Moneycation

Off-Shore Tax Shelters Explained

2012-03-03T13:26:00.000-05:00

Offshore Tax Shelters Around the World

Image attribution: Arkyan, GFDL, CC BY-SA 3.0

An offshore tax shelter is a legal mechanism or entity by which income that would normally be earned and taxable in one tax district is only taxable within the domicile of that tax shelter's registration. In other words, when capital is transferred to another legal jurisdiction and is subject only to that jurisdiction's taxation system, then income earned from use of that capital is no longer considered taxable in a higher taxed jurisdiction.

Several criteria must apply for offshore tax shelters to be legitimate. For example, if income is earned for purposes other than tax avoidance, it is more likely to be considered legal. This is more the case when the income earned through that tax shelter comes from the country that holds tax sheltered assets. Moreover, this is because income earned in a higher tax zone can still be taxable even if earned from a foreign registered entity.

Some entities attempt to avoid taxable income earned from offshore entities by taking advantage of rules that don't require taxes from foreign registered entities. For example, a Senate committee report chaired by Senator Carl Levin found that certain hedge funds were avoiding taxes on dividends earned within the U.S. This abusive practice was accomplished by restructuring the transaction so the money would not be taxable under the rules of the new transaction. The transactions were still considered tax evasion because they were believed to not serve the purpose of the transaction, but rather the intent of tax evasion.

In some cases, tax treaties are signed into law between two countries. The Internal Revenue Service (IRS) states these treaties often do not protect residents or citizens from U.S. Taxes due to a 'savings clause'. However, also according to the IRS, there are exemptions to the savings clauses of tax treaties. In such case, the saving clause exemptions of a tax treaty can serve an offshore tax shelter by allowing income to be earned within the United States through the tax shelter in so far as tax exemptions apply. Filing of specific tax forms may still be required by the IRS in order to claim the tax exemption.

With our without tax information sharing treaties between countries, tax that is illegally sheltered is still illegally retained income. In other words, tax shelter fraud and misuse of offshore portfolio investment strategy are considered tax evasion and not tax shelters as distinguished by the IRS. For this reason it is necessary to understand the basic tax laws that classify income as either taxable or non-taxable, and the difference between tax shelter fraud and tax shelters.

For most individuals that earn income in an offshore account, that income must still be reported to the IRS. However, if that income is not earned by an individual, but rather an entity that is legally separate from the individual, new rules apply. Even this can be considered tax evasion if that entity is established solely to avoid taxes. In other words, the motive of an offshore tax shelter should not be tax avoidance, but rather tax sheltered income according to US Legal. When considering offshore tax shelters, consulting with the IRS or contacting a skilled tax professional that is also accurately knowledgeable in the area of offshore tax shelters may be advisable.

Originally published 03/02/2011: http://www.helium.com/items/2105974-offshore-tax-shelters http://www.helium.com/items/2105974-offshore-tax-shelters

Financial News 03/02/2012: Consumer Sentiment Metric Does Not Measure Retail Spending

2012-03-02T08:31:00.006-05:00

It is evident that consumers are spending less as thrift shops have been seeing substantial revenue gains. Two examples are Big Lots which just reported a 4.2 percent rise in revenue per MarketWatch and Dollar General which has increased revenue for the last five years per the Motley Fool.

Year over year retail spending has increased a little over five percent per Census data, but after inflation of 3.6 percent as measured by the Bureau of Labor Statistics, that is an increase of 1.4 percent, an amount .2 percent less than the 2011 annual growth in gross domestic product.

Yet despite anemic gains in inflation adjusted retail spending, consumer sentiment has risen for the last year to reach an index level of 75.3 per Reuters. A longer-term chart of consumer sentiment can be viewed at the Federal Reserve Bank of St. Louis.

So it looks like consumer sentiment is just that, sentiment and does not necessarily translate into economic growth as measured by retail spending and GDP growth. That is using newer ways of measuring things like inflation. Moreover, according to older measurements, retail spending has declined in terms of real dollar value and inflation soared over nine percent in 2011 per the American Thinker.

