The Federal Deposit Insurance Corp. issued its quarterly report on the U.S. banking industry Thursday, saying the group earned $18 billion during the first quarter of 2010, with more than half of banks and thrifts reporting year-over-year improvements.
Now looking at this you might assume that these bankers must be very smart earning this much in a down economy but upon further inspection their secret is revealed. You see the government loans money to these banks at zero percent interest and then these banks turn around and purchase government bonds that pay three percent. This gives the banks automatic profits with no risk and allows the government to have money to spend on other things.
I want to give everyone the benefit of the doubt but when the senator responsible for all of this, Chris Dodd, has decided not to run for re-election I wonder if he will receive a nice retirement gift from these banks. Call me cynical
Tuesday, August 24, 2010
tax cuts
With the expiration of the Bush tax cuts set for the end of this year, congress is trying to decide on whether or not to extend them and this has given us an opportunity to examine just who benefited from these cuts, as the Democrats have proposed retaining the tax cuts for those earning less than $200,000 per year.
Democratic plan is neither cheap nor paid for. Making permanent all tax cuts for the middle class will cost the Treasury $2.7 trillion over 10 years, according to the Joint Committee on Taxation, at a time when Washington has already added trillions
Keeping all of the tax cuts in force will cost 3.7 trillion.
Making permanent the 2001 and 2003 tax cuts and AMT relief would have a direct cost of $3.7 trillion over the next ten years (fiscal year 2009 through 2018),
This shows us that 2.7 divided by 3,7 or 72% of the tax savings went to those earning less than $200,000 per year leaving 28% for the so called rich. Now if we investigate who pays taxes we find that those earning more than $200,000 pay over 50%
Nationally, taxpayers earning under $50,000 collectively earned 22 percent of the nation's total AGI, but paid just 8 percent of all federal income taxes at an effective rate of 5 percent. Those making over $200,000 collectively earned 29 percent of total AGI but paid more than half of all federal income taxes at an effective rate of 22 percent.
To summarize the rich people (those with family incomes over $200,000 received 28% of the cuts under the Bush tax cuts and those same people still paid over 50% of all income tax. Since the inception of the Bush tax cuts they have been described as favoring the rich but I am not so sure that was accurate
Democratic plan is neither cheap nor paid for. Making permanent all tax cuts for the middle class will cost the Treasury $2.7 trillion over 10 years, according to the Joint Committee on Taxation, at a time when Washington has already added trillions
Keeping all of the tax cuts in force will cost 3.7 trillion.
Making permanent the 2001 and 2003 tax cuts and AMT relief would have a direct cost of $3.7 trillion over the next ten years (fiscal year 2009 through 2018),
This shows us that 2.7 divided by 3,7 or 72% of the tax savings went to those earning less than $200,000 per year leaving 28% for the so called rich. Now if we investigate who pays taxes we find that those earning more than $200,000 pay over 50%
Nationally, taxpayers earning under $50,000 collectively earned 22 percent of the nation's total AGI, but paid just 8 percent of all federal income taxes at an effective rate of 5 percent. Those making over $200,000 collectively earned 29 percent of total AGI but paid more than half of all federal income taxes at an effective rate of 22 percent.
To summarize the rich people (those with family incomes over $200,000 received 28% of the cuts under the Bush tax cuts and those same people still paid over 50% of all income tax. Since the inception of the Bush tax cuts they have been described as favoring the rich but I am not so sure that was accurate
talk shows
I often hear people question why conservative shows have more appeal than liberal shows and I believe I have an answer or at least a plausible opinion. If you want to talk for several hours about a subject it has to be something that you can be completely honest about. If you are a conservative you believe in the individual’s ability to succeed but if you are a liberal you feel that many people need the help of government to be successful and there in lies the problem. As a liberal you are convinced that because of past real or perceived mistreatment many people need to have a leg up from the government in order to level the playing field but you cannot let them know you feel that way. If you don’t handle this carefully you come across as telling people they cannot take care of themselves and they don’t believe that and don’t want to hear that. They think they are perfectly capable of caring for themselves but they have been victimized by society which leads you as a liberal to confirm their status as victims. You must convey the message to them that their lack of success is not because they are not capable but because of circumstances beyond their control. I maintain that you can do this in a normal conversation but if you have to talk for one, two or three hours your true feelings will slip though and while your audience will not turn you off in anger they will just drift away from you because the true message will come through and they do not want to hear it.
While we all live in the same environment the news is replete with examples of individuals who have faced adversity and won. I don’t need to list names as everyone can think of Horatio Alger stories. I personally know at least a dozen people who succeeded against tremendous odds.
