“Money we don’t have”

Good NYT article on deficit hysteria, with an especially illustrative quote from Rep. Cooper (D, TN):

“We have to stop spending money we don’t have,” said Representative Jim Cooper, a Tennessee Democrat who voted against the bill. “I hope deficit reduction fever is catching.”

The U.S. is in the midst of a balance sheet recession, with demographic ratios shifting an an unfavorable economic direction for several more years.  Under those conditions, deficit reduction fever will lead directly to the dreaded Japanese Disease —  another decade of stagnation, underemployment, and opportunity costs, all of which will impose greater burdens on future generations than expanded federal deficits would.

And policymakers — not to mention most members of the electorate, including analysts and the media — continue to commit two fundamental errors regarding fiscal policy:

1. They believe that all deficit spending must be financed with interest bearing debt, thus competing with the private sector for scarce financial resources.  However, judging by current Treasury rates, there’s still plenty of room for expanded federal borrowing.  And there’s a symbiosis between federal deficits and repair of balance sheets in the financial sector, as evidenced by the perfect quarters turned in by several major investment banks recently.  Politically, that relationship is almost nauseating, as it’s doing very little to relieve distressed households — but it nevertheless makes apparent the  dynamic between public sector fiscal deficits and private sector balance sheet relief.
2. They also believe implicitly that the U.S. is on a gold or similar standard, where fiscal and monetary policies are constrained by the supply of some exogenous factor, and governments can thus literally “run out of money.”  Governments can’t run out of money, as it is ’created’ by nothing more than digital ledger entries.  In other words, government (today, via operations of the quasi-private Fed) is the sole creator and supplier of high powered money.  Thus, the only constraint on money creation is inflation and a loss of confidence in the currency, and at the moment, those forces are emphatically not in play.  This too is symptomatic of Japanese Disease.

The fears of incumbent politicians like Cooper are certainly understandable.  But they’re borne of either ignorance about how these things work, or self-preservation.  Either way, it smacks of lousy political leadership. 

And given that Republicans are likely to benefit in November, we’d expect the trend towards fiscal conservatism to intensify.  Even President Obama, in a speech yesterday, promised the following:

• A three year freeze on all non-discretionary federal spending beginning in 2011
• Expiration of tax cuts via sunset provisions
• Elimination of 120 federal programs
• Reinstatement of PAYGO
• Higher fees on banks that are expected to lower federal deficits by $90B over ten years

He promised all of this as a way to force the public sector to budget in the same way that families and businesses do.  Again, this is wrong, and is borne of either ignorance or pandering.  And as with Congress, it smacks of crummy political leadership either way. 

The administration’s jawboning is also reminiscent of budget austerity measures touted by the Carter administration in the 1970s in reaction to the “tax revolt” — austerity measures that contributed to its eventual demise, even though they may have been more appropriate to the conditions prevailing at the time (e.g., baby boomers entering adulthood, global trade and financial integration, etc).   Today, austerity is far less appropriate, but even more vigorously pursued.  That almost certainly spells trouble for Obama in 2012 – assuming the GOP can field a worthy candidate and avoid blowing all of its political capital in the intervening years. 

You also have to wonder, were he to experience a change of heart, whether there’s any credible way for him to backtrack from his neo-liberal rhetoric.  The DLC, Brookings, Peterson, and all the other usual suspects have painted the guy into one hell of a corner.

In the meantime, assuming that reality will align with rhetoric, the political climate continues to be favorable to the USD and Treasuries, and rather risky to gold.  A contrarian call? You bet.  But it’s based on what we think is a well-grounded and – just as importantly – non-ideological assessment of the facts. 

IMPORTANT DISCLOSURES: Symmetry Capital Management, LLC (“SCM”) is a state registered investment adviser in the Commonwealth of Pennsylvania. The views expressed by the author are as of the publication date, and are subject to change based on market and other conditions. The foregoing information is for informational, educational, or entertainment purposes only. It does not constitute an offer to buy or a solicitation to sell any security, or to engage in any investment strategy. Investors should not use this information as a basis for any investment decisions without first consulting their own financial adviser. SCM is an Amazon.com associate, and earns a commission on sales generated through links from our website. Some clients of the firm are long GLL and/or long TLT.  At the time of writing, neither the firm nor its principals owned any securities mentioned. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

