Robblog - probably news and economics - things I like

I've moved

noreply@blogger.com (Rob Paris) — Mon, 05 Oct 2009 02:21:00 +0000

I'm now hosting my own site.

Come visit me at.... Rob v. State

robvstate.com

Jim Rogers on banking

noreply@blogger.com (Rob Paris) — Wed, 30 Sep 2009 15:59:00 +0000

This video is over two weeks old, but it's new to me. This all makes too much sense for the government to listen. Instead, they'll do the opposite. Here are two great quote from the video.

"How can the solution for debt and consumption be more debt and more consumption? How can that be the solution to our problems?"

"Banks have been going bankrupt for a few hundreds years. The way the system works is when somebody fails you let him fail. What we're doing now is we're taking the assets away from the competent people and giving them to incompetent people and telling them now you can compete with competent people with their money."

Select quotes from the Great Depression

noreply@blogger.com (Rob Paris) — Wed, 23 Sep 2009 14:09:00 +0000

... and why I don't believe a word Bernanke says.

According to Bernanke,

"...from a technical perspective the recession is very likely over at this point"

and

"... there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery"

I've seen these quotes time and time again... from during the Great Depression. They were just as wrong then.

I planned on making this in flash and laying the quotes over the corresponding time on the chart, but due to limited flash abilities, I didn't. Does anybody want to make it for me?

Before looking at the quotes below, take a look at the stock market performance during the time frame in which the quotes were made.

With a chart like this, you'd expect the economists too be pessimistic. That's not the case.

These quotes are all over the Internet. I've found the original source for some, and for others, I've just posted the source where I found them. Collections of these types of quotes already exist, but I've chosen the ones that stood out the most to me. I've included the date and occupation of the person where I could.

Economist John Maynard Keynes in 1927

“We will not have any more crashes in our time.”

President Herbert Hoover on August 11, 1928

“Unemployment in the sense of distress is widely disappearing…We in America today are nearer to the final triumph over poverty than ever before in the history of any land. The poor-house is vanishing from among us. We have not reached the goal, but given a chance to go forward with the policies of the last eight years, and we shall soon with the help of God be in sight of the day when poverty will be banished from this nation. There is no guarantee against poverty equal to a job for every man. That is the primary purpose of the economic policies we advocate.”

President Calvin Coolidge on December 4, 1928

“No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.”

Financier, Bernard Baruch, June 1929

“The economic condition of the world seems on the verge of a great forward movement.”

Economist Irving Fisher on September 5, 1929

“There may be a recession in stock prices, but not anything in the nature of a crash. Dividend returns on stocks are moving higher. This is not due to receding prices for stocks, and will not be hastened by any anticipated crash, the possibility of which I fail to see. A few years ago people were as much afraid of common stocks as they were of a red-hot poker. In the popular mind there was a tremendous risk in common stocks. Why? Mainly because the average investor could afford to invest in only one common stock. Today he obtains wide and well managed diversification of stock holding by purchasing shares in good investment trusts.”

Economist Irving Fisher on October 17, 1929

“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”

Banker Arthur Reynolds, October 24, 1929

“This crash is not going to have much effect on business.”

Financier, J. L. Julian, October 26, 1929

“The worst is over. The selling yesterday was panicky brought on by hysteria. General conditions are good. Our inquiries assure us that throughout the country business is sound.”

Analyst R. W. McNeel, October 30, 1929

“This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.”

Businessman J.D. Rockefeller, Sr., October 30, 1929

“Believing that the fundamental conditions of the country are sound and that there is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week, my son and I have for some days been purchasing sound common stocks. We are continuing and will continue our purchases in substantial amounts at levels which we believe represent sound investment values.”

Newspaper, The Times of London, November 2, 1929

“Hysteria has now disappeared from Wall Street.”.

Magazine, Business Week, November 2, 1929

“Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.”

School, Harvard Economic Society (HES), November 2, 1929

“…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…”

Economist, Irving Fisher, November 14, 1929

“The end of the decline of the Stock Market will probably not be long, only a few more days at most.”

President, Herbert Hoover, December 1929

“I am convinced that through these measures we have reestablished confidence.”

Government agency, U.S. Dept. of Labor, December 1929

“[1930 will be] a splendid employment year.”

Treasury Secretary, Andrew W. Mellon, December 31, 1929

“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”

Treasury Secretary, Andrew W. Mellon, February, 1930

“There is nothing in the situation to be disturbed about.”

President, Herbert Hoover, May 1, 1930

“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”

President, Herbert Hoover, June, 1930

“Gentleman, you have come sixty days too late. The depression is over.”

