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Thursday, August 18, 2022


Wreck It Wednesday – Trump Steals $4 Trillion for Himself and His Top 1% Friends

Image result for trump crookIs Trump a crook or an idiot?  

If you go by what he promised to do for America, he's a crook but if you think he's trying to do what's best for America, then he's just an idiot.  The reason Ireland charges only a 15% Corporate Tax rate is because they are an otherwise unattractive place to do business so they compensate for that by offering incredibly low taxes as an incentive to get businesses to move there.  

When Ireland dropped their Corporate Tax Rate to 15% in 2015, their economy was $180Bn and they attracted $300Bn worth of corporate assets, which grew their GDP by 26% but it did not grow revenues because it wasn't enough to cover the overall low rates and employment barely changed because companies simply moved their "official" address to Ireland, and kept their actual offices elsewhere.  

Much of that untaxed $300Bn came from the US and it could easily fixed by telling companies they aren't allowed to do that but, instead, Trump is "fixing" the problem by cutting our own Corporate Tax Rate down to 15%.  The problem with this is – WE ALREADY HAVE MOST OF THE CORPORATIONS – so all this does is give them a MASSIVE tax cut that will cost the US $400Bn a year (see yesterday's post for math) and, even if the $300Bn comes back from Ireland, 15% of that is just $45Bn a year.   So maybe Trump is an idiot?  

Or, maybe he's a crook.  As Trump has often said, he runs a "tremendously successful" business and he's worth Billions.  Even if "tremendous" only means 10% profits and even if Billions only means $2Bn – that's still $200M in annual profits, so $70M in taxes at 35% and $30M at 15% means a 60% tax cut will put another $40M PER YEAR in Donald's pocket.  No wonder he can afford to donate his $400,000 Presidential salary!  

Unfortunately for America, in order for Trump to steal $40M (per year!) from you and your children, he has to enable the entire Top 1% to take $399.96Bn under the same rule.  It would be way better for America if we simply cut Donald a check and told him to go away – before he bankrupts the country.

The market has rallied 2% in two days on "news" of this massive tax cut for our corporate citizens and, of course, rich people like me will run right out and incorporate to take full advantage and I'm sure the average Trump supporter will as well.  Or maybe they think their Corporate Masters will spread that $400Bn a year around?  That's what Art Laffer thinks, but he hasn't been right since the early 80s.  

Image result for office robotsAsk yourself if the company you work for is going to hire more workers or build more automation so they won't need anymore workers – or, eventually, the ones they have.  It's not Mexicans that are stealing your jobs – that's just a distraction while you train a machine to do your job – the way a cow shows a butcher which of his parts are going to taste the best.

Even as we speak, H&R Block (HRB) is having their staff teach IBM's Watson how to do the jobs of 70,000 accountants.  Just like any human, it will take Watson a year or two to learn how to do the job well but, once he learns it, he'll be able to do it for everyone in America instantly at a cost of 10% of what HRB is paying now for those pesky employees.  This is great for HRB, great for the customers, but terrible for 70,000 people with accounting degrees and years of now-useless experience.  

Now, we can say "well that's Capitalism" but it's not Capitalism because the idea in Capitalism is that another PERSON gets a job when they dislocate the less-efficient workers.  If all the money 70,000 people made (x $40,000/yr = $2.8Bn) turns into a $280M check to IBM/Watson and a 50% discount to taxpayers and another $1Bn in profit for HRB – who really benefits?  While it's nice to pay $200 instead of $400 to have your taxes done, it's a very uneven distribution of wealth that drives a much bigger wedge between the upper and lower classes. 

Image result

Image result for income disparity

Now, imagine these charts but we're only going to charge the top 1% 15% taxes from now on.  That is truly insane, isn't it?  Since the cost of these tax cuts drives up the deficit (if you ignore the Republican fantasy that our economy will double to make up for it and, even if it did, 97% of that doubling would go to the Top 1%) it then falls on the bottom 99% to make sacrifices (like the Greeks) to balance the budget and, like the Greeks, we will have to give up our health care, our pensions, our Government services.  