URLs:

http://www.nytimes.com/2010/05/29/us/politics/29deficit.html

http://www.japanreview.net/review_bsr.htm

http://www.miraeasset.com/ourmarket/outlookView.do?board_id=1125&group_id=1&pageNo=2

http://www.investmentnews.com/article/20100602/FREE/100609973

http://seekingalpha.com/article/208174-how-deficit-hawks-will-keep-cutting-spending-until-we-re-all-on-food-stamps

IRS vs Small Fry, Part 2

More on the IRS focusing its audit efforts on small taxpayers from CFO.com. In a recent post, we speculated on some conditions under which this might make sense. However, the study reported on and the experts interviewed in the article cast a far more shadowy light on the situation. For example:

• Audits of large companies have fallen dramatically over the past two decades, from 67% to 25%, despite offering the greatest potential dollar return per hour of agent labor.
• A “perverse quota system” might be incentivizing tax agents to pursue smaller companies, according to the authors of the study.

The IRS has indirectly defended its actions by reporting that it has increased its focus on pass through entities like S-corporations and partnerships, and by blaming “flat budgets.”

Tax experts quoted in the article point out that smaller companies are the locus of the “tax gap” problem — the difference between what is estimated to be owed in taxes and what is actually paid.

One of them also raised an interesting possibility regarding “sustension rates” (emphasis added):

While [Dean Zerbe, national managing director of tax consultancy Alliantgroup] says it is “difficult” to speculate on the decline in large-company audits, he points out that sustention rates (the ratio of agreed-on and upheld tax deficiencies to proposed tax deficiencies) may have something to do with the shift. Historically, sustention rates pertaining to large companies have been very low, says Zerbe. While the IRS may seek a high dollar amount based on underreported taxes, “the number drops like a stone” when the case gets to court and wends its way through the appeals process, he says.

Smaller companies also see the amount of tax they owe reduced in court, but “not nearly as dramatically,” notes Zerbe. That’s because they may not have the resources to challenge the IRS and are therefore more likely to settle. As a result, the IRS may see a better “bang for the buck” pursuing smaller companies, says Zerbe.

But targeting smaller companies may be bad for the economy on the whole, since audits consume the time and attention of business owners, adds Zerbe. ”While politicians in Washington love to give speeches touting how small businesses are the engines for job growth, revving up IRS audits of small business is like putting sugar in the gas tank,” he says.

We noted a similar irony while addressing healthcare reform back in March:

…employees of large corporations, unions, and public sector employees…have been subsidized, either through higher premiums, greater personal risk, or less health care, by the self-employed and entrepreneurs (which may be why politicians always try to kiss their rear ends)…

Our advice? Pay your taxes, small fry, but be wary of politicians kissing your keester. That smacking sound could signify an impending audit. 

URLs:

http://www.cfo.com/article.cfm/14493089

http://symmetrycapital.net/index.php/blog/2010/04/irs-watch-out-small-fry/

http://symmetrycapital.net/index.php/blog/2010/03/paul-ryans-floor-speech/

IRS: Watch out, small fry

From WebCPA:

“IRS to Step Up Audits of Sole Proprietors”

“IRS Reduces Audits of Large Corporations”

As bad as it sounds, this could be the natural progression of a long term enforcement effort, though we’re only speculating on that possibility. It’s also valid for the IRS to enforce existing tax laws regardless of the size of a business. The core problem, as described by a subject in one of the articles, is that the tax code’s complexity imposes a heavier relative burden on smaller businesses, and (we would add) real opportunity costs on society. That’s especially true when innocent firms are subjected to an intensive audit.

Plane hits IRS building

Normally we treat ‘tax revolt’ news items with some levity, but this one is tragic:

A software engineer furious with the Internal Revenue Service launched a suicide attack on the agency Thursday by crashing his small plane into an office building containing nearly 200 IRS employees, setting off a raging fire that sent workers fleeing for their lives.

At least one person in the building was missing.

A federal law official identified the pilot as Joseph Stack and said investigators were looking at a long anti-government screed and farewell note that he apparently posted on the Web earlier in the day as an explanation for what he was about to do.

In it, the author cited run-ins with the IRS and ranted about the tax agency, government bailouts and corporate America’s “thugs and plunderers.”

Stack’s full screed is available on The Smoking Gun website.