Economist Irving Fisher in September, 1932

“As this book goes to press recovery seems to be in sight. In the course of about two months, stocks have nearly doubled in price and commodities have risen 5½. European stock prices were the first to rise, and European buyers were among the first to make themselves felt in the American market.”

You distract!

noreply@blogger.com (Rob Paris) — Wed, 16 Sep 2009 17:59:00 +0000

What happened?

This post is going to talk about South Carolina Rep. Joe Wilson's outburst during the joint session of Congress on September 9th. I'm not taking sides and I'm not going to debate who was right. I'm just looking at what happened and what the reaction was.

During Obama's speech before Congress on September 9th, Obama made a comment that Wilson did not agree with.

Obama: There are also those who claim that our reform effort will insure illegal immigrants. This, too, is false – the reforms I’m proposing would not apply to those who are here illegally.

Wilson: You lie!

Immediate reaction
The immediate response to Wilson's outburst was a brief pause by Obama, then a smile, and then back to the speech. On the side, Michelle Obama shook her head in disapproval. I'm not sure if Michelle was disapproving Obama's comment, or Wilson's comment, but it's safe to assume that it's the latter.

It's happened before
This speech was not intended to be an open conversation and Wilson's response was clearly unexpected. However, this isn't the first time a presidential speech has been interrupted. In 2005, during Bush's State of the Union address, Democrats boo'ed Bush while yelling "No!".

Four years later, when Wilson acts in the same manner, there's a big raucous.

The apology
Immediately after the speech, Wilson apologized to President Obama. According to Obama, Wilson's apology was made "quickly and without equivocation". Obama added that "we all make mistakes" and that he accepted Wilson's apology.

Nancy Pelosi has a similar reaction. Pelosi agreed that Obama was right to continue his speech and not to "give it any more attention than it deserved." Pelosi also said that, "It's time for us to talk about health care and not Mr. Wilson". I agree with Pelosi on her first statement. Wilson's comment shouldn't be getting any more attention. I'm sure that's what going to happen.

The resolution
Pelosi later changed her mind after Wilson wouldn't make an additional apology to House leaders. Almost one week later, on September 15th, the House of Representatives formally admonished Wilson. With a vote of 240-179, mostly along party lines, the following resolution passed:

Whereas on September 9, 2009, during the joint session of Congress convened pursuant to House Concurrent Resolution 179, the President of the United States, speaking at the invitation of the House and Senate, had his remarks interrupted by the Representative from South Carolina, Mr. Wilson; and

Whereas the conduct of the Representative from South Carolina was a breach of decorum and degraded the proceedings of the joint session, to the discredit of the House: Now, therefore, be it

Resolved, That the House of Representatives disapproves of the behavior of the Representative from South Carolina, Mr. Wilson, during the joint session of Congress held on September 9, 2009.

Commentary
Now Wilson must be aware that he was a bad boy. Rather than formally disapproving of Wilson, why not send him to the corner for 15 minutes to think about what he did. Wilson was obviously aware that the Democrats disapproved of what he said, and that the Republicans didn't. That's why the vote went along party lines. I don't see the point of formally disapproving. If the resolution was to make a point, then they should have made a point. Instead, Democrats chose to stick his nose in it and make him sleep in the backyard.

And keep your hands off my Medicare

noreply@blogger.com (Rob Paris) — Fri, 11 Sep 2009 23:26:00 +0000

Excerpts from Obama's speech at a high school in Portsmouth, New Hampshire on August 11, 2009

First Obama said,

"Our deficit will continue to grow because Medicare and Medicaid are on an unsustainable path. Medicare is slated to go into the red in about eight to 10 years. I don't know if people are aware of that. If I was a senior citizen, the thing I'd be worried about right now is Medicare starts running out of money because we haven't done anything to make sure that we're getting a good bang for our buck when it comes to health care. And insurance companies will continue to profit by discriminating against people for the simple crime of being sick. Now, that's not a future I want for my children. It's not a future that I want for the United States of America."

Obama starts out strong. He admits that both Medicare and Medicaid are on an unsustainable path. He mentions that in 8-10 years, Medicare will be in the red. It's probably less than 8-10 years, but it's close enough.

Obama then goes on to make an outrageous claim. He says that insurance companies are profiting by "discriminating" against the sick. That's not discrimination, that's called a market. It's providing a service. Is my plumber "discriminating" against me because I have a broken toilet? Is Grimaldi's "discriminating" against me because I'm hungry? The insurance companies are providing a service, not "discriminating".

