from North America can become viable sooner?
A: The prospects for exporting liquefied natural gas (LNG) are one of the primary movers in further development of shale basins in North America. Even Russian giant Gazprom (no fan of shale gas) has acknowledged that the U.S. will probably comprise at least 9% of the global LNG market supply by 2020, from zero currently.
Shale gas resources in Poland are still expected to be a factor, despite early drilling disappointments. And the U.S. Geological Survey's report indicated significant reserves worldwide. Now that does not mean they are profitable or extractable with current technology and infrastructure, but this is not the "flash in the pan" initially projected by detractors.