URLs:

http://news.yahoo.com/s/ap/20100218/ap_on_re_us/us_plane_crash_texas

http://www.thesmokinggun.com/archive/years/2010/0218102stack1.html#theLink

President Still on Message…and It’s a Costly One

President Obama stumped over the weekend for Martha Coakley, who is running for Ted Kennedy’s vacant Senate seat against GOP upstart Scott Brown. He echoed his recent hawkishness, pitting green jobs against the oil industry, and taxpayers against “fat cat” Wall Street bankers, repeating his “I’ll get your TARP money back” meme. 

[1/20/2010 UPDATE - In an interview currently running on CNBC, Warren Buffet pointed out that most of the TARP recipient banks have repaid the federal government with interest, and that the industry, via FDIC, has absorbed the losses resulting from bank failures. TARP losses are the result of GSE's like Fannie and Freddie, and AIG, where many stakeholders - not just CDS counter parties, but also insurance settlement and annuity receipients - were paid with TARP funds. Important points, and they make the President's recent TARP rhetoric all the more puzzling.]

Obama’s current approach to policy is a net economic negative that will not reduce unemployment, at least in the short run. It will merely shuffle employment around between industries, creating inefficiencies and piling additional dislocation on top of the residual pain of a deep recession. And preaching to the choir could not have helped Coakley, given that she had lost a double digit poll lead due to migration of moderate and independent voters in recent weeks. Arch lefties are simply not going to swing the special election in Massachusetts, and they are probably not going to swing the 2010 midterm elections. For the second time in the last couple of weeks, we are left to wonder which cabinet member(s) the president is currently getting his strategic and tactical guidance from, and how much it’s going to cost his party before he starts looking for better advice.

We would assert that the Dems have lost a great deal of ground since they and the president began taking a more hawkish fiscal stance, and since PAYGO came back into vogue (though we could be wrong – perceptions of overreaching on health care reform may have been more important, for example). The parties’ current approaches to policy are basically:

Dems:    increased public spending  + higher taxes

GOP:      decreased public spending + lower taxes

It’s interesting to note that in many environments – this one included, we think – those options won’t differ a whole lot in terms of economic output. Thus, the choice may not be about economic performance as much as private versus public control of resources, which seems to be fairly characteristic of the American voter. That’s too bad, as there are some important public sector initiatives, including infrastructure, energy efficiency, gaps in the health care system, even a public employer of last resort, that could and arguably should be undertaken. Unfortunately, every time the President or members of his party claim that the private sector (however narrowly defined and targeted) will be put on the hook for funding some initiative, he shuts down these important opportunities.

As we’ve noted elsewhere, the federal government issues the money used to service its debt. Thus, the only real constraint on public sector deficits is inflation expectations coming unhinged. This has not happened to date, and most forward looking indicators are pointing in a disinflationary if not outright deflationary direction, at least in purely domestic goods and services. This realization offers a less divisive way forward for whichever party grasps it first, i.e.:

Dems:    increased public spending  + increased deficits

GOP:      lower taxes + increased deficits

In what appears to be a  ’Keynesian’ decade ahead, these approaches offer a healthier framework for policymaking. And arguably, the Dem direction – if they had the courage to advocate it, and the sense and restraint to do it reasonably well – would lead to better economic outcomes overall.

TR2: Rangel Holds Onto Ways & Means Post

House Republicans tried unsuccessfully yesterday to oust Democrat Charlie Rangel from his chairmanship of the House Ways & Means tax writing committee. The attempt was based on a continuing investigation by the House Ethics Committee into improper tax filings and various ethical lapses (if you play the video at that link, you’ll see Rep. Rangel’s unique character in action, and also a couple of voters who are troubled by the allegations of “skeezy” conduct; perhaps this will help reanimate the ’tax revolt’ that seems to be flagging of late). As the WebCPA article noted (emphasis added):

John Carter, R-Texas, had introduced the resolution in the House. “Today the majority party in the House of Representatives approved a double-standard for taxpayers, one for powerful Washington politicians, and another for regular working Americans,” he said. “Chairman Rangel can neglect his taxes for years and pay no penalty or interest, while the American public faces massive penalty and interest charges for the same infractions. That was the judgment delivered by House Democrats today. Let the voters take note.”