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While we all live in the same environment the news is replete with examples of individuals who have faced adversity and won. I don’t need to list names as everyone can think of Horatio Alger stories. I personally know at least a dozen people who succeeded against tremendous odds.
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Volt
GM announced today that their new electric car the “Volt” will cost $41,000 even though the government is subsidizing each car with a $7,500 gift to GM. If not for this you would be looking at close to $50,000.
The Volt can travel 40 miles on its battery charge and an additional 340 miles on a gasoline-powered generator
I believe that certain environmental types will pay that and then plug in the car each night but asking the general public to go this route is tenuous at best.
Since 1997 Toyota has sold 850,000 Prius’s world wide and a Prius cost between $22,000 and $32,000.
I have never considered myself a marketing expert but this doesn’t look too good for GM.
It could be that all new technology starts out like this and over time improvements encourage more and more purchases. We shall see. In the meantime I will continue to purchase small front wheel drive four cylinder cars.
The Volt can travel 40 miles on its battery charge and an additional 340 miles on a gasoline-powered generator
I believe that certain environmental types will pay that and then plug in the car each night but asking the general public to go this route is tenuous at best.
Since 1997 Toyota has sold 850,000 Prius’s world wide and a Prius cost between $22,000 and $32,000.
I have never considered myself a marketing expert but this doesn’t look too good for GM.
It could be that all new technology starts out like this and over time improvements encourage more and more purchases. We shall see. In the meantime I will continue to purchase small front wheel drive four cylinder cars.
Inner city
Recently I wrote about the Minnesota law stating that the math requirement for graduation is that you either pass the test or you flunk it three times and this got me to thinking about the mess that the inner city schools are in. I realize it was just one more example of the results of government helping out. Back in the 60’s when the government stepped in to aid single moms they set up a situation where any girl who got pregnant could have her own place to live with all expenses paid and today we have 75% of black children born into families with no father around. With no fathers around to teach respect for authority these kids grow up with crime and drugs as the norm. The discipline problems in school add to the already dismal results that show that many of those who graduate read and write at a sixth grade level. Many “problem kids” are passed along each year and end up illiterate. Blacks are 12% of the general population and 36% of the prison population. There are more black men in prison than black men in college.
The latest boondoggle foisted upon these same people was the concept that everyone should qualify for the American dream of home ownership and the result was all those who supposedly were helped to purchase homes are now forced into bankruptcy.
We now have three generations of people who have grown up living on public assistance and they have become so dependent on government that they no longer can care for themselves. The primary responsibility of a parent is to raise children who can go out in the world and care for themselves and many children have not been afforded this opportunity. During Hurricane Katrina many people living in New Orleans did not have cars and were told to wait for buses to take them to the Super Dome. Some of these people were elderly, some quite young and others were disabled but the majority were able bodied citizens who could easily walk the three miles to the Dome but did not do so. They had been trained over the years to follow the government so they no longer had the personal initiative to act on their own. This same lack of initiative is what keeps them from improving their life styles. In the past I would make excuses for this lack of initiative but after witnessing the many who have risen above their humble beginnings to become productive citizens, I can see now that the choice is theirs. Under the guise of helping the government is promoting dependence. Why they would do this I can only offer an opinion and that is they want a permanent underclass to secure votes. I will give them the benefit of the doubt and say that they believe they are helping but that does not help to solve the problem.
The latest boondoggle foisted upon these same people was the concept that everyone should qualify for the American dream of home ownership and the result was all those who supposedly were helped to purchase homes are now forced into bankruptcy.
We now have three generations of people who have grown up living on public assistance and they have become so dependent on government that they no longer can care for themselves. The primary responsibility of a parent is to raise children who can go out in the world and care for themselves and many children have not been afforded this opportunity. During Hurricane Katrina many people living in New Orleans did not have cars and were told to wait for buses to take them to the Super Dome. Some of these people were elderly, some quite young and others were disabled but the majority were able bodied citizens who could easily walk the three miles to the Dome but did not do so. They had been trained over the years to follow the government so they no longer had the personal initiative to act on their own. This same lack of initiative is what keeps them from improving their life styles. In the past I would make excuses for this lack of initiative but after witnessing the many who have risen above their humble beginnings to become productive citizens, I can see now that the choice is theirs. Under the guise of helping the government is promoting dependence. Why they would do this I can only offer an opinion and that is they want a permanent underclass to secure votes. I will give them the benefit of the doubt and say that they believe they are helping but that does not help to solve the problem.
social security
When the presidents committee on how to solve the debt problem makes their report in December one of the problems that will be discussed in social security but it will be used by both sides to scare people. One of the many things wrong with out present system is how it discriminates against certain groups and here is just one example.