Image result for us spending budget 2017

Where are you going to get $400Bn?  And forget $400Bn, Q1 Government spending shows the Trump Administration is on the way to putting us $1 TRILLION in debt this year – and that's without the tax cuts.  Our National Debt is passing the $20Tn mark and, every 1% rise in interest rates means we need another $200Bn just to pay the interest on that debt.  Currently, we're only paying about 1.5% but that's because we have converted to mainly short-term notes, which are more subject to rate shocks on the way up.

We're certainly not going to cut the Military, we just boosted that by 10% and $85Bn spent on education is only $1,328 per child in school in America – about 1/3 of what other developed nations spend on education.  Trump says he's building more Transportation and he's promised the Farmers more so the FDA can't be cut but housing is on the chopping block with Dr. Carson ready to cut away on that department and the EPA and Energy Departments are being dismantled (because who needs the environment or energy?) but that still leaves over a $1Tn gap so, obviously, we'll have to cut 1/3 of your Social Security and Medicare.

Not only will it have to be cut, but it will have to be frozen where it is and that means 50%, 60% and 70% less benefits as the boomers retire and draw from the pool.  Meanwhile, those of us who still work will have to contribute the same amount – even though it's likely we'll never collect a dime.  

Regardless of what Trump promised you – that's the Future he is delivering and it starts today, when he announces how he and his family will make an extra $120M a year from now on.  Soon after that, he will tell you how terrible it would be to tax his estate when he dies – how unfair that is to hard-working farmers like him and Melania…

And you'll fall for it, won't you?



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BDC – For SVXY, did you mean $45 or $145? I forget 🙂

I am with you Palotay on the UVXY short calls and as usual I regret not having sold more! But too risky in this environment. Good money in any case…

I closed mine today to lock in the 50% gain.  Hopefully we will get another chance to sell them soon.

/KC getting ccuuuurrrrshed.  

FU JO!!!!!!!!!!!

StJ – I've stipulated I've lost this bet because SVXY sells premium, which means it "melts up" while garbage like UNG and VXX melt down. In fact, my play on this one is to wait until after the next market crash then and buy SVXY as a long term hold for next 8 to 10-year market run.

BDC – If the market crashes, you'll be able to sell SVXY puts for little margin and great leverage and sell UVXY calls with the same conditions! 

Very large number of companies report after the bell today and tomorrow morning.  Should be interesting to see if strong trend continues.

New video on Real Vision, featuring Mark Spiegel, on shorting TSLA

Tax cuts / Phil – Not a chance in hell that passes! Eliminating the AMT when they just showed on MSNBC last month that it was the only tax that Trump paid! And eliminating deductions for state and local taxes is a big FU for blue state so no surprise there. And who will benefit from the repeal of the estate tax besides Trump's family? Are they tone deaf? And don't anyone bring that double-taxation BS! When I go buy a pizza at the local store, what I pay the guy has been taxed already and yet, he needs to report it as income. Of course, $20 is income, billions are the fruit of hard work that cannot be taxed.

In any case, I don't see a great reaction from the market now.


"I would never ever bet against this president. He will get this done."

You mean like healthcare!

And finally, how much time did they spend on that great plan? 30 minutes?


Trump has embarrassed us in so many ways that I guess this is small beer, but FFS. This is the United States of America, the biggest, richest country on the planet. The leader of the free world. And this is what we get from our president these days. He wants to cut taxes by $4 trillion or more—$4 trillion!—and he can't be bothered to produce more than a single page of bullet points about it. No details. No legislation. No analysis from the OMB. Nothing. Just a comic book version of a tax overhaul.

It's a joke! I can't believe we had a rally around that!

Phil/GOGO  What do you think about closing here?  I can close all legs and make 65% of the spread right now.  I suspect we will get some sort of pullback over the summer, minor, so that is factoring in also.

I think a couple of weeks ago I posted that I thought the NAS would pull the other indexes higher. Thats exactly whats happening.  I think new higs coming across the board, barring a bombing in NK.