That’s a powerful and potentially incendiary statement. Here’s the rub though — neither party has a monopoly on corruption or poor ethics. As Mary Ann Akers noted for Current:

The motion, brought by House Minority Leader John Boehner (R-Ohio) was handily defeated, 226-176. Backing their leader in trying to punish Rangel were the following embattled GOP lawmakers: Don Young of Alaska, Tom Feeney of Florida and four California members who are under ethics clouds – Ken Calvert, John Doolittle, Jerry Lewis and Gary Miller. All six Republicans made this year’s “most corrupt members of Congress” list published by the ethics watchdog group CREW, Citizens for Responsibility and Ethics in Washington.

Akers also noted that indicted Democrat William Jefferson (LA), and his colleague Alan Mollohan (WV) who is under investigation, both voted to protect Rangel, while “Reps. Vito Fossella (R-N.Y.), whose drunken driving arrest last Spring revealed he had a secret mistress and child, and Rick Renzi (R-Ariz.), who was indicted on 35 counts of public corruption charges in February” both abstained. Good grief…

The natural objection to Akers’ laundry list is that most of Rangel’s alleged ethical violations pertain to the tax code, making it unthinkable that he would continue to chair the House’s tax writing committee. That’s especially true when you consider that, according to CREW, he fumbled his disclosures yet again for 2007, after settling back taxes with the IRS for prior years without penalty:

Recently, we learned that Rangel filed a grossly misleading financial-disclosure report for 2007 — failing to report at least $500,000 in assets. It turns out Rangel had a credit-union account worth at least $250,000 and maybe as much as $500,000 — and didn’t report it. He had investment accounts worth about the same, which he also didn’t report. Ditto for three pieces of property in New Jersey. Beyond that, we’ve learned that Rangel has failed to report assets totaling more than $1 million on legally required financial-disclosure forms going back to at least 2001. The news comes on top of revelations last year that Rangel didn’t report — and didn’t pay taxes on — income from a villa in the Caribbean. In that matter, the IRS gave him sweetheart treatment; Rangel paid about $10,000 in back taxes but was not required to pay any penalty or interest.

We have somewhat mixed fillings about this. On the one hand, Rangel has done precious little to advance pro-growth tax policy, or to expand awareness of America’s increasingly uncompetitive tax code (to be fair, he has proposed lowering the top marginal corporate rate, but only in exchange for closing loopholes; this might be more efficient, but it doesn’t necessarily lower the net burden on business investment; it also leaves distortions in place regarding the choice of corporate structure). On the other, he’s attacked the AMT, and has been a persistent advocate of fairness in the tax system, which is important. His idea of fairness probably goes a lot further then ours, but we agree with him up to a point – and conservative pundits and their followers should take note – talking only about ‘the percentage of income taxes paid by the top 1% (or 5%, or 10%) of earners’ does NOT provide anything close to a complete picture of our tax system, its fairness, or its efficiency. Of course, Rep. Carter’s observation that Rep. Rangel paid no penalties and no interest for his tax errors provides grounds for intense public cynicism about what Rep. Rangel’s idea of fairness really is.  In fact, Carter has even introduced a tongue-in-cheek bill proposing something called ‘The Rangel Rule’. As an article posted on CREW’s website describes it:

The work of Rep. John Carter, a Texan who spent two decades as a judge before coming to the House in 2002, H.R. 735 would require the IRS to give everyone the same kid-glove treatment it gave Rangel.

The bill’s title is modeled on something known in Texas as the “Hobby Rule.” In the 1970s, Bill Hobby, then the state lieutenant governor, was pulled over for drunk driving. Hobby was taken to the police station, but when his attorney showed up in the wee hours of the morning, authorities simply let Hobby go — no bond, no nothing. That special treatment became a precedent for future drunk-driving cases, as lawyers cited the “Hobby Rule” to demand their clients be freed with no questions asked, just like Bill Hobby.

Thus the “Rangel Rule.” Under H.R. 735, if you’re caught cheating on your taxes, you simply pay what you owe, then write “Rangel Rule” at the top of your return, and you won’t be charged any penalty or interest. That way, Carter said when he introduced the bill, ordinary taxpayers will be “treated with the same courtesy that, it seems, the IRS is treating the chairman of the Ways and Means Committee.”

Of course, Carter’s bill doesn’t have a chance. Democrats undoubtedly see it as a joke. But the Rangel case is very, very serious.