The key point of Obama's first statement is that, "Medicare and Medicaid are on an unsustainable path". Later during the Q&A session of the same speech, Obama gets the following question:

"My name is Peter Schmidt. I'm a state representative from Dover. I'm a senior citizen. I have a wonderful government-run health care plan called Medicare. I like it. It's affordable, it's reasonable, nobody tells me what I need to do. I just go to my doctor at the hospital, I get care.

Now, one of the things you've been doing in your campaign to change the situation is you've been striving for bipartisanship. I think it's a wonderful idea, but my question is, if the Republicans actively refuse to participate in a reasonable way with reasonable proposals, isn't it time to just say we're going to pass what the American people need and what they want, without the Republicans?"

Now here is where Obama has to tell Mr. Schmidt the truth. He's going to reiterate the point he made 20 minutes earlier about the unsustainable path of Medicare. He'll talk about how the program is going to run out of money. Wait for it...

"Well, let me make a couple of points. First of all, you make a point about Medicare that's very important. I've been getting a lot of letters, pro and con, for health care reform, and one of the letters I received recently, a woman was very exercised about what she had heard about my plan. She says, "I don't want government-run health care. I don't want you meddling in the private marketplace. And keep your hands off my Medicare." (Laughter.) True story.

And so I do think it's important for particularly seniors who currently receive Medicare to understand that if we're able to get something right like Medicare, then there should be a little more confidence that maybe the government can have a role -- not the dominant role, but a role -- in making sure the people are treated fairly when it comes to insurance. (Applause.)"

What happened to the unsustainable, running out of money part? That was so 20 minutes ago. Now government is able to "get something right like Medicare". I see what you did there. Make a joke, tell a lie. Hopefully, when you're done talking, people will still be thinking about the joke and not notice the glaring contradiction you just made. It should be noted that the quote ends with "(Applause.)". It looks like the plan worked.

Abraham Lincoln's First Inaugural Address

noreply@blogger.com (Rob Paris) — Thu, 10 Sep 2009 23:13:00 +0000

Select quotes and commentary from Abraham Lincoln's First Inaugural Address

Monday, March 4, 1861

QUOTE
Apprehension seems to exist among the people of the Southern States that by the accession of a Republican Administration their property and their peace and personal security are to be endangered. There has never been any reasonable cause for such apprehension. Indeed, the most ample evidence to the contrary has all the while existed and been open to their inspection. It is found in nearly all the published speeches of him who now addresses you. I do but quote from one of those speeches when I declare that— "I have no purpose, directly or indirectly, to interfere with the institution of slavery in the States where it exists. I believe I have no lawful right to do so, and I have no inclination to do so".

COMMENTARY
Lincoln directly states that he has neither the lawful right nor inclination to interfere with the institution of slavery (in states where it already exists). Lincoln's opinions about slavery were well documented as he frequently made it a key point in his speeches. In an attempt to appease the South, Lincoln made it clear that he would not free the slaves in slave-owning states. However, on September 22, 1862, 18 months after entering office, Lincoln issued the Emancipation Proclamation, declaring that slaves in any state of the Confederacy, that did not rejoin the Union by January 1, 1863 would become free. The Emancipation Proclamation made no claim on states that were currently in the Union. Instead of freeing slaves in states where Lincoln had power, he declared that they become free only in states that he did not have any power.

Although Lincoln's address states that he had, "no objection to its [the Corwin Amendment] being made express and irrevocable", it was during his presidency that an amendment with an opposing viewpoint was passed. The proposed Corwin Amendment stated that, "No amendment shall be made to the Constitution which will authorize or give to Congress the power to abolish or interfere, within any State, with the domestic institutions thereof, including that of persons held to labor or service by the laws of said State." However, on December 6, 1865, the Thirteenth Amendment to the United States Constitution which called for the abolishment of slavery and involuntary servitude was adopted. "Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."

QUOTE
Those who nominated and elected me did so with full knowledge that I had made this and many similar declarations and had never recanted them; and more than this, they placed in the platform for my acceptance, and as a law to themselves and to me, the clear and emphatic resolution which I now read: "Resolved, That the maintenance inviolate of the rights of the States, and especially the right of each State to order and control its own domestic institutions according to its own judgment exclusively, is essential to that balance of power on which the perfection and endurance of our political fabric depend; and we denounce the lawless invasion by armed force of the soil of any State or Territory, no matter what pretext, as among the gravest of crimes".

