During my working years I specialized in retirement planning and often times people were surprised when I pointed out that if they chose to work past age 62 they would be working for free. How does this happen?
Suppose you had worked thirty years for a company that had a pension plan that paid you 1.5% of your final salary for every year you worked or they would pay your 45% of your final salary. Assume that your salary was $50,000 so your pension would be $22,500 per year. First step is to determine what your net pay is if you continue to work.
Gross pay $50,000
Less standard deduction for two people $11,400
Less personal exemptions (2) $7,300
Taxable income $31,300
Federal tax $3,861
State tax (MN) $1,158
Less social security $3,825
Take home pay (net) $41,156
The pension will be income tax free and no social security withheld so it will net out at
Pension $22,500
Husband social security ($1,200/mo) $14,400
Wife social security (35% of husbands) $5,040
Take home pay (net) $41,940
Often times the cost of health insurance is not covered until age 65 when Medicare kicks in so I tell them if they like what they are doing and they feel good to keep on working but if they are burnt out they should retire and take a part time job doing something they like and earn enough to buy health insurance.
This is all leading up to people, who today, are collecting unemployment, which pays about one half of salary up to a maximum of about $500 per week. Assume you were making ten bucks an hour or $400 per week and you get laid off and start collecting $200 per week. While you are working, assuming you were a family you didn’t pay any income tax but you did pay social security tax so your take home pay was $369. If you go back to work your income will increase by $169 ($369 - $200) so you will be earning 169 divided by 40 or $4.22 per hour which is kind of depressing. If you have to pay a baby sitter you are better off not working.
The point here is that for low income people, those who make less than $25 per hour, the difference between working and collecting unemployment is not that great and since unemployment benefits now run for 99 weeks, it may be a while before these people get serious about looking for work and I guess you can’t really blame them.
--------------------------------------------------------------------------------
Saturday, June 5, 2010
Bankers
We should all celebrate the great victory in the US Senate today. Recall that the senate has been trying to change the financial rules to prevent another meltdown. The Republicans have been using the filibuster to try and get more teeth into the bill but today the Democrats were able to get the 60 votes they need to stop the filibuster.
The two main problems were first to get rid of the too big to fail type banks and second to bring transparency to derivative trading. Well guess what? Neither of these things are in the bill. Instead there was a bunch of small changes regarding credit cards and retailers selling products on credit such as a car dealer financing your car loan. Not only did we not get rid of the too big to fail the situation is now even worse than it was before because over the past few years the big have gotten much bigger. The big six banks 15 years ago controlled 17% of the GDP and today they control 65%. Derivative trading will still be carried out in secret.
The bottom line is that big banks can gamble with our money and if they guess right they keep the profits and if they guess wrong we cover their losses.
When this bill passes which will be in a few weeks the politicians will come out and say they have passed new laws which will help us and behind the scenes the big bankers will be smiling.
Jack/John
The two main problems were first to get rid of the too big to fail type banks and second to bring transparency to derivative trading. Well guess what? Neither of these things are in the bill. Instead there was a bunch of small changes regarding credit cards and retailers selling products on credit such as a car dealer financing your car loan. Not only did we not get rid of the too big to fail the situation is now even worse than it was before because over the past few years the big have gotten much bigger. The big six banks 15 years ago controlled 17% of the GDP and today they control 65%. Derivative trading will still be carried out in secret.
The bottom line is that big banks can gamble with our money and if they guess right they keep the profits and if they guess wrong we cover their losses.
When this bill passes which will be in a few weeks the politicians will come out and say they have passed new laws which will help us and behind the scenes the big bankers will be smiling.
Jack/John
Europe
Have you noticed that all of your friends who used to tell you that we, the USA, should be more like Europe are now strangely silent
Jack/John
Jack/John
Gays
Written to a congressman out of my district
Since I am from out of your district I doubt you will ever see this but some of your staff might. I heard your remarks about gays in the military and would like to add my two cents worth. I have two points to make but first I