Serious indeed. Whether sufficient to reinvigorate the tax debate remains to be seen.

URLs:

http://www.webcpa.com/news/Rangel-Keeps-Job-Running-Tax-Committee-52001-1.html

http://rangel.house.gov/

http://wcbstv.com/politics/charles.rangel.investigation.2.1150611.html

http://current.com/items/89322589_look-who-voted-to-punish-rep-charlie-rangel.htm

http://www.foxnews.com/politics/2009/10/07/house-considers-resolution-oust-rangel-ways-means-committee-chair/?test=latestnews

http://www.crewsmostcorrupt.org/node/2154

TR2: “Why We’ll Leave…”

Interesting op-ed from the president of Creators Syndicate on why his firm is considering leaving Los Angeles:

This city is fast becoming a job-killing machine. It’s no accident the unemployment rate is a frightening 11.4% and climbing.

I never could have imagined that, after living here for more than three decades, I would be filing a lawsuit against my beloved Los Angeles and making plans for my company, Creators Syndicate, to move elsewhere.

But we have no choice. The city’s bureaucrats rival Stalin’s apparatchiks in issuing decrees, rescinding them, and then punishing citizens for having followed them in the first place…

From the beginning, we’ve been headquartered in Los Angeles. But 15 years ago we had a dispute with the city over our business tax classification…You can imagine how relieved we were on July 1, 1994, when the ruling was issued. We won, and firmly planted our roots in the City of Angels and proceeded to build our business.

Everything was fine until the city started running out of money in 2007. Suddenly, the city announced that it was going to ignore its own ruling and reclassify us in the higher tax category…

…I suspect many companies like ours already have quietly left town in the face of the city’s taxes and regulations. This would help explain the erosion of jobs.Regardless of the outcome of our case, the arbitrary and capricious behavior of some bureaucrats is creating a lose-lose situation for everyone involved. If we win in court, the taxpayers of Los Angeles will have lost because all those tax dollars will have been wasted on needless litigation.

If we lose in court, the remaining taxpayers in Los Angeles will have lost because their burden will continue to swell as yet another business moves its jobs — and taxpayers — to another city.

As long as City Hall operates like a banana republic, why is anyone surprised that jobs have left the city in droves and Los Angeles is teetering on the brink of bankruptcy?

URLs:

http://online.wsj.com/article/SB124718265362620253.html

TR2: Lawmakers’ expense accounts

In Tax Revolt II news, increasing scrutiny is being paid to lawmakers’ expense accounts in the U.S. and Europe after a scandal erupted in the U.K.’s Parliament over some abuses of living expense claims.

According to a story just posted online by the Wall Street Journal, ”House Speaker Nancy Pelosi on Wednesday directed that “statement of disbursement” records detailing spending by the offices of members of the House be published online “at the earliest date.”

This episode lends support to an assertion we made at the beginning of 2007: “There’s a governance revolution afoot in the world. Beltway and other capital denizens should be careful to take notice. ”

URLs:

http://tinyurl.com/google-parliament-scandal (http://preview.tinyurl.com/google-parliament-scandal)

http://online.wsj.com/article/SB124364352135868189.html

http://sify.com/news/fullstory.php?a=jf2l9Heicga&title=British_expenses_scandal_heads_to_EU_parliament

http://online.wsj.com/article/SB124404974993181853.html

http://symmetrycapital.net/index.php/blog/2007/01/a-seamy-trifecta/

More TR2

More evidence to support our ‘tax revolt II’ thesis, but first, we should acknowledge that TR2 is a blatant misnomer. There have, of course, been many tax revolts before the 1970s and today, and several in between. But TR2 is easier to type than “tax revolt current edition”, so we’re going to stick with it.

First is a letter to the WSJ editorial page by our friend Ray Galkowski at Par Capital, LLC, in response to an op-ed by Berkeley economist and Clinton Labor Department chief Robert Reich:

Mr. Reich argues that the primary philosophical difference between Messrs. Reagan and Obama is that Reagan tried to advance economic growth with “top-down” policies, while Mr. Obama is working through the more egalitarian “bottom-up” approach…

In fact, it is Messrs. Obama and Reich who are attempting to manipulate from the top down by taking resources from every American and allocating it as they, the central planners, see fit. It is Messrs. Obama and Reich who are disregarding what we the people want. What could be more conceited than that?

