By Simon Grey, on October 31st, 2011
GOP presidential candidate Rep. Ron Paul will unveil his economic plan Monday afternoon, calling for a lower corporate tax rate, cutting spending by $1 trillion during his first year in office and eliminating five cabinet-level agencies, including the Education Department, according to excerpts released to Washington Wire…
But Mr. Paul does get specific when he calls for a 10% reduction in the federal work force, while pledging to limit his presidential salary to $39,336, which his campaign says is “approximately equal to the median personal income of the American worker.” The current pay rate for commander in chief is $400,000 a year.
The Paul plan would also lower the corporate tax rate to 15% from 35%, though it is silent on personal income tax rates, which Mr. Paul would like to abolish. The congressman would end taxes on personal savings and extend “all Bush tax cuts.”
He would also allow U.S. firms to repatriate capital without additional taxes. Some lawmakers have recently proposed such legislation as a way to spur job growth. Its critics argue that a tax holiday for companies with money abroad has not historically led to domestic investment.
But the plan, at its heart, is libertarian. While promising to cut $1 trillion in spending during his first year, Mr. Paul would eliminate the Departments of Education, Commerce, Energy, Interior and Housing and Urban Development. When former Massachusetts Gov. MItt Romney unveiled his economic plan last month, he said he would submit legislation to reduce nonsecurity, discretionary spending by $20 billion.
Mr. Paul would also push for the repeal of the new health-care law, last year’s Wall Street regulations law and the Sarbanes-Oxley Act, the 2002 corporate governance law passed in response to a number of corporate scandals, including Enron.
I think this is a good start to addressing the problem. I also think this is the most serious proposal from any of the current candidates, Democrat and Republican alike.
Some may call for incremental changes. We’re past that point. We’re going to face an economic collapse. There’s no sense in strengthening federal power when this happens. And there is no point in continuing the policies that led to this problem.
Ultimately, Paul’s plan is the best out there, though it could certainly be improved upon. My proposal would be to cut all unconstitutional spending. I think that would solve a lot of problems in fell swoop.
By Bron Suchecki, on October 31st, 2011
Shall we count how many bloggers pick up on this news item Chinese silver imports decline 39% y/y; exports tumble 44% y/y:
Silver imports in China fell by 39% y/y and 16% m/m to 264.7 tonnes, the lowest level since February, while silver exports declined by 44% y/y to 83.5 tonnes, keeping China a net importer of the metal for two consecutive years on a monthly basis.
On a product basis, silver powder, unwrought silver, semi-manufactured silver, and silver jewelery all declined y/y in September with the latter two products suffering the steepest decline and silver powder only falling by 4% y/y. Indeed, silver powder is the only product that has grown for the year-to-date.
And from the “Chinese love paper more than physical” department, see China’s gold frenzy gives birth to small bourses:
The emerging exchanges offer a lot size as small as one ounce, which lowers the capital needed to begin trading, even though the margin requirements can be as high as 30 percent. With lot size set at 10 ounces and margins at 20 percent, the initial capital requirement to start trading is about half the amount required by the SGE.
Emerging exchanges claim to trade physical gold, but most investors are not interested in taking physical delivery. Some exchanges make it difficult and expensive to take delivery. …
“Who would want to take physical gold? People just want to speculate on price moves and make a profit,” said a customer service representative at the exchange who gave her last name as Chen.
Analysts compared the gold investment spree to the wave of retail stock market investors in the last decade, who rushed to a bull market with little know-how, only to suffer huge losses during later market turbulence. …
Although China’s central government has vowed to open up the market, and has made progress by allowing more foreign banks access to the two Shanghai exchanges, an open market for retail investors is yet to take shape. …
But it was unlikely to happen as long as the country’s foreign currency exchange remains tightly controlled. Until foreign exchange controls are lifted, Chinese gold bugs would continue to need tables to put down their bets. “The Chinese love gambling,” said Hou.
Doesn’t sound like China’s exchanges are any different from COMEX. If the Chinese Government wanted its people to buy physical gold you’d think all this paper gold would be shut down. I suppose we will have to wait until the much hyped PAGE is up and running [sarcasm]. 
By Eldon Mast, on October 31st, 2011
Last week stocks surged, extending the biggest monthly rally for the Standard & Poor’s 500 Index since 1974, and the euro strengthened as European leaders agreed to expand a bailout fund to stem the region’s debt crisis. The 20 percent monthly advance for the Dow Jones Transportation Average, a proxy for the economy, is the biggest since 1939. The S&P 500 rose to its highest level in almost three months and has rebounded 17 percent since Oct. 3.
In addition to remembering 1974, Economic growth strengthened in the third quarter and the component mix is more favorable than expected. GDP growth improved to a 2.5 percent annualized increase in the third quarter. The advance estimate matched market expectations for a 2.5 percent gain. (For once the majority was right!)
Optimism is clearly now appearing as the consumer sentiment index jumped to 60.9 compared to 57.5 at mid-month to imply a 64.3 level for the final two weeks of the month. The improvement the last two weeks is centered in the leading component of expectations which jumped 4.8 points to 51.8. The current conditions component also rose, up 1.3 points to 75.1. Inflation expectations show no change from mid-month, at 3.2 percent for the one-year outlook and 2.7 percent for the five-year.
And on the job front, initial jobless claims are holding steady in a narrow range just above 400,000. Claims came in at 402,000 in the October 22 week, a bit better than expectations. The four-week average of 405,500 is 10,000 below the month-ago period to point to continued improvement and a positive October employment report.
By B.P.T., on October 31st, 2011
At 9:45 AM EDT, the Chicago PMI Index for October will be announced. The consensus index value is 58.0, which is 2.4 points lower than last month, but is still above the break-even level at 50.
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