COMMENTARY
Lincoln denounces the lawless invasion by armed forces on any State or Territory. He goes on to show how strongly he believes this by saying, "no matter what pretext" and by calling an invasion "among the gravest of crimes". Later in his inauguration speech, Lincoln goes on to say that,

QUOTE
In doing this there needs to be no bloodshed or violence, and there shall be none unless it be forced upon the national authority. The power confided to me will be used to hold, occupy, and possess the property and places belonging to the Government and to collect the duties and imposts; but beyond what may be necessary for these objects, there will be no invasion, no using of force against or among the people anywhere.

COMMENTARY
Lincoln states that there is no need for bloodshed. However, soon after the states announced their succession, the South was invaded in the bloodiest war in United States' history. A war in which 620,000 were killed, more casualties than the nation's loss in all its other wars combined. Lincoln makes it a point that he will hold the property belonging to the Government. However, the Southern states, either as independent states, or as the Confederacy, are not the property of the federal Government.

QUOTE
Descending from these general principles, we find the proposition that in legal contemplation the Union is perpetual confirmed by the history of the Union itself. The Union is much older than the Constitution. It was formed, in fact, by the Articles of Association in 1774. It was matured and continued by the Declaration of Independence in 1776. It was further matured, and the faith of all the then thirteen States expressly plighted and engaged that it should be perpetual, by the Articles of Confederation in 1778. And finally, in 1787, one of the declared objects for ordaining and establishing the Constitution was "to form a more perfect Union."
But if destruction of the Union by one or by a part only of the States be lawfully possible, the Union is less perfect than before the Constitution, having lost the vital element of perpetuity.

It follows from these views that no State upon its own mere motion can lawfully get out of the Union; that resolves and ordinances to that effect are legally void, and that acts of violence within any State or States against the authority of the United States are insurrectionary or revolutionary, according to circumstances.

COMMENTARY
Lincoln's conclusion cannot be logically drawn from his premises.

one of the declared objects for ordaining and establishing the Constitution was "to form a more perfect Union."
if destruction of the Union... be lawfully possible, the Union is less perfect than before the Constitution
It follows from these views that no State upon its own mere motion can lawfully get out of the Union

First, Lincoln's second premise is not true. Lincoln's view that the Union would be less perfect if certain states seceded his only his opinion. I'm sure Jefferson Davis and 9 million other Southerners would disagree.

Second, even if both of Lincoln's premises were true, there is no logical progression to his conclusion. Because the Constitution was created to make a perfect Union, and succession would make the Union less perfect, does not mean that no State can leave the Union. This is failed logic.

QUOTE
If by the mere force of numbers a majority should deprive a minority of any clearly written constitutional right, it might in a moral point of view justify revolution; certainly would if such right were a vital one. But such is not our case. All the vital rights of minorities and of individuals are so plainly assured to them by affirmations and negations, guaranties and prohibitions, in the Constitution that controversies never arise concerning them.

COMMENTARY
This claim does not make sense. How can Lincoln state that the rights of minorities are so plain and that there are no controversies at a time when the controversy over a Constitutional right for a minority (the South) is so rampant?

The key points of Lincoln's first inaugural address were nothing more than words. Lincoln failed to keep his promises to the American public. At the same time he greatly reduced the civil rights of both the North and the South. For this, he was rewarded a second term.

Select quotes from Atlas Shrugged

noreply@blogger.com (Rob Paris) — Tue, 08 Sep 2009 02:48:00 +0000

After a little re-reading, I've noticed another part of Atlas Shrugged that seems to be timely. Here are some quotes about a small-scale factory socializing, among other things, health care.

Atlas Shrugged - Part II - Chapter X

"The plan was that everybody in the factory would work according to his ability, but would be paid according to his need."

"...it wasn't too clear, but nobody asked any questions. None of us knew just how the plan would work, but every one of us thought that the next fellow knew it. And if anybody had doubts, he felt guilty and kept his mouth shut—because they made it sound like anyone who'd oppose the plan was a child killer at heart and less than a human being. They told us that this plan would achieve a noble ideal."

"When it's all one pot, you can't let any man decide what his own needs are, can you?"

"Well, anyway, it was decided that nobody had the right to judge his own need or ability. We voted on it."

"In the old days, we used to celebrate if somebody had a baby, we used to chip in and help him out with the hospital bills, if he happened to be hard-pressed for the moment. Now, if a baby was born, we didn't speak to the parents for weeks. Babies, to us, had become what locusts were to farmers. In the old days, we used to help a man if he had a bad illness in the family. Now—well, I’ll tell you about just one case. It was the mother of a man who had been with us for fifteen years. She was a kindly old lady, cheerful and wise, she knew us all by our first names and we all liked her—we used to like her. One day, she slipped on the cellar stairs and fell and broke her hip. We knew what that meant at her age. The staff doctor said that she'd have to be sent to a hospital in town, for expensive treatments that would take a long time. The old lady died the night before she was to leave for town. They never established the cause of death. No, I don't know whether she was murdered. Nobody said that. Nobody would talk about it at all. All I know is that I—and that's what I can't forget!—I, too, had caught myself wishing that she would die. This—may God forgive us!—was the brotherhood, the security, the abundance that the plan was supposed to achieve for us!