Debasing the dollar could be monetary policy's way of making Americans feel richer, when in fact they are getting poorer. For example, according to the BLS Inflation Calculator, one 1970 dollar is worth $5.84, that is an increase of 484 percent in 41 years. How many retirement plans can beat that kind of growth?

• Daily Finance: Baby Boomers last to enjoy full pensions and social security
• Bloomberg: SEC enforcements don't bear statistical fruit
• RealtyTrac: 41% of foreclosures at auction, majority under $200K
• WNYC: New York approves new socially conscious business structure
• ISM: Index value of 52.4 shows 4th month of slowing manufacturing growth
• MW: Tax planning hazed by uncertainty over pending changes in tax law
• RFE: 25 of 27 European politicians sign fiscal treaty to prevent more debt
• BBC: Spain renegotiates higher 5.8% government spending deficit target
..........

Cost Effective Ways To Dine Out With Children

2012-03-02T06:52:00.000-05:00

Image attribution: Paul Glazzard, CC BY-SA 2.0

There are plenty of ways to dine out with kids without breaking the bank. These frugal methods for dining out can make interesting, and sometimes educational outings as well as affordable or free food. Frugal ways to dine out with kids can also be part of a daily activity that brings family or friends together to share experiences, entertainment and food.

• Kids eat free restaurants

For those who still like to go to restaurants when dining out with kids, kids eat free restaurants might be just the thing. According to Frugal Living, there are many kids eat free restaurants for parents and adults to choose from when dining out with kids. Among these restaurants listed by Frugal Living are select franchises of Applebees, Buffalo Wild Wings, Cinzetti's and quite a few others.

• Promotional dinner seminars

Sometimes promotional seminars also offer free dinner. This can be a useful way to introduce children to the adult world of finance while also getting them a free dinner. For example, the Better Business Bureau of Louisville, Kentucky mentions many investment planners and estate planners offer free lunches or dinners to potential clients. If kids are actually interested in the topic of the seminar, or if they warm up to the idea of the seminar, the meal can be that much better.

• Church dinners

Churches also offer free dinners alongside specific church events per the Salisbury Post. These events might require kids and adults to attend a church service, parish meeting or community sponsored event, but can also be a frugal source of dinner. For those parents looking to introduce their children to life among church goers, a free church dinner might be just the thing. What's more these types of dinners are not necessarily limited to one faith only.

• Hunting pot luck

Another frugal way to dine out with kids is at hunting events such as hunting pot lucks. At these events, newly acquired game and wildlife becomes the main dish after a day of venturing outside amongst ducks, deer, turkey, rabbit or even fish. If hunting is your thing, hunting pot lucks are a way to teach kids about the activity while spending quality time with them and following up with a hearty meal.

• Food holidays and birthdays

If a kid can't get a free meal or discount on his birthday, a national food holiday might be just the thing. Food holidays are promotional holidays that promote a specific type of food at discounts or free. For example, on March 1, 2011, the International House of Pancakes (IHOP) offered free pancakes for National Pancake day. If pancakes aren't the right type of food, there are plenty other food holidays that might contribute to a frugal outing with the kids.

Originally published 03/01/2011: http://www.helium.com/items/2105176-free-dinner-for-kids

Financial News 03/01/2012

2012-03-01T08:33:00.000-05:00

• U.S. DOE: 2013 model vehicles to offer up to 53 miles per gallon
• Kiplinger: U.S. business spending to grow 6% in 2012
• DOL: 351,000 jobless claims were filed the week ending 02/25/12
• Reuters: Workforce drop excluded, 6% unemployment could take 5 yrs
• Bloomberg: Gold price fell after Fed testimony revealed QE3 less likely
• Fed: U.S economic activity likely increased in January and early February
• Telegraph: Greek bondholders not to be reimbursed by CDSs per ISDA
• CNBC: Chinese local government investment in infrastructure down 70%

