Tax Reform in China

The Chinese National People's Congress is considering tax reforms that would raise the minimum level of monthly income that is subject to the income tax from 900 RMB to 1500 RMB. This would effectively remove millions of citizens from the income tax rolls. Other proposals include creating a uniform tax system across the country, simplifying tax reporting procedures, and creating an oversight body to investigate abuses by tax authorities.

Time to Take a Pause in the Market

Closing out some positions today: oil hedge and short positions are all in the money at the moment. I believe traders, etc. are so focused on the hurricane events that, in the short term, they may not give any weight to the negative long term fundamentals. Can't see the forest for the high winds and rain, so to speak. Will wait to see if I can restore the short positions on a strong rally. May regret this decision. Timing is a very, very difficult trick to pull off. In any event, no change in my longer term assessment that this is a market in search of a crash. (Ironically, the hurricane --- and Bush's megaKeynesian response to his falling poll numbers --- may postpone that moment of truth.)

Short Market: Increased Position

A strong ISM number, falling oil prices, some positive manufacturing numbers in Euroland, a strong Euroland rally yesterday (when the U.S. markets were closed), short covering, and the general bullishness of the market are driving stocks higher today. I'm just not buying it. I see too many negatives in the economy (even before Katrina the problems were mounting and the impact of Katrina is not well understood at this point, including impacts on the natural environment in the Gulf from all the toxic waste from damaged oil and chemical facilities plus) and the strong consumer and housing markets floating on hot credit that is over reaching the capacity of consumers to repay. A lot can go wrong, not much can go right (that isn't already baked in the market cake). In a best case scenario, strong global growth continues, oil and other commodity prices continue on an up trend, U.S. treasury prices resume their decline, and the U.S. dollar becomes relatively less attractive. In that best case scenario, current P/E ratios contract as the P falls faster than any rise in the E. I'm using today's rally to increase my short position against the market (in this case by shorting the NASDAQ 100). See my earlier post titled Short Market/Short Oil (22 August).

Jefferson Parish Official Calls for Secession from United States

CNN just reported this. In an age of trade/economic integration that makes political boundaries less meaningful, I'm surprised we don't see more movements to secede from the United States. California would be a major economic and political power on the planet as an independent nation, for example. And what exactly does New England have in common with the Deep South? Kerry could be President of a United States of New England. And does anyone recall the novel, Ecotopia that was constructed around the secession of the Pacific Northwest from the United States? I still think of myself as an Oregonian and had a lot of sympathy for the idea behind Ecotopia (if not the writing). Indeed, if secession had ever been on the ballot (and Oregonians love ballot measures and take them far more seriously than they do here in New England, where politicians often ignore the will of the people in such matters) while I was living in Oregon, I would have voted for it.

Kucinich on Katrina -- Press Release

FOR IMMEDIATE RELEASE
SEPTEMBER 2, 2005
12:20 PMCONTACT: Congressman Dennis Kucinich
Doug Gordon (202) 225-5871 Floor Statement of Congressman Dennis J. Kucinich:
The Supplemental for Hurricane Katrina
WASHINGTON - September 2 - Congressman Dennis J. Kucinich (D-OH) gave the following speech today on the House floor during a special session to provide relief money for the victims of Hurricane Katrina:

"This amount of money is only a fraction of what is needed and everyone here knows it. Let it go forward quickly with heart-felt thanks to those who are helping to save lives with necessary food, water, shelter, medical care and security. Congress must also demand accountability with the appropriations. Because until there are basic
changes in the direction of this government, this tragedy will multiply to apocalyptic proportions.

"The Administration yesterday said that no one anticipated the breach of the levees. Did the Administration not see or care about the 2001 FEMA warning about the risk of a devastating hurricane hitting the people of New Orleans? Did it not know or care that civil and army engineers were warning for years about the consequences of failure to strengthen the flood control system? Was it aware or did it care that
the very same Administration which decries the plight of the people today, cut from the budget tens of millions needed for Gulf-area flood control projects?

"Countless lives have been lost throughout the South with a cost of
hundreds of billions in ruined homes, businesses, and the destruction
of an entire physical and social infrastructure.

"The President said an hour ago that the Gulf Coast looks like it has
been obliterated by a weapon. It has. Indifference is a weapon of
mass destruction.

"Our indifferent government is in a crisis of legitimacy. If it
continues to ignore its basic responsibility for the health and
welfare of the American people, will there ever be enough money to
clean up after their indifference?

"As our government continues to squander human and monetary resources of this country on the war, people are beginning to ask, "Isn't it time we began to take care of our own people here at home? Isn't it time we rescued our own citizens? Isn't it time we fed our own people? Isn't it time we sheltered our own people? Isn't it time we
provided physical and economic security for our own people?" And isn't it time we stopped the oil companies from profiting from this tragedy?

"We have plenty of work to do here at home. It is time for America to come home and take care of its own people who are drowning in the streets, suffocating in attics, dying from exposure to the elements, oppressed by poverty and illness, wracked with despair and hunger and thirst.

"The time is NOW to bring back to the United States the 78,000 National Guard troops currently deployed overseas into the Gulf Coast region.

"The time is NOW to bring back to the US the equipment which will be needed for search and rescue, for clean up and reclamation.

"The time is NOW for federal resources, including closed Army bases, to be used for temporary shelter for those who have been displaced by the hurricane.

"The time is NOW to plan massive public works, with jobs going to the people of the Gulf Coast states, to build new levees, new roads, bridges, libraries, schools, colleges and universities and to rebuild all public institutions, including hospitals. Medicare ought to be extended to everyone, so every person can get the physical and mental health care they might need as a result of the disaster.

"The time is NOW for the federal government to take seriously the research of scientists who have warned for years about the dangers of changes in the global climate, and to prepare other regions of the country for other possible weather disasters until we change our disastrous energy policies.

"The time is NOW for changes in our energy policy, to end the domination of oil and fossil fuel and to invest heavily in alternative energy, including wind and solar, geothermal and biofuels.

"As bad as this catastrophe will prove to be, it is in fact only a warning. Our government must change its direction, it must become involved in making America a better place to live, a place where all may survive and thrive. It must get off the path of war and seek the path of peace, peace with the natural environment, peace with other nations, peace with a just economic system."