Croton Water Filtration Plant Project

noreply@blogger.com (Rob Paris) — Sun, 06 Sep 2009 20:07:00 +0000

According to New York City Comptroller, William C. Thompson, the new Croton Water Filtration Plant Project is necessary to "ensure that our water remains clean". Additionally, the federal government charged that the city had failed to protect its water system. Accordingly, New York City agreed to build the Croton Walter Filtration Plant. With such an important issue, the plant should have been fast-tracked and completed within 5 years. Don't remember hearing about this? Maybe it's because this happened over 10 years ago. Haven't heard anything about it recently? Maybe it's because the plant isn't ready yet - not even close.

According to a study by the City of Winnipeg, a new Water Treatment Plant, from pre-construction approval to operation, should take 6 years and cost $204 million. "This includes design, construction and environmental approval costs, and provides for inflation." Only 2-3 of these years are needed for actual construction.

In New York, as usual, government planners have under-budgeted and under-estimated project times. Although the plant should cost $200 million, New York City budgeted $992 million and 8 years. That's 5 times the budget and 150% the allotted time. Maybe they were following the rule of thumb that project always take twice as long and cost twice as much as planned.

In usual government fashion, the treatment plan "will cost more than twice the original estimate of $992 million and it will not be finished on time". With a budget expansion of over $1 billion and an additional 4 years tacked on, the new plant is expected to open on October 31, 2011 at a cost of over $2 billion. October 2011? Don't hold your breath. And unlike the World Trade Center, this is without the MTA and Port Authority holding it up.

After acknowledging the importance of the situation, over 10 years have gone by, and there is still no treatment plant. It's a good thing the government can milk the taxpayers and doesn't have to beg bondholders for more money, otherwise this plan would have been grounded years ago.

If it can't produce clean drinking water in a dozen years for 10 times the average cost, why should we trust the government to manage something as complicated as a health care system? We also shouldn't trust their cost estimates. Not without magnifying them 10-fold.

Baseline budgeting

noreply@blogger.com (Rob Paris) — Mon, 31 Aug 2009 12:25:00 +0000

"The previous budget serves merely as a baseline; the only question in any given year is how much spending will increase. Once created, no spending program is ever eliminated. The cycle goes on and on, with different administrations and different people in Congress." - Ron Paul

"I object strenuously to the term "baseline budget." In Washington, this means that the previous year's spending levels represent only a baseline starting point. Both parties accept that each new budget will spend more than the last, the only issue being how much more. If Republicans offer a budget that grows federal spending by 3%, while Democrats seek 6% growth, Republicans trumpet that they are the party of smaller government! But expanding the government slower than some would like is not the same as reducing it." - Ron Paul

Home buyer tax credit

noreply@blogger.com (Rob Paris) — Thu, 27 Aug 2009 12:34:00 +0000

If the price of a good is too high, and supply increases, the price of the good will decrease to lower the supply. If the price doesn't decrease fast enough, government will force it down.

Enter First-Time Home Buyer Tax Credit

Ignoring Bastiat's That Which is Seen, and That Which is Not Seen and the broken window fallacy. Ignoring time preference and the expediting of future goods to increase immediate demand with disregard for future demand.

The first-time home buyer tax credit seems like a great idea.

The American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.

This should read:

The American ~~Recovery~~ Theft and ~~Reinvestment~~ Destruction Act of 2009 authorizes ~~a tax credit~~ the theft of ~~up to~~ $8,000 for ~~qualified~~ ~~first-time home buyers~~ anybody who's salary is low enough and has not owned a principal residence for three years who plans on purchasing a principal residence on or after January 1, 2009 and ~~before December 1, 2009~~ on into the future.

Let's read the FAQs.
Some of these FAQs have been shortened.

Question 2:

Q. What is the definition of a first-time home buyer?
A. The law defines "first-time home buyer" as a buyer who has not owned a principal residence during the three-year period prior to the purchase.

No, a first time home-buyer isn't somebody who is buying a home for the first time. It's just somebody who hasn't bought a home in a few years.

Question 4:

Q. Are there any income limits for claiming the tax credit?
A. Yes. The income limit for single taxpayers is $75,000; the limit is $150,000 for married taxpayers filing a joint return.