Financial News 02/29/2012

2012-02-29T08:42:00.000-05:00

• NYT: Era of low borrowing rates nearer end than beginning
• Bank Rate: National average mortgage rate 3.85%,
• S&P: Case-Schiller national Q4, 2011 home price composite down 3.8%
• BEA: Q4, 2011 GDP 3%, for the year national GDP was 1.625%
• Business Insider: Interest rate swaps net JP Morgan $12k per transaction
• Bloomberg: LTRO 3 less likely as ECB lending nears $1.35 trillion
• Reuters: Indian Q4, 2011 economy slowed to 6.1%, a three year low
• RT: G20 FSB does not like fact rating agencies have influence

Reasons To Join A Credit Union

2012-02-29T07:15:00.000-05:00

Image attribution: Kenneth Allen. CC BY-S.A. 2.0

The benefits of joining a credit union are actually quite good because it's like banking with perks. With banks the managerial priority is usually to serve its shareholders by gaining profit from banking services. With credit unions the shareholders are members so the result becomes a more affordable banking experience. Credit Unions often serve their members with free services, lower borrowing costs, higher lending rates, and personalized service.

• Free online bill pay

Online bill pay is a convenient way to pay bills and saves on stamps, time and gas going to the post office. Many credit unions offer free online bill paying services that allow members to literally pay bills through the credit union. Some bill payer services such as the one available at CINCO Credit Union can also be automated to withdraw a fixed amount of money from a pre-specified account every month as bills become due.

• Free cashiers checks

Another benefit of banking with some credit unions is free cashiers checks. For those who only require one to three checks a month, this can save the cost and hassle of purchasing and managing a check-book. Cashiers checks are also guaranteed so the payee has greater financial assurance of the payers ability to pay. These types of checks are useful for important purchases such as down-payments, but can also be used for other transactions typically involving checks. The Navy Federal Credit Union is an example of a credit union that not only provides members with free cashiers checks, but also allows them to be ordered online.

• Free online banking

Apart from online bill pay, free online banking allows a credit union member to track and monitor banking transactions easily and affordably. Some credit unions such as NIH Federal Credit Union offer free online financial software, free electronic statements or e-statements and have free tax preparation software built in. Free online financial software can benefit members with financial planning and secure online financial record-keeping.

• Lower cost credit cards

Credit cards can be expensive, but they can be less financially costly with no annual fees, lower interest rates and fewer surcharges. Credit unions tend to provide their members with competitive interest rates that are useful for consolidating credit card debt or re-directing credit card expenses normally put on higher interest cards. According to Bankrate, Inc. penalty fees on credit union credit cards are also lower.

• Personalized service

Since credit unions are often relatively small in comparison to banks. This is helpful when seeking to develop a banking relationship with credit union staff and employees. Personalized financial services through a credit union can also assist with speedier and more helpful service. For example, obtaining help with the loan application process, with opening accounts and choosing between different financial products is facilitated through personalized financial assistance.

Originally published 02/28/2011: http://www.helium.com/items/2104217-credit-union-membership-benefits

Cheap Scottish Themes in Corporate America

2012-02-28T14:46:00.003-05:00

Scottish people are stereotyped as being spendthrifts. Whether or not they are is somewhat beside the point as they are cast as such. If you keep your eye out you might see where in corporate America this theme is capitalized upon. Below are a few examples starting with McDonald's which is known for its dollar menu, value meals and unquestionably Scottish sounding name.

Times Square New York McDonald's US-PD

Ronald McDonald is the trademark mascot of McDonalds, he also could be of Scottish descent as red hair and whitish skin is a feature of some Scottish people. The highlander reenactor on the right also has red hair. Why Ronald McDonald is also a clown is up for speculation, but there you have it.

Ronald McDonald by Ru K, GFDL, CC BY-SA 3.0, Highlander by David Ball GFDL, CC BY-SA 3.0

Scottrade supposedly got its name from its starting headquarters in Scottsdale, Arizona according to its founder Roger Riney. In this case it is a striking coincidence that the name matches the firms role as a discount broker quite nicely and conveniently.