THE CASE FOR PRIVATIZING SOCIAL SECURITY
Social security takes in about $800 billion per year. It can be privatized over a 20 year period at 5% per year at a cost of $16B the first year and rises each year after. Currently we pay 6.2% of our wages into social security and our employer matches that amount. Social security has three parts. First, the retirement fund, second survivor benefits and third benefits for the disabled. 2.2% must remain as is to cover the survivors and disabled but the remaining 4% can be transferred to private accounts over the 20 year time period.
A person who averaged $30,000 per year in salary over the past 45 years would have contributed 4 percent into his social security account and his employer would have added another similar amount. If they had earned 3% interest they would have about $225,000 in their account at age 65. This person would be eligible for $15,000 per year in social security benefits or enough to last 15 years not counting any interest earned on the remaining balance.
What this means is, under the current system black males are supporting white females since white females have a life expectancy of 81 and black males of 70. A black male that retires will collect five years at $15,000 per year or $75,000 and the remainder of his social security or $150,000 will be used to pay for white females who will collect 17 years at $15,000 per year or $255,000.
If we were on the private investment plan this $150,000 left over from the black male could be passed on to his children and in a relatively short time there would be a large transfer of wealth to poor people.
The point here is that black leaders like Jesse Jackson oppose the private option and I don’t believe that most black males realize how this effects their retirement.
One wonders about the motives of these leaders.
Federal employees have had such a system for many years and they are very satisfied. There are five investment accounts in which they can invest. If we changed the present social security system to private accounts there would be a large influx of cash into the stock market, which would provide money for investment in new business and expanding business.
In 20 years the system would be privatized and allow the government to direct its efforts to other endeavors.
THE CASE FOR PRIVATIZING SOCIAL SECURITY
Social security takes in about $800 billion per year. It can be privatized over a 20 year period at 5% per year at a cost of $16B the first year and rises each year after. Currently we pay 6.2% of our wages into social security and our employer matches that amount. Social security has three parts. First, the retirement fund, second survivor benefits and third benefits for the disabled. 2.2% must remain as is to cover the survivors and disabled but the remaining 4% can be transferred to private accounts over the 20 year time period.
A person who averaged $30,000 per year in salary over the past 45 years would have contributed 4 percent into his social security account and his employer would have added another similar amount. If they had earned 3% interest they would have about $225,000 in their account at age 65. This person would be eligible for $15,000 per year in social security benefits or enough to last 15 years not counting any interest earned on the remaining balance.
What this means is, under the current system black males are supporting white females since white females have a life expectancy of 81 and black males of 70. A black male that retires will collect five years at $15,000 per year or $75,000 and the remainder of his social security or $150,000 will be used to pay for white females who will collect 17 years at $15,000 per year or $255,000.
If we were on the private investment plan this $150,000 left over from the black male could be passed on to his children and in a relatively short time there would be a large transfer of wealth to poor people.
The point here is that black leaders like Jesse Jackson oppose the private option and I don’t believe that most black males realize how this effects their retirement.
One wonders about the motives of these leaders.
Federal employees have had such a system for many years and they are very satisfied. There are five investment accounts in which they can invest. If we changed the present social security system to private accounts there would be a large influx of cash into the stock market, which would provide money for investment in new business and expanding business.
In 20 years the system would be privatized and allow the government to direct its efforts to other endeavors.
loans
The president came out with a program to help save the homes of people in financial trouble but the banks did not promote it. The plan is called Mortgage Modification Program. It was designed to help people whose payments were more than they could afford by modifying the loan to reduce payments.
When you take out a mortgage it is called the first mortgage and these mortgages are often sold to pension companies as investments. When you take out a second mortgage the bank normally retains possession of these. Now if you get in trouble the second mortgage is subservient to the first so if the bank has to forgive part of your loan it will be the second and thus a direct loss to the bank. It is not surprising that the banks were uncomfortable with this program and thus only a small number of home owners were helped. Here is a quote from the Financial Times of London.
The resistance of many banks to modify loans never made any sense to me, since a home sold at aforeclosure auction often sells for much, much less money than it bring through a conventional sale. Also, a significant number of foreclosed homes are damaged once their owners are forced out, which only drags the value down further since it's hard to sell a home that's covered in spray paint with broken windows. Banks should be highly motivated to avoid having to seize and auction properties.
But it turns out banks have another motive. Many of the banks that service home loans also have made second mortgages to these properties, as the FT points out. A second mortgage is subservient to the first mortgage, so the first mortgage is supposed to be paid first.