This isn't a problem with the FAQ, more with the program. Is the purpose to put people in homes or to stimulate the economy (Although it won't work either way)? If the purpose is to put people into homes, then this would stimulate another unsustainable housing boom. If the people can't afford homes, they should rent. Otherwise, they'll be taking loans and defaulting. We know how that story ends. If, however, the purpose of this plan is to stimulate the economy through home-building, why put an income cap?

Question 11:

Q. I read that the tax credit is "refundable." What does that mean?
A. The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $8,000 home buyer tax credit. As a result, the taxpayer would receive a check for $7,000 ($8,000 minus the $1,000 owed).

A tax credit is a credit against taxes paid or payable. If taxes aren't being paid, and the credit is still given, it's not a tax credit. It's a check for $8,000. Call this what it is.

Question 16:

Q. I am not a U.S. citizen. Can I claim the tax credit?
A. Maybe. Anyone who is not a nonresident alien (as defined by the IRS), who has not owned a principal residence in the previous three years and who meets the income limits test may claim the tax credit for a qualified home purchase. The IRS provides a definition of "nonresident alien" in IRS Publication 519.

Sure, why not, it's a free for all! This adds a little more support to the idea that it isn't about putting people in homes, it's about boosting the home-builders. Accordingly, the salary cap should be removed. (Again, I don't believe this tax credit will work, but to be consistent with the idea behind the program, this is what should be done)

Question 17:

Q. Is a tax credit the same as a tax deduction?
A. No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

It is true that a tax credit is not the same as a tax deduction. However, the First Time Home-Buyer "Tax-Credit" is not a dollar-for-dollar reduction of what the taxpayer owes. See question 11. Regardless of what a taxpayer owes, it's an $8,000 check.

Question 21:

Q. If I’m qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?
A. Yes. The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008.

It's not like the government follows Generally Accepted Accounting Principles (GAAP) anyway. It doesn't matter when the home is bought, just do whatever gets the most money.

Question 22:

Q.For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?
A. Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

In case we didn't answer this well enough in the previous question. Yes, it's true, we don't follow GAAP. If we did, our federal debt wouldn't be 10 trillion, it would be $65.5 trillion. Oh, and that's before all of the money we spent this year.

The rule seems to be, that if a group is productive, they follow GAAP. If the group is the government or certain recipients of government aid, they follow whatever works best.

I can't wait to see what they come up with next!

Civil Servants

noreply@blogger.com (Rob Paris) — Thu, 27 Aug 2009 01:10:00 +0000

Q: When does a servant make more than his master?
A: When he's a civil servant.

As of June 2009, 155 million people were laboring in the shrinking private sector of the American Empire with a per capita income of $39,751 and a per household income of $50,740.

In addition to supporting themselves and their dependents on those earnings, they were also supporting 22.5 million government employees at the federal, state and local levels. The average pay of those on the federal government payroll is $75,419 this year, according to Econwatch.

Why is the average unproductive civil servant making nearly double the average productive worker in the private sector?

Of course this isn't counting the:
3.9 million welfare recipients
46.5 million Social Security recipients, a number projected to rise to about 72 million in the next 20 years.
14.7 million Americans drawing unemployment benefits, with that number expected to rise consistently in the foreseeable future.
The productive sector workers are also paying for everything the Leviathan State does, such as wars, roads,Imperial adventures, private stadiums, bailouts, counterfeiting, ad infinitum. They also pick up the soaring tabs for 47 million Medicaid and 42 million Medicare recipients.

Sooner or later, we're going to shrug.

Thanks Jim Panyard

Thomas Jefferson on Religion

noreply@blogger.com (Rob Paris) — Wed, 26 Aug 2009 12:21:00 +0000

Remember Thomas Jefferson?

"...that the impious presumption of legislature and ruler, civil as well as ecclesiastical, who, being themselves but fallible and uninspired men, have assumed dominion over the faith of others, setting up their own opinions and modes of thinking as the only true and infallible, and as such endeavoring to impose them on others, hath established and maintained false religions over the greatest part of the world and through all time: That to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is sinful and tyrannical."*

I guess not.

Let's sit back down while our sinful and tyrannical leaders do what's best for us. /s

* for the rest of the text, see here.

My favorite part of of Cash for Clunkers program...

noreply@blogger.com (Rob Paris) — Mon, 17 Aug 2009 23:37:00 +0000

is the privacy statement.

This application provides access to the DoT CARS system. When logged on to the CARS system, your computer is considered a Federal computer system and is the property of the U.S. Government. Any or all uses of this system and all files on this system may be intercepted, monitored, recorded, copied, audited, inspected, and disclosed to authorized CARS, Dot, and law enforcement personnel, as well as authorized officials of other agencies, both domestic and foreign.