Image source: Dwight Burdette, CC BY-SA 3.0

Here's another one with two ts, maybe it's named after a guy called Scott who is Scottish. Scott toilet paper is one of the cheaper brands in terms of cost. A roll of the most affordable Scott brand could last a while and save you a few dimes.

If all the above seem somewhat questionable or have alternate themes that coincide with low priced products there is another one that makes the case. McFrugal, a tool shop that claims it has "Quality Tools at a Frugal Price", right next to the image of a very Scottish looking man with bagpipes.

McFurgal's furniture is more corporate Canadian, but all the same when it comes to stereotyping Scottish people. If the red haired Scotsman does not give it away, the name does.

Financial News 02/28/2012

2012-02-28T08:37:00.000-05:00

• Bloomberg: Research shows wealthy prefer to lie, and cheat
• IBD: Next debt ceiling breach to move forward on lower tax revenue
• Census: January Durable goods orders declined 4% or $8.6 billion
• CNBC: Governmental measures to restrict oil price already implemented
• GMO: Avoid over-management, leverage and impatience when investing
• USA Today: Riot police have disbanded an Occupy London camp
• MW: World Bank finds incestuous economics could collapse China
• Reuters: Greek sovereign debt rating downgraded to "selective default"

Financial News 02/27/2012

2012-02-27T05:09:00.000-05:00

• BH: Non-taxable modified mortgage forgiveness to vanish in 2013
• NYT: Study finds high IQ investors pick better stocks
• Bloomberg: Student loans lower 29-34 age group mortgages 8% in 10 yrs
• Reuters: New factory automation to replace more workers in manufacturing
• Business Insider: High oil price mostly due to low supply and refining
• CNBC: Oil expected to rise further this week per 12 of 16 analysts
• EUB: LTRO 2 to launch February 29 and allow banks unlimited cheap loans
• Tapai Times: Greek bailout dependent on investor majority bond swap

Financial News 02/24/2012: Market Models Honey Badger

2012-02-24T07:31:00.004-05:00

This week's stock market action models the fearless honey badger, scary to short-selling leopards, immune to a venomous depreciating dollar, and unhampered by multiple earnings stings. The honey badger market's strength is attributable to systemic resistance courtesy of HFT, FED, and unbridled optimism in the face of unsustainable national debt growth, decreasing work force, and slowing U.S. share of global GDP.

• eBay: Nike Foamposite Galaxy shoes, 54th bid price $60,100
• Oil-Price.net: Sweet crude reaches $108/brl, brent $123.00/brl
• Reuters: EMMA helps bond investors assess municipal bonds
• Bloomberg: U.S. home prices fell 2.4% in Q4, 2011
• IBT: G-20 meeting this weekend to discuss IMF funding
• Options Queen: Bullish trend cancerous like ultra-violet light
• Euronews: BoE aggressive amid Lloyds $4.4 billion profit pit
• Telegraph: German finance minister realistic about Greek debt

Financial News 02/23/2012

2012-02-23T08:34:00.001-05:00

• KLEWTV: Hidden readers still being used to steal financial data at ATMs
• RealtyTrac: 210,941 foreclosures in January, 2012
• DOL: 351,000 jobless claims were filed the week ending 02/18/12
• Bloomberg: S&P 500's price/earnings ratio is 14, 2.4% growth since 2009
• FT via CNBC: Volcker Rule too restrictive on U.S. financial institutions
• NYT: Eurozone recession confirmed by European Commission
• AP via Economic Times: European austerity has not yielded growth
• Reuters: European banks lose money from Greek debt they held

Financial News 02/22/2012

2012-02-22T07:50:00.001-05:00

• Business Insider: Dividend tax to rise to 43% in 2013
• Bloomberg: Private tax lien funds plagued by fees, and low transparency
• Reuters: Mortgage applications declined 4.5% last week
• USDA: This week is America Saves Week, financial literacy promoted
• AP: Greek debt rating downgraded again, this time to 'C' by Fitch
• Bloomberg: February manufacturing and services shrank in the Eurozone
• HSBC: Emerging Markets Index for Q4, 2011 52.2, slow, but up .2%
• WSJ: Manufacturing in China contracted for second month in January

