I never intended for Quote of the Week to become the Crimson Cavalier's version of Sports Illustrated's "This Week's Sign That The Apocalypse Is Upon Us", but increasingly it seems like that's what it's becoming. So be it. I don't make the news, I just re-package it and add snarky commentary.
This week, we've once again got co-champions, since it seems like everyone in the world these days is in a race to say (or do) the dumbest possible thing. My money is still on Jose Canseco in this race, but the field is strong. First up, the European Central Bank, as reported by Mish Shedlock (pardon the weird grammar, blame Google Translate for the clumsy translation).
This week's QUOTE OF THE WEEK #1
"The personal representative of the [European] central bank is now demanding that the employees pensions would be protected against inflation. It requires that an insurance against their own failure."
- Frankfurter Allgemeine, via Mish Shedlock
This is truly special. The ECB, like the Fed, is supposedly charged with upholding the stability of the region's primary currency (the Euro). They know, however, that their policies (like the recent LTRO) are incredibly destabilizing in the long-run, and they therefore want to ensure that they are protected from the damage caused by their own policies. This is akin to a doctor demanding that his salary increase every time he is sued for malpractice--it would be laughable in that case, and it should be laughable here as well.
You know what else is laughable? California politics. I give you Jerry Brown:
This week's QUOTE OF THE WEEK #2
"Brown also defended calling his proposal a 'millionaires tax' on his initiative campaign website, even though the income threshold would be $250,000.
'Anybody who makes $250,000 becomes a millionaire very quickly if you save it. You just need four years,' Brown said. 'It is a millionaires tax. It taxes millionaires, right? And it’s for schools. And it protects public safety.'"
- Don Thompson, Associated Press (via Falkenblog)
Wow, buddy. Now, I'm not going to sit here and ask you all to feel pity for anyone who earns $250k a year, but the sheer innumeracy of Brown's argument is simply maddening. First of all, we're talking about $250k in pre-tax income here, not post-tax, so you're already taking Brown's "four years" and bumping it up to at least 7 or 8. Second of all... WHO THE HELL SAVES 100% OF THEIR INCOME???
Let's see, the U.S. personal savings rate is sitting at 3.7% right now, and Bernanke and friends are doing their best to drive that down even lower. If we assume that the hypothetical $250k wage-earner is taxed at a combined 40% between Fed and state, that leaves him with $150k in take-home money. Even if we assume that the savings rate among the richest Americans is higher than that for the average American (a fair assumption), and we place this hypothetical $250k wage-earner's savings rate at an ambitious 15%, that leaves him with an annual savings of $22,500. That's a nice chunk of change, but we've just taken our "four years" and bumped it up to "44 years". Sorta a big difference, don't you think?
But... of course... if our friend just invests his money on the CalPERS plan, he can assume a robust 7.5% annual return on his money, which means... oh, screw it all, whatever, we're all millionaires now. Thanks, Jerry.