House passes climate-change bill

noreply@blogger.com (Rob Paris) — Sat, 27 Jun 2009 00:17:00 +0000

Government.

My favorite quotes from this article involve...

Scare tactics.

"Democratic Rep. Tim Ryan of Ohio countered that, without the bill, the United States would remain energy-dependent on people who want to “fly planes into our buildings.”

Filibusters.

That wasn’t good enough for House Minority Leader John Boehner (R-Ohio), who delayed the roll call vote by reading page-by-page through a 300-page managers’ amendment Democrats added at around 3 a.m. Friday. Boehner seemed to relish the hour-long stunt, picking out the bill’s most obscure language and then pontificating about what it might – or might not – mean. Republicans laughed along with him and roared with applause when he was done.

Nothing to read.

"Republicans accused the Democrats of ramming the bill through the House. Rep. Joe Barton (R-Tex.), managing the debate for his party, asked repeatedly if there was even a copy of the current version of the bill anywhere in the House chamber. Democratic Rep. Ellen Tauscher – sitting in the speaker’s chair although she’s already been confirmed as Obama’s undersecretary of State for Arms Control and International Security — repeatedly dodged the question.

If you want to read, you can't vote.

"Rep. Ed Markey (D-Mass.), one of the bill’s sponsors, finally rose to say that a single copy of the current version of the bill was available at the speaker’s desk – and on the Internet, which members would have to leave the floor to access."

Poor planning and games.

"Even as the House raced toward a Fourth of July recess, Republicans unwittingly gave Democrats more time to whip their members Friday by calling for a series of amendments to an unrelated spending bill. When the Republicans realized what was happening, they quickly tried to withdraw the amendments, but the Democrats wouldn't let them."

Chocolate bribes.

"Pelosi plied undecided members with chocolate-covered Dove bars in a series of small group meetings. White House chief of staff Rahm Emanuel worked the phones, and administration officials whipped members at a White House luau Thursday night."

If you want to laugh, read the original article...

The complicated US tax code… or a bunch of liars

noreply@blogger.com (Rob Paris) — Tue, 07 Apr 2009 00:46:00 +0000

Five Obama appointees incorrectly filed their taxes. Ironically, none of these errors were in the form of an overpayment. They never are.

There are two possibilities. Either these appointees intentionally underpaid their taxes, or they accidentally misfiled them.

Tim Geithner – January 14, 2009 - Treasury Secretary - $42,702
Tom Daschle – January 30, 2009 - Secretary of Health and Human Services - $140,167
Nancy Killefer – February 3, 2009 - Chief Performance Officer - $946.69
Ron Kirk – March 2, 2009 - Chief Trade Representative - $9,975
Kathleen Sebelius – March 3, 2009 - Secretary of Health and Human Services - $7,918

I’m going to take the high road and assume that all five tax problems were accidental. However, these are smart, college-educated professionals and politicians. They should be able to understand the tax code. Not only were they unable to understand it, like most government documents, they wouldn’t even be able to read the whole thing. According to Florida Congressman Connie Mack, “Our current tax code is over 17,000 pages long and over 60% of Americans pay someone else to do their taxes for them.” According to Virginia Congressman Bob Goodlatte, “The tax law has grown from 11,400 words in 1914, to seven million words today.” Congressman Goodlatte has also claimed that, “American taxpayers spend $200 billion and 5.4 billion hours working to comply with federal taxes each year, more than it takes to produce every car, truck, and van in the US.”

There is something wrong with this system.

While many of these tax filing errors were likely mistakes (especially Ms. Killefer and Ms. Sebelius), they happened nonetheless. Between these five appointees, there were twelve problems filing taxes. I believe that the underlying issue isn’t dishonesty, but an overly complicated tax system. If the same people who oversee the tax code can’t understand and comply with it, there’s a problem. It’s time to reform the tax code.