Financial News 02/21/2012

2012-02-21T08:33:00.001-05:00

• NYT: Mortgage settlement does not stem fears of empty financial pledges
• ABC7: Revenue from D.C. speed cameras, $30 million for 7 months in 2011
• Chicago Fed: Chicago Fed economic index down to .22 for January, 2012
• Associated Press: Walmart's Q4, 2011 income declined 4.2%
• Bloomberg: €130 billion to be escrowed to Greece, Spain's debt to double
• Reuters: Asian loans from U.S. banks lower as China lowers bank reserves
• BBC: Recent ECB bond buying lowered the yield on sovereign bonds
• RT: Apple iPad banned in China because of trademark court ruling

Financial News 02/20/2012: Fiscal and Monetary Economic Centralization On The Rise

2012-02-20T09:55:00.004-05:00

A trend of fiscal and monetary centralization seems to be rebuffing capitalist ideals for an economic heel digging. As Western nations deleverage private assets, governments are doing the opposite by leveraging monetary and fiscal policies. Central bank bailouts, and easing of monetary policy have been in fashion across the world. A look at the balance sheets of central banks, and the global debt map published by the Economist should make this clear enough.

The expense of all this money bathing is credibility. How much money can governments print, and how many sovereign bonds can be restructured at the expense of private bondholders before businesses and investors doubt the effectiveness or benefits of such policy? The more money that flows, the higher the equities climb. Higher 401(k) balances are more appealing than lower inflation and systemic fiscal functionality, and placing Southern Europeans in financial rehabilitation will be good for Europe even if it comes at the expense of nationality.

The economic debate about such policies exists, but traditional mainstream economics is not the approach of choice per Dylan Matthews of the Washington Post. Moreover, according to Matthews a good number of influential economists either support aggressive fiscal or monetary policy or both. Anything can be rationalized with sound reasoning, that does not make it valid logic however. In the case of economic policy, all this spending could be an echo of Reaganomics where outspending competition leads to advantages. Problem is that is a tactic not a strategy.

• Reuters: Corporate earnings reports less than spectacular
• Bloomberg: Oil price rises as Iran cuts off exports to U.K, France
• WP: Government and employers penalize military reservists seeking work
• NCPPHE: American wealth to decline based on current education trends
• DOL: Advanced manufacturing growing, but labor is scarce per WP
• OECD: Q4, 2011 GDP in OECD Area declined .1%
• IBI: China seeks to boost lending by lowering bank reserves to 20.5%
• UK Guardian: Hundreds of thousands protest spending cuts in Spain

Financial News 02/17/2012

2012-02-17T08:31:00.000-05:00

Image attribution: Colin Brown. CC BY-SA 2.0

• Miami Herald: Pump and dump investment fraud is real
• Reuters: Market manipulation by major banks proven in Canadian court
• BLS: Consumer prices rose .2% in January
• FBI: An average of 6,345 banks were robbed annually in 2003-2011
• Forbes: Egan-Jones downgraded Germany's credit to AA- in January
• Bloomberg: $6 trillion in U.S. Treasuries seized in Switzerland
• Mobile Bloomberg: Eurozone GDP contracted .3% in Q4, 2011
• IHT: Foreign Direct Investment in China declines for third month

Financial Crime Is a Larger Problem Than You Might Think

2012-02-17T08:18:00.002-05:00

Each year financial crime quietly occurs without a whole lot of limelight. In 2011, the IRS was investigating tax fraud, investment schemes, tax evasion, and mail fraud among other things. Similarly the FBI investigates hundreds of corporate fraud cases each year. The Securities and Exchange Commission 'brought' 735 'enforcement actions' in 2011. How much credibility is given to actions that have to be worded so carefully is debatable.

There's also the Department of Justice, Federal Trade Commission, Office of the Comptroller of Currency and Consumer Financial Protection Bureau. Those are a lot of organizations to protect against various forms of financial misconduct. According to the FBI chart below, you are least safe when in the street or on the highway. 58.1% of these robberies occurred in the Northeast USA, 45.9% were in the Midwest, and 44.2% were in the West making the South the safest from robberies.