That means if the terms of the primary loan are changed, the secondary loan could be wiped out. Some secondary mortgage lenders are fighting to share the losses with the primary lender, according to the FT
Just one more example of the unexpected consequences of good intentions. Seems our government never
When you take out a mortgage it is called the first mortgage and these mortgages are often sold to pension companies as investments. When you take out a second mortgage the bank normally retains possession of these. Now if you get in trouble the second mortgage is subservient to the first so if the bank has to forgive part of your loan it will be the second and thus a direct loss to the bank. It is not surprising that the banks were uncomfortable with this program and thus only a small number of home owners were helped. Here is a quote from the Financial Times of London.
The resistance of many banks to modify loans never made any sense to me, since a home sold at aforeclosure auction often sells for much, much less money than it bring through a conventional sale. Also, a significant number of foreclosed homes are damaged once their owners are forced out, which only drags the value down further since it's hard to sell a home that's covered in spray paint with broken windows. Banks should be highly motivated to avoid having to seize and auction properties.
But it turns out banks have another motive. Many of the banks that service home loans also have made second mortgages to these properties, as the FT points out. A second mortgage is subservient to the first mortgage, so the first mortgage is supposed to be paid first.
That means if the terms of the primary loan are changed, the secondary loan could be wiped out. Some secondary mortgage lenders are fighting to share the losses with the primary lender, according to the FT
Just one more example of the unexpected consequences of good intentions. Seems our government never
Blago
The Blago verdict is in and he is not-guilty on all charges except lying to the FBI. The irony is that what he lied about doing was not even illegal but non the less he will get off with a slap on the wrist.
The interesting thing to me was that all of the tapes of Blago on the phone were played for the jury but the tapes of his interviews with the FBI were not played. I am wondering what was on those tapes as the first time I heard that they would not be played was several months ago and my first thought was that there were things on there that might implicate some higher ups. Then I heard that the prosecution did not present a strong case and this further heightened my curiosity about the case. Then there was Blago’s confident attitude and insisting that he was going to testify and at the last minute deciding not to take the stand. As I add all of this up I came to the conclusion that he was told that if he kept his mouth shut he would get off. We will find out when they interview the jury how many jurors voted not guilty and if there was only one my suspicious mind would lead me to believe that this person might have been a plant.
One final thing that while the FBI tapes are kept quiet the tapes of CIA interviewing terrorist were to be made public which confirms my idea that there is something very damaging on those tapes and I don’t mean damaging to Blago.
We will see how this plays out.
The interesting thing to me was that all of the tapes of Blago on the phone were played for the jury but the tapes of his interviews with the FBI were not played. I am wondering what was on those tapes as the first time I heard that they would not be played was several months ago and my first thought was that there were things on there that might implicate some higher ups. Then I heard that the prosecution did not present a strong case and this further heightened my curiosity about the case. Then there was Blago’s confident attitude and insisting that he was going to testify and at the last minute deciding not to take the stand. As I add all of this up I came to the conclusion that he was told that if he kept his mouth shut he would get off. We will find out when they interview the jury how many jurors voted not guilty and if there was only one my suspicious mind would lead me to believe that this person might have been a plant.
One final thing that while the FBI tapes are kept quiet the tapes of CIA interviewing terrorist were to be made public which confirms my idea that there is something very damaging on those tapes and I don’t mean damaging to Blago.
We will see how this plays out.
pensions x
This is from an essay I wrote several months back
The three big government pension funds in California are currently short of money to provide the promised benefits. How did this happen? Well instead of putting the proper amount into the fund the government used the money for other purposes and made the fund whole by raising the projected rate of return.
Here is a quote from yesterdays news
The SEC's civil case, for which New Jersey paid no monetary penalties, concerned $26 billion of municipal bonds sold by the state between 2001 and 2007. It charged the Garden State with tricking investors into believing it was adequately funding the two largest funds in the $66.9 billion New Jersey retirement system.
Among other things, the SEC said, the state didn't disclose in bond sale documents that it had abandoned a five-year plan to fund the pension plans, the $34 billion Teachers' Pension and Annuity Fund and the $28 billion Public Employees' Retirement System.
I wonder when the SEC will get around to New York, Illinois, and California and then work there way through the rest of the states and then to Municipalities over the land
The three big government pension funds in California are currently short of money to provide the promised benefits. How did this happen? Well instead of putting the proper amount into the fund the government used the money for other purposes and made the fund whole by raising the projected rate of return.
Here is a quote from yesterdays news
The SEC's civil case, for which New Jersey paid no monetary penalties, concerned $26 billion of municipal bonds sold by the state between 2001 and 2007. It charged the Garden State with tricking investors into believing it was adequately funding the two largest funds in the $66.9 billion New Jersey retirement system.