In his letter, Ray captures the traditional American sentiment towards taxation rather well. But are his letter and the similar ones accompanying it a harbinger of a national tax revolt? We think it depends on how heavy the overall tax burden gets in coming years. Because tax revolts unfold at the margin, each increase is a potential catalyst. And on that count, there has been evidence of increasingly heavy handedness by government treasuries. In the U.S., Congress is pushing tighter loopholes for expatriates, and the President’s budget allegedly imposes a less generous tax schedule on estates in 2010 (that’s according to the WSJ editorial page – we haven’t read the legislation yet). By themselves, these aren’t likely to catalyze much. However, as the proverb notes, every straw in the camel’s hay bale counts.***

It’s also worrisome that expatriate initiatives appear to be spreading, which could put globalization at further. In Bahrain for example, a new labor tax was enough to spur protests, while India has been pursuing a parallel tack on citizens employed abroad by multi-nationals.

If there’s any upside, it’s that some countries, such as Canada and Brazil, continue to lead in positive directions on taxes. Who would have thought fifteen or twenty years ago that those two countries would become the western hemisphere’s leading lights on economic policy? It boggles the mind.

***Tobacco excise taxes could be a stronger catalyst, given the larger number of people impacted, and the intensely contradictory thinking behind them, ie: the tax will produce revenue for desired programs like health insurance for children, AND it will also deter the undesirable behavior from which those revenues are derived. If the deterrence aspect proves effective, where’s the slack going to be made up? By cutting other programs? Not without a tax revolt. Higher tobacco taxes should also provide a small windfall for Indian reservations and nicotine smugglers, in addition to tobacco companies, who have reportedly already raised their prices, although this could be due to tax induced demand spikes (an ironic side note in that last linked article – a grandson of tobacco giant RJR’s founder heads a foundation called Smokefree America – we’re speculating, but would assume that he’s able to do so at least in part because of the wealth amassed from dear old grand dad’s cancer sticks!).

URLs:

http://en.wikipedia.org/wiki/Tax_revolt 

http://ballotpedia.org/wiki/index.php/Tax_revolt 

http://online.wsj.com/article/SB123846479778072325.html 

http://online.wsj.com/article/SB123819895769662043.html 

http://online.wsj.com/article/SB123431935722571333.html 

http://in.reuters.com/article/indiaDeals/idINIndia-38724720090326 

http://in.reuters.com/article/governmentFiling
sNews/idINSPG00024520090330 

http://www.kpmg.ca/en/services/tax/documents/20082009General_English_Jan312009_WEB.pdf 

http://news.google.com/news?um=1&ned=us&hl=en&q=tobacco+taxes 

http://www.wowt.com/news/headlines/42125942.html 

http://www.timesdaily.com/article/20090331/ARTICLES/903315024/1011/NEWS?Title=Tobacco-sales-soar-pending-tax-increase

TR2: A New Tea Party?

Another piece of evidence for an incipient tax revolt is the emergence of the ‘New American Tea Party’ (http://newamericanteaparty.com/), which we learned of via a Snopes.com check of a viral email urging people to mail a tea bag to 1600 Pennsylvania Ave. According to Snopes, the email campaign has nothing to do with the NATP (although they have posted a suggestion that people mail tea labels instead of bags, if they want to save money on postage and have any hope of their mail reaching the desired parties).

No surprises among the sponsoring organizations, which include American Spectator, Heartland Institute, Americans for Tax Reform, and National Taxpayers Union, so we aren’t making too much of it yet. But if their membership ranks were to swell and diversify, either directly or in sympathy, then we would infer that TR2 is gaining significant traction.  We think that could begin to happen in 2011-2014.

However, if the opposition party remains relatively impotent (insert Bob Dole/Viagra pun here), as it did in the late 1930s, then the revolt probably won’t get very far. Instead, the best hope for sensible tax reform might be a realization among some key Democrat constituencies that our corporate code is becoming an increasingly severe competitive disadvantage, and also hampers the government’s ability to fulfill on long term social promises. If that conversation were to unfold, it might be possible to extend it to personal and payroll taxes as well. We have no idea what the probability of that is – we suspect it’s not very high – but if it occurred, it would be a very bullish development.