FBI Crime Files US-PDGov

FBI Corporate Fraud Cases 2005-2009

Consumer financial crimes are a problem. According to the Coalition Against Insurance Fraud $80 billion dollars were defrauded from insurance companies each year. Those costs are passed back at least in part via higher premiums. Essentially lack of financial integrity and trust costs Americans hundreds of billions of dollars each year. Gives pause for Libertarian ways of thinking in terms of cost cutting.

Financial News 02/16/2012: Dollar Value a Key Component In Market Pricing

2012-02-16T08:31:00.004-05:00

Global Reserve Currencies

Image attribution: Spitzl. GFDL, CC BY SA 3.0

With the dollar still accounting for more than 60 percent of global reserve currency, its value has a significant impact on global trade including equity prices. Today the dollar index, a measure of the dollar's value against a basket of other currencies temporarily rose above 80 per Bloomberg. This financial relationship is clarified by Sentra Commerce that claims since the dollar impacts commodities prices, which then affect bond prices that affect equity prices. For example, if the dollar increases in value, then the price of oil drops because it is priced in dollars, and bond rates drop because interest rise with inflation, then stocks go down.

According to Investopedia Intermarket Analysis is an indicator not an immediate signal to buy and sell. In other words it can take time for the chain events to occur, and any break in the sequence nullifies or dampens the influence of the dollar on stocks. For example, a stronger dollar causes oil to drop, but a global event, or central bank decision can counteract that pressure. For instance, when the Federal Reserve Bank implemented massive open market operations it seemed as though the treasury market was influencing the currency price and not the other way around.

When the Federal Reserve expanded its balance sheet it was effectively lowering interest rates on government securities as demand causes price to rise and rates to lower. Since lower interest rates are not inflationary, yet massive central bank purchases are in terms of dollar valuation, the traditional sequence proposed by Intermarket Analysis is vulnerable to being misinterpreted. For this reason it is important to be aware of additional market and economic factors. Today the dollar rose in value, presumably because of Europe's financial crisis causing the Euro to decline in value. The effect of this is a short-term flight to safety such as U.S. Treasuries, and the dollar.

Is today's market action reflecting initial events or future results of the Intermarket price sequence? Or is it due to other factors such as overbought equities, increased rehypothecation of assets in international markets, or cash flow out of U.S. equities? In any given day it is the big picture, comprised of a multitude of related variables that causes the trading decisions of financial institutions and private equity firms to either buy or sell. Not all these decisions are based on the same time horizon, short-term traders take advantage of immediate price events, whereas long-term investors navigate a course. Still more do both.

• BLS: 348K jobless claims for 02/11, producer price index up .1%
• Moodys: Multiple credit reviews and downgrades on Euro bonds
• NYSE: Seller ratio was 3.28% by 01/31/12, near 4 year resistance
• FED: Industrial production unchanged, business equipment key
• Bloomberg: Market-linked CDs offer weak assurance of growth
• FED: National home prices down inflation adjusted 40% since peak
• Reuters: World Bank Chief to resign, U.S. replacement in queue
• BBC: Eurozone requires more details to issue €130 billion bailout

Late Retirement Planning Tips

2012-02-15T16:35:00.001-05:00

Image attribution: Bixexe, US CBO. GFDL, CC BY-SA 3.0

According to the above graph the bottom 80 percent of income earners account for approximately 78 percent of the U.S. working population. This can make retirement planning more difficult for lower earning demographic groups and be a contributing factor in late retirement planning. Even so, retirement planning is still possible across income levels when future retirees have a will to exercise retirement planning principles.

