Category Archives: markets

Government Controls

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Here’s the latest version of the Biden-Harris administration’s attempt to expand government control over our economy, this time using Medicare drug pricing as their venue. This example also is the latest inclusion in the Progressive-Democratic Party’s reconciliation bill.

The Health and Human Services Secretary will “negotiate” 10 to 20 of the drugs that Medicare spends most on, starting in 2025. Drug makers will get socked with a 95% excise tax on gross sales if they don’t agree to the government’s price.

This is a textbook example of the fascism version of socialism. Companies are free to produce and sell whatever they want, so long as it fits within Government requirements directing what is produced, the volume of production, and the prices to be charged.

Yet, Biden can’t make the trucks run on time.

A Risk and a Solution

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Japan’s Softbank Group has reported a significant loss driven by the technology company crackdown the People’s Republic of China government has inflicted on PRC tech-oriented companies and Softbank’s heavy investments in those companies.

Masayoshi Son, Softbank’s CEO, now is saying

Our China risk is not so huge. It is within our control[.]

And

It is a time of severe trials for China’s high-tech stocks. We are right in the middle of a storm.

And, as paraphrased by The Wall Street Journal,

[T]here is only so much more damage turmoil in China can do.

Here’s a thought: Softbank could eliminate the risk altogether and prevent any further damage by divesting itself of all PRC-oriented holdings and no longer investing at all in PRC companies, whether tech or ditch digging or anything in between.

The Cost of Aiding and Abetting

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$590 million dollars. That’s the cost of aiding and abetting ransomware criminals in the first half of this year. That’s what so-called victims of ransomware attacks paid to their putative attackers to reward them for their crimes. Moreover,

The average cost of reported ransomware payments per month in the US in 2021 was $102.3 million. If the current trend continues, the number of SARs filed in 2021 “are projected to have a higher ransomware-related transaction value than SARs filed in the previous 10 years combined,” the Treasury projects.

(The average cost and the total cost differ by about 4%, but the point remains valid.)

Andrew Lipow, Lipow Oil Associates LLC CEO, is busy ducking responsibility—and he’s sadly typical:

The anonymity of a digital currency has allowed ransomware attacks to flourish. If you can’t follow the money today, regulators need to either ban the digital currencies or implement regulations that enable the identification of people and accounts involved in these transactions—just like they would do for a real bank.

Sure. Because criminals engaged in ransomware attacks can be counted on to obey currency laws. What a copout.

Aside from that, whether digital currencies need to be regulated is wholly irrelevant. What’s required is for businessmen to stop paying the ransom, stop rewarding criminals for their crimes, stop actively aiding and abetting criminals. They’re only making their companies willing repeat targets.

Beyond that, this is more than just money out of these companies’ coffers. It’s money out of other companies’ coffers, too, those that are downstream in the supply chain from the company that decides it’s fine to reward the criminals. They have to pay the higher prices the “victim” companies charge to cover their payoffs ransom payments.

It’s also money out of the coffers of other, otherwise unrelated, companies as they must bear the added security costs accruing from having also been made targets by those putative victims so amply rewarding the crimes and the criminals engaged in them.

It’s money out of us consumers’ pockets, too, in the form of increased prices we have to pay as those company executives just treat the “ransom” payments as a cost center, a cost of doing business.

All Those Rich Fat Cats

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Easy come, easy go. Especially for those ill-sympathized-with rich fat cats. The rest of us….

All that money we saved on our Independence Day celebrations—every one of those 16 cents (and what did we get? Another day older)—is gone, and we’re deeper in debt.

We’re also going to pay a whole lot more for our Thanksgiving Day celebrations.

Nearly every component of the traditional American Thanksgiving dinner, from the disposable aluminum turkey roasting pan to the coffee and pie, will cost more this year, according to agricultural economists, farmers and grocery executives.

Meat and poultry are up over 10% since last year. Raw aluminum is up 80% over the last 16 months; guess how much that roasting pay, made of processed aluminum, is going to cost us.

It’s OK, though. ‘Least all those rich fat cats who made their 16 cents with their superiorly astute purchasing skills for their Independence Day celebrations gonna pay their fair share for the upcoming most expensive Thanksgiving Day celebration inflation can produce.

However, no worries; it’s all good. I have it on good authority that we just need to lower our expectations and quit whining.

Fantasy World

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President Joe Biden and his Progressive-Democratic Party syndicate now want to tax unrealized gains in order to raise money. WSJ‘s Editors are being generous when they call the move a mirage.

Unrealized capital gains are gains in the value of an asset that are thought to have accrued between the time of acquisition and the present time, but that haven’t been “realized,” the asset hasn’t actually been sold and a profit actually collected. That’s just one aspect of the concept of unrealized gain, though.

Another aspect is especially critical: who makes the assessment of value increase? For instance,

A tax court this year ruled that the late entertainer Michael Jackson’s “likeness and image” were worth about $157 million less than the IRS claimed.

That’s Government making the assessment of the present value of an asset before the asset has been sold and not the free market making an empirical assessment based on the actual sale price. This time, Government was caught out and reversed. But under the Progressive-Democrats’ latest tax scheme? Asset owners might not be so lucky.

Progressive-Democrats are living in fantasy land in terms of what average Americans want from our economy and for ourselves.

Now the Progressive-Democrats want the IRS to move into fantasy land with them. Unrealized gains are just that—they don’t exist, they’re purely fantasy.

Separately,

The IRS will have to hire many more auditors [to make such assessments]….

Of course it will. It’s part of the Progressive-Democrats’ Build Government Bigger plan.