90% tax on execs a good thing

I never thought I'd say that a 90% tax was a good thing, until now. Everyone has heard that while AIG was propped up by billions of taxpayers money, that the execs were actually meeting to decide who amongst them would receive bonuses and how much. Wow. Absolutely stunning and congress is also to blame for not putting something about bonuses in the bailout bill.

But I think some good came out of congress's incompetence and AIG's greed, a 90% tax.

We've heard for years that you can't tax this company and not that one because the execs will follow the path of more money or in this case less taxation but with a 90% tax across the board (for any company taking TARP money), they will have few places to go. Heck maybe, they will actually decide to build these companies for the long term rather than a short term pop just to cash in some stock options!


Social Security

I have resisted blogging about Madoff. Its about time that crook started doing time. Dont get me started on his wife, how in the world does she believe that she is entitled to $70 million dollars? She was his assistant, a bookeeper. Bottom line is that that money is ill-gotten gains and ought to be taken away, period.

But thats not why I am blogging. With the market off 50% and Madoff and Stanford proving that anyone can indeed turn out to be a scoundrel, we are very fortunate that the Social Security trust fund was not allowed to be put into the stock market!

Can you imagine what our economic situation would be like, how decimated the dollar would be? Social Security is underfunded as it is, imagine, it would 50% less today. Imagine how politized every appointment to the fed and treasury would become (they are already a little).

Bottom line, there is absolutely no reason to put our Social Security in the stock market which is proving to be more like a casino everyday. We will make the necessary adjustments to taxes and benefits and get by and the baby boomer bubble (pig in the snake) will exhaust itself in time and we will be back to more of a normal distribution of workers to retirees which will take care of the problem naturally.


Two Party System

We face some pretty big challenges. Have you heard anyone say we should vote our leaders out of office? Of course you have BUT in a two party system, that would likely mean voting for the party you dont care for - and no one is about to do that.

Think about it, I live in Texas and I hear it all the time, 'throw the bums out' but here that would mean voting democratic for the most part and thats as likely as people in Massachusetts voting republican, get it!

The point is that the two party system really gives you little real choice and that has to change. We need to allow a third or a fourth party to grow and with the amount of money needed to mount any kind of campaign, even at a local level, its going to be tough.

I suggest we do away with all campaign finance, period, allow all parties equal time on local and national television, say 5 minutes at the end of newscasts, this would allow for the possibility for real debate and a third party giving voters a real chance for change.



Is it a shock to anyone that GM needs more money? This is one of many outrages as of late but this unlike alot of other financial situations was/is easy to see.

I am on record saying that back in 2008 that the government should not be bailing out the carmakers. Instead, they should have assisted in an orderly bankruptcy, this would have allowed them to wipeout billions of crushing debt but the unions that run Detroit and their politicians would not let it happen. It was also an election year and republicans were hoping for the blue collar vote.

Instead we gave them billions (GM got 13 billion) and now they are back for more (GM wants 30 billion), continuing with a failed business model at our expense. Incidentally, GM's market capitalization is just over 1 billion. Now the democrats, house, senate and President Obama could show everyone that they are indeed willing to look at the BIG picture and do something very politically unpopular but I am not holding my breath.

The only problem with bankruptcy is that we the taxpayers will be on the hook for the pension for every past and present employee through the Pension Guarantee Trust Fund and what about the employees healthcare bills? Argh!!!

Looks like we are screwed either way.


Spend Spend Spend

I know I'm not the only one who thinks that the government might be spending a little too much money. Back in 2007, we all thought that the Bush Administrations stimulus bill was an attempt to stave off Dow 10000 and 10% unemployment, ouch. That didnt work so well. So what has the Obama Administration decided to do, spend more money.

In the end, this was just a housing bubble, no different than the tech bubble before it except one major difference, it involved many more people, the bubble was larger and thus the fall has to be larger. BTW, if you are looking for someone to blame, there is plenty to go around from all parties and ideologies, more on this on a later blog.

I totally understand that it takes money to run the government, a lot of money but this is getting out of control and is a large gamble. If it works, Obama and democrats will be able to point to the spending bill and will be in power for a long time. They will also be able to say and rightly so that its better to have a slightly smaller piece of a bigger pie. If the spending bill does not work well then republicans will be able to say and rightly so that government is not the answer and will point to market forces as the answer once again. Only time will tell!


Warren Buffett

So that all within blogging distance are clear on this point, this blog is unbiased. One day the blogs may lean left the next day they may lean right. Thats how I roll. I am one of the few I know who is truly down the middle, more on that in later blogs.

Warren Buffett (not Jimmy for those of you living under a rock for a decade or two) is one of the they most astute investors and businessmen on Earth. He has been a republican for the bulk of his life and not a rino (republican in name only) either, a Nebraska republican. In the last election Warren Buffett backed a democrat for the first time in his life!

Why do you think Warren Buffett backed now President Obama? It is likely because he saw that continuing the Bush administration policies just wasn't working. This isn't a slam on Bush, just some of the tired old policies of his party. Trickle down economics worked well for Reagan (but what wouldn't have worked after the disastrous Carter years?) and produced growth of 3.42% in the 80's. BTW, Clinton presided over growth of 3.76% in the 90's. The 00's under Bush saw just over 2% and obviously ended with a recession.

The point is that Paris Hilton can only buy so many pairs of shoes which is supposed to trickle down ultimately to the guy who parks her car at the mall. This works for a while, maybe a decade or two until it doesn't, like any cycle so here we are.

Median household income per the US census was $50557 in 2000 and $50223 in 2007 or growth of 0% (as opposed to income growth of 8% under Reagan and 14% under Clinton).

Point is that during the 00's, we had growth of 2%, not great but still growth nonetheless, but the incomes actually went down! That is a business model that just can't work long term and didn't. That is why Warren Buffett voted democratic for the first time in his life. It was time for a change!


Welcome to my blog

Hi Everyone,
Welcome to my weblog. I hope you will enjoy reading my blogs and blogging along with me on the subject of money, finance and politics.

See you tomorrow.