The end of tax deferral

President Obama has introduced a bill to raise $100 billion in tax revenue by eliminating tax deferrals for business that conduct sales outside the U.S. While the rest of the world would not adhere to these outrageous laws, U.S. companies would, thereby reducing the ability of U.S. firms to compete oversees, leading to less output and diminishing job opportunities. This video made by the Tax Foundation sums it up quite well:

Foreclosures reach record levels

The housing crisis, which it has been argued for so long that it’s a segregated problem within the housing market, officially became an ‘average American’ problem today, whatever the hell that means.

The government reported this morning that 12% of all homeowners with a mortgage in America are behind on their payments or in foreclosure. And those subprime borrowers, well they are still in deep shit as well. 50% of all ARM borrowers are behind or in foreclosure! Wow. The usual suspects of California, Nevada, Arizona, and Florida make up 46% of all new foreclosures.

I have argued for a while that the worst is yet to come. As long as unemployment continues to rise, housing defaults will continue to increase as well. There is a clear correlation between the two. Yet economists will argue that housing is/has bottomed. I disagree.

Another round of foreclosures is inevitable as long as unemployment continues to rise; so or later it will catch up. When it does, we can put in a true bottom and REALLY begin to recover. The government can continue to put a band-aid on a gunshot wound, but it’s only going to help for so long.