Phil, on COST:  With the Jan 175 Ps and Cs at about $19 total,  would it make sense to buy the stock and write the options?

TSLA …. big data ….. uh OK….

Whatever BUY BUY BUY — I'm looking for 500 by next summer folks!

Phil/GOGO thanks – excellent points.

Phil/Thumb Rule

"~~COST/Taihu – Well, it's all proportional because it's 10% of the stock price – about normal for call and put selling."

Can you please elaborate the 10% price?

thanks as always


GreenCoin – Why "Social Carbon" works and "carbon credits" do not:

Why carbon credits don’t work:

Link between 1st and 3rd world “total lack of environmental integrity”

Infested with corruption and a significant lack of transparency

Have fueled tangential, unsustainable practices counterproductive to the original environmental imperative

GreenCoin puts a price on carbon free of government regulation, since it's traded among peers (held by individuals who decide when to buy and sell) and does not require gov'ts to produce, audit or verify the actual carbon credit itself. The Foundation is responsible for auditing real producers of course, but GreenCoin's are issued for production, not for project finance like carbon credits/offsets. It is therefore as simple as reading electric meters, which is obviously usual and customary in today's world, and well tested.

So what is Social Carbon? Regular folks transacting carbon as small part of usual, everyday life. A solar home owner receives enough coins and buys a coffee at starbucks with his low-carbon earnings, a CSR for a small business buys an offsetting amount to green their image with customers, a soccer mom buys a small amount to be a part of the overall solution, or a speculator that wants to "invest" in the low-carbon future. GreenCoin is the mechanism which enables this ecosystem, but it is very different than the UNFCCC-led massive-project carbon cap and trade and offsetting schemes that have been failing since 2000. In all of the above scenarios, there is an underlying secure digital asset which may rise in value. This is not just a tax or donation that goes wherever and hopefully somebody is selflessly making the world a better place, it has potential for personal benefit.

This is the future that I see.

Finally an end of day sell off and I actually had a short ready and waiting! Of course itwould have been a bit better if I hadn't taken a poke long on oil and gasoline at 49.50 and 1.59 respectively, but I am ok holding those for tomorrow's run up into the weekend. I knew that 6.6 million barrel total build would bite me in the ass, but I decided to give it a go anyway. Oh well,I even made some money on KC today and wisely did not buy it again on the dip later in the day.

Ok I see a reason for getting early assigned on short calls.  It forced me to pay the quarterly dividend for the stock.  Obvious in hindsight but I had never considered that.

We will reach peak oil in 2030… peak oil demand!


The surge in battery powered vehicles will cause demand for oil-based fuels to peak in the 2030s, Total Chief Energy Economist Joel Couse said at Bloomberg New Energy Finance’s conference in New York on Tuesday. EVs will make up 15 percent to 30 percent of new vehicles by 2030, after which fuel “demand will flatten out,” Couse said. “Maybe even decline.”

Phil – check this out – I really like this article:



It's got a great narrative potential for GreenCoin, going down the list how and having a reason how GreenCoin exactly solves for each issue presented (while agreeing carbon credits are a disaster). The central idea of course is the emergence of digital currencies enable solutions that weren't previously possible. This is also the "killer app" for bitcoin that has so far been elusive, meaning the widespread adoption of crypto, so it solves for both.

Short calls – I assume the time value was less than the dividend value but I do not know.

Phil – Are you still doing the Institutional newsletter?  Maybe they got wind of the coffee trade?

Peaks / Phil – It's true, very often in history when people talk about reaching peak something, they are already on the other side and just don't know it yet! Or at least closer to the top than they think…


  What are your open futures positions and basis?

/Phil/RB-feel off a cliff overnight. Thoughts other than what was discussed y'day.

stjeanluc    Thanks for the recap of the tax proposal insult.  I am furious that they have the nerve to put forward such a ridiculous proposal, I commented to my wife that it appeared that a high school student put together the one page bullet point.  And I was very disappointed with the press coverage. They should have called it for what it is – another gift to the 1%. 

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