Among other things, the SEC said, the state didn't disclose in bond sale documents that it had abandoned a five-year plan to fund the pension plans, the $34 billion Teachers' Pension and Annuity Fund and the $28 billion Public Employees' Retirement System.
I wonder when the SEC will get around to New York, Illinois, and California and then work there way through the rest of the states and then to Municipalities over the land
Muslim
When it comes to questions of culture, politics and social norms I am considered a moderate by those who know me and so when I look at the Muslim faith I see a billion people 95% of whom are just ordinary citizens trying to put food on the table. While I have tried to concentrate on the so called moderate Muslims to maintain my claim of moderation in these regards, I am having a difficult time and have decided to release some of my political incorrect thinking.
Let me start with some facts before I enter the more dangerous waters of opinion, not that facts are not dangerous but only slightly less so. As I look around the world today I see Muslims fighting Latino Christians in the Philippians, fighting Buddhist in Thailand, fighting Hindus in India, fighting Russians in Chechnya, fighting Jews in Israel, dark skin Muslims fighting light skin Muslims in Sudan, Suni Muslims fighting Shia Muslims in Iraq, and finally Muslims fighting the US in Afghanistan. This does not include civil unrest caused by Muslims in European countries like France, Germany and England. I most likely missed a few trouble spots but you get the point as to why my tolerance toward Muslims is fading.
First I am aware that many Muslim countries are economically depressed, the exceptions being those who have oil and if it were not for the oil the people in those countries would be living in tents in the desert. I mention this because there are Muslims who live in industrialized countries like Western Europe, Canada and the USA who have adjusted to modern society and they find themselves between a rock and hard place. They have their faith which is more that religion and is called a way of life. Think how different the way of life is for people in Indonesia as opposed to here in the United States. Even in a wealthy oil producing country like Saudia Arabia there are no Christian churches allowed, women are treated as a different class of citizens and the citizens are ruled by a royal family.
Now I will move into the area of opinion and take my licks. I get the distinct feeling that many American Muslims are sympathetic to some terrorist views and others strongly oppose the acts of terrorist but both groups are afraid to speak out. The first group thinks that their thoughts might cause other Americans to distrust them and the second group is afraid some extremist might attack them.
We no longer have any feminist groups since Bill Clinton put them out of business so ordinary citizens have become more concerned about the plight of women and that is one of the main reasons for continuing the fight in Afghanistan. We have recently seen the type of treatment women receive from the Taliban and most Americans would be very uncomfortable knowing we left the country in the hands of these terrorist. Perhaps fighting a war to protect women is more noble that fighting for oil. The fact that I use the word perhaps tells you a lot about modern society.
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Let me start with some facts before I enter the more dangerous waters of opinion, not that facts are not dangerous but only slightly less so. As I look around the world today I see Muslims fighting Latino Christians in the Philippians, fighting Buddhist in Thailand, fighting Hindus in India, fighting Russians in Chechnya, fighting Jews in Israel, dark skin Muslims fighting light skin Muslims in Sudan, Suni Muslims fighting Shia Muslims in Iraq, and finally Muslims fighting the US in Afghanistan. This does not include civil unrest caused by Muslims in European countries like France, Germany and England. I most likely missed a few trouble spots but you get the point as to why my tolerance toward Muslims is fading.
First I am aware that many Muslim countries are economically depressed, the exceptions being those who have oil and if it were not for the oil the people in those countries would be living in tents in the desert. I mention this because there are Muslims who live in industrialized countries like Western Europe, Canada and the USA who have adjusted to modern society and they find themselves between a rock and hard place. They have their faith which is more that religion and is called a way of life. Think how different the way of life is for people in Indonesia as opposed to here in the United States. Even in a wealthy oil producing country like Saudia Arabia there are no Christian churches allowed, women are treated as a different class of citizens and the citizens are ruled by a royal family.
Now I will move into the area of opinion and take my licks. I get the distinct feeling that many American Muslims are sympathetic to some terrorist views and others strongly oppose the acts of terrorist but both groups are afraid to speak out. The first group thinks that their thoughts might cause other Americans to distrust them and the second group is afraid some extremist might attack them.
We no longer have any feminist groups since Bill Clinton put them out of business so ordinary citizens have become more concerned about the plight of women and that is one of the main reasons for continuing the fight in Afghanistan. We have recently seen the type of treatment women receive from the Taliban and most Americans would be very uncomfortable knowing we left the country in the hands of these terrorist. Perhaps fighting a war to protect women is more noble that fighting for oil. The fact that I use the word perhaps tells you a lot about modern society.
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