Complete article link: http://www.helium.com/items/2292742-how-to-save-for-retirement-in-later-years

Financial News 02/15/2012

2012-02-15T06:53:00.001-05:00

• NYT: Financial planner explains personal finance on napkins
• IRS: Non-profit employers receive SS reductions for hiring Vets
• Reuters: Federal Reserve Bank could raise interest rates before 12/2014
• WCF: $5 per gallon gasoline nears, Iran cuts oil exports to 6 Euro nations
• IRS: Taxpayer Assistance Centers offer free tax advice
• Bloomberg: China assists Europe by holding European assets
• BBC: Italy and Netherlands in recession, UK unemployment hits 8.4%
• China Post: China may allow banks to postpone debt payments

Assessment of Universal Health Care

2012-02-14T18:43:00.003-05:00

Image attribution: Kborer. US-PD

Universal Health Care likely means lower and slower quality of health care services, increases in taxes, bureaucracy, and unnecessary government spending. A Los Angeles Times article entitled 'Universal healthcare's dirty little secrets' illustrates these points. It is a lack of faith in the ability of American citizens to make informed decisions for themselves in addition to an unconsidered write off of any private/public hyrbrid health care solution and the principles of capitalism in and of itself. "So what is potentially fiscally functional solution?" you may ask.

Government can regulate what isn't in its control, it has done this before with anti-trust, federal approval of drugs, federal oversight of building code etc. The Government does not have to have absolute control of health care to assist in a solution. Possible solutions include, cost caps, legalized private insurance, co-op insurance, partially subsidized insurance, federal investment insurance and so on. The amount of solutions are as many as a creative bureaucrat can think of.

To illustrate further, think of a small community of around 100 people. 2 within the community are doctors. Let's assume the average income is 30k and the tax increase is 10 percent or $3000/year. Even if the tax increase were only 5 percent that would be $1500 or $125/month per person. Incidentally that could get you fairly decent private insurance. Given there would be a tax increase of 5-10% does it make more sense to have more or less control of one's health care? If one pays the taxes, the Government decides for you, if you pay for private insurance you decide.

The next point in this opposition to universal health care is in regard to high hospital bills and ever increasing private medical costs. This is clearly and issue and has the potential to wipe out many families savings. It does not mean a thoughtful fiscally conservative solution to the problem does not exist, and it is unreasonable to assume that such a solution does not exist.

Economically, the healthier a nation is, the less health insurance individuals should need. This being the case the Government may be better off spending one percent of taxes to promote healthier lifestyle than 5 percent fixing the problems created by poor lifestyle choices. Even if only 25 percent of the population becomes healthier from a healthy living campaign that's a net savings of 10 percent off the five percent of taxes since only one percent was spent and 25 percent of five percent is 1.25 percent. Subtract the one percent healthy living campaign expenses from the 1.25 percent and that's 25 basis points the Government saved itself and tax payers. On a grand scale of say a billion dollars, that would mean savings of two and a half million dollars.

Yet another reason universal health care should be avoided is because people often know more about their health than the Government or its potential doctors ever will. An optimized plan that doesn't increase taxes, decreases Government spending and allows for affordable contributions from employers and individuals could be as follows.

Every individual in the country is legislated to pay $20.00/month to a private health insurance plan and subsidized for this payment by a decrease in personal vehicle property taxes at the State level, and a federal subsidy paid for by a fractional decrease in some of the less useful Government programs. Furthermore, additional funds can be generated from mandated sliding scale minimum contributions from employers based on employer profitability calculations.

In theory this type of system would pay for itself and probably generate a surplus if managed well. Under such a system individuals would still have the freedoms associated with private health insurance and pay less for it. Similar health care systems are currently being proposed by legislators and Governors nationally.

Lastly, when Government takes things over, things get slowed down. In the Canadian health care system people often have to wait for longer periods to get crucial surgery and vital medical attention. With a private system, if someone has the insurance, they get the medical attention they need. Why sacrifice a perfectly good system with a few glitches for a complete overhaul. It's simply not necessary.

To summarize the positions made henceforth, the following points have been made in this opposition:

• Universal Health Care implies there is no hybrid or private solution as good.
• Health Care problems can be repaired without system overhaul.
• Responsible regulation yield better results both fiscally and medically.
• Health care is a personal issue and should be an individual choice.
• Federalization of services often leads to a decline in quality.

