“The point to remember is that what the government gives it must first take away.” ~ John S. Coleman
by Catherine Austin Fitts
There is pressure in the air. It’s called tax time.
U.S. Corporate taxes are due on March 15th. I have always wondered about that date. Why choose a date famous through history for the assassination of Julius Caesar?
Corporate tax time in the U.S. dovetails with annual SEC filings and the announcement of corporate earnings. Global slowdown and a rising dollar is putting pressure on corporate earnings. With the US stock market levitating at or near all time highs, the question is, what will happen if and when corporate earnings drop? Will P/E’s rise to offset? Or is the market finally going to make that long overdue 10-25% correction?
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This is a tricky question as great harm has been done to the US economy to organize market share into large corporations to keep those earnings rising. With capital gains serving as the largest source of political contributions, Washington has consistently organized the federal budget to generate larger corporate earnings, generating a win-lose relationship between the Dow Jones, S&P and NASDAQ Index and the people, or as I describe it, the Popsicle Index
The pickle is that most people want their investment portfolio to go up in value, or their insurance company and bank to be sound, or their pension fund to achieve its investment goals. They also want America to stay competitive in the global market. So they share the goal of a strong stock market.
One of the things that has helped the stock market has been falling U.S. corporate taxes. No doubt another thing that has helped is the refusal of the US government to publish audited financial statements as required by law for the last 20 years, to account for over $4 trillion missing from its accounts or to provide easily accessible budget, financials and contracting budget reporting by Congressional district and state. Imagine if every year when we were asked to fill out our tax return, we just explained to the US government that we could not account to them for our money?
Most of us also share a goal of higher interest rates if that is what it takes for insurance companies and pensions to fulfill their promises and to generate a return to savers.
Those higher interest rates will put the rest of the world in a US dollar vise – as countries and institutions around the world have levered up with cheap dollar borrowings since 2008. With the US dollar continuing to rise in the face of a global dollar slowdown, dollars are getting harder to earn and more expensive to borrow. Global borrowers can not simply print more dollars the way the US can.
The squeeze will continue into next month, on April 15, when US citizens pay individual taxes and contemplate the now $2 trillion of cash that US corporations have stockpiled overseas and $4 trillion missing from US accounts without benefit of reliable financial statements.
As the squeeze continues, it is a good time to think abut how to evolve to a win-win relationship between the stock market and people in places – both US and foreign.
Related Reading:
US corporate profits set for second straight quarterly fall
The Stock Profits of Obamacare