Tim Geithner
Tim Geithner was selected to be Treasury Secretary of the United States, a position that includes overseeing the bloated beast itself, the IRS. It was quickly discovered that Mr. Geithner owed $42,702 in back taxes for various reasons including:

Failure to pay Social Security and Medicare taxes while employed by the International Monetary Fund
Illegally claiming that his children’s summer camp was a dependent care expense
Employing an individual who lacked legal immigration status

Tom Daschle
Tom Daschle was considered for Secretary of Health and Human Services until it was discovered that he owed $140,167 in taxes. Mr. Daschle’s offenses include:

Failure to declare a limousine and chauffeur as taxable benefits (over $250,000 worth)
Undeclared income ($83,333) from InterMedia Partners earned in 2007
Declaring tax deductions of $14,963 for unapproved charitable organizations

Nancy Killefer
Nancy Killefer was considered for Chief Performance Officer before her past tax complications were unearthed. Although Ms. Killefer had already resolved her $946.69 tax problem, she joined the list of Obama appointees who withdrew their candidacy due to tax issues. Ms. Killefer’s offence was:

Failure to pay unemployment compensation to an employee in 2005

Ron Kirk
Ron Kirk was selected as United States Trade Representative on March 18 despite his $9,975 tax issue. Mr. Kirk’s offences include:

Failure to declare compensation for speeches worth $37,750
Illegally declaring three seasons of Dallas Mavericks season tickets as qualifying entertainment expenses (without completing the required documentation)

Kathleen Sebelius
Kathleen Sebelius was the second appointee for Secretary of Health and Human Services to have tax problems. Ms. Sebelius’s back taxes amounted to $7,918 for offenses including:

Declaring three charitable contributions without receiving proper documentation
Filing mortgage interest deductions after selling a home
Declaring business expenses without having sufficient documentation

Numbers without context can be confusing

noreply@blogger.com (Rob Paris) — Fri, 03 Apr 2009 22:00:00 +0000

I think it was second grade. It might have been third. At some point we all learned about big numbers. We learned that there are thousands. A million is a thousand thousand. A billion is a thousand million. And finally (for practical purposes), a trillion is a thousand billion.

As we got older, it's something we remembered because we'd see the numbers frequently. We all knew the difference. I could easily spend a thousand dollars. Somebody with a million dollars was rich. Somebody with a billion dollars was super rich. I didn't know any billionaires, most of us didn't. $1 billion was so much money that we wouldn't even be able to spend it all. Then there were the trillions. That was a number reserved for government. Nobody was worth a trillion. No family was worth a trillion. No company was worth a trillion. In 1980, the total debt of the US government wasn't even a trillion... although 30 years later it's well over 10 trillion.

The point is, we know what the numbers mean. But when they're used out of context, on purpose or not, it's easy to miss the point.

A few recent examples of numbers out of context are AIG bonuses, bank repayments and earmarks. All three of these have made big news, but they're really minor details.

AIG
The government has given AIG somewhere around $180 billion. The bonuses at AIG, regardless of whether they should have been given out, totaled $165 million. So 165/180 means that almost 92% of the bailout money was given out as bonuses. That seems like a misuse of taxpayer money. Something we should all be upset about. Wait... 165/180,000 means that less than .1% of the bailout money was given as bonuses. Right or wrong, .1% means that this shouldn't be the biggest issue. Don't worry, after weeks of media attention 9 of the top 10 AIG execs gave the bonuses back.

Bank repayments
Want a bailout? Everybody's doing it. The government created a $700 billion bailout fund (among other bailouts). According to the Associated Press, yesterday,

"Five banks have repaid millions of dollars they received from the government's $700 billion financial bailout pot, the Obama administration said Thursday.

The Treasury Department, which oversees the bailout program, said the banks returned a total of $353 million."

So the banks have already repaid 50% (373/700) of the bailout plan. It looks like the government's illegal, colossal blunder might have actually worked. No. Again, that's 373/700,000. That means .05% of the money has been repaid. That's not news. If I borrowed $100 from you, it's the equivalent of me repaying you one nickel. It's not a start, it's not symbolic. It's an insult as much as anything else.

Earmarks
Earmarks. Horrible, horrible earmarks. Anytime a discussion about government spending comes up, somebody undoubtedly complains about earmarks. Don't get me wrong, I think earmarks should be cut (along with 90% of government spending), but this isn't as big an issue as the media makes it out to be. In 2005, $27.3 billion of the $2.4 trillion (the government spends in trillions now) was spent on pork. That's around 1.1%. In 2006, around $29 billion of the $2.66 trillion spent by government was pork. Again around 1.1%. Yes, it's an issue. No, it's not THE issue. It should be discussed and eliminated, but it should not be the focus of the media or the linchpin of a government spending argument.

Whether it's AIG, bank repayments or earmarks, it's all relative. What I mean, is that one number is relative to the next. $1 million is a big number if you compare it to $2. But it's insignificant when you compare it to $1 trillion. The next time the media spouts some numbers and makes a huge deal out of it, think about what it relates to.

My first post

noreply@blogger.com (Rob Paris) — Fri, 03 Apr 2009 13:53:00 +0000

I've been thinking of blogging for a while. And I just did it.