The evidence is clear, a simple deferment to Universal Health Care is negligent of sound Capitalistic principles that have the potential to yield outstanding health care to many if not all Americans. Federal regulation is not universal health care but can adjust the benefits of a universal system so long as many interest groups priorities are considered and no doorway to universal health care is left open. In other words an advantageous health care system emphasizing private coverage under a moderate position can be nationally beneficial. In order to be beneficial it would ideally lowers cost, expands availability, enhances public health and benefits the country as a whole without being a stepping stone to Universal Health Care.

Originally published 05/23/2007: http://www.helium.com/items/350003-should-the-united-states-have-universal-health-care

Are Greek Bondholders Protected from 'Credit Events'?

2012-02-14T11:01:00.003-05:00

Greek bondholders such as hedge funds are faced with possible restructuring by the Greek Government. If those bonds are insured not by the Greek Government, but rather with separate credit default swaps, a credit event must occur in order for that insurance to be claimed. Determining whether or not insurers will pay out in such scenarios depends on what is considered a credit event if the bonds are even insured.

According to Allen & Overy, Global Intelligence Unit most of Greek Sovereign Bonds are governed by Greek law allowing the bonds to be restructured via a Governmental resolution of bondholder options via collective action clause within the bond terms. How those collective action clauses are worded can mean the difference between a credit event and voluntary rescheduling of bond payments. In the event of involuntary restructuring, that debt is considered in default and would allow buyer protection to be issued per Allen & Overy.

Thing is, if the bond restructuring is legally administered by the Greek government to be 'voluntary' as defined by collective action clauses, then it is not considered a credit event per Forbes. Moreover, why didn't Greek bondholders collect on credit default swaps in the last Greek bond 'haircut'? or did they? It does not set much of a precedent for a credit event now if CDS sellers did not pay out the last time. This is because the same reasoning that was used to not pay bondholders the last time could be used again to protect their financial interests. Why wouldn't they?

Financial News 02/14/2012

2012-02-14T07:57:00.010-05:00

• EI: Only 33% of delinquent real estate will be repossessed by year end
• NFIB: Small Business optimism at recession levels
• Reuters: 2.9 million Americans could be affected by USPS closures
• Census: Retail sales for January were $401.4 billion, up .4%
• WP: PIMCO Chief Executive states U.S. unemployment at crisis level
• NYT: Payroll tax cut extension favored by Republicans if cuts added
• Reuters: FHA's losses mount as defaults rise, $1 billion on tap
• BW: Greek Politicians could redefine bond terms via vote
• Moody's: Credit ratings of 9 European nations downgraded or adjusted

Financial News 02/13/2012: Greek Rioters Burn Banks As Government Fires Dissenting Members

2012-02-13T07:57:00.003-05:00

The protests in Greece are a sad reminder of the divide between public sentiment and fiscal policies around the world. Multiple banks and retailers were set ablaze after the Greek Parliament passed a vote posing further austerity on Greek people in a clearly Euro-zone guided agenda. This time the cuts will knock off 20 percent of the Greek minimum wage and lay off 15,000 government employees per the WSJ.

Past cuts have not led to the intended financial goals because the GDP keeps declining as people lose their jobs and the economy shrinks. In a weekend speech, the unelected prime-minister of Greece said the alternative of bankruptcy is worse. The images and news from the streets of Greece give pause for thinking twice on that, and the firing of dissenters within the Greek Parliament seems a tad un-democratic.

Image attribution: Athens Indymedia. CC BY-SA 2.0

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Financial News 02/10/2012

2012-02-10T08:31:00.002-05:00

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Tax Reform's Affects on America

2012-02-09T17:30:00.002-05:00

Image attribution: OECD: Sugar-baby-love/Wikimedia Commons. CC0 1.0

As complex as tax reform is the bottom line never changes. Americans, the U.S. economy, global competitiveness, the budget deficit, tax gaps etc. are all affected by how well tax reform takes place. It is likely some type of tax reform will take place, who it will benefit remains to be seen.

Complete article link: http://www.helium.com/items/2290284-pros-and-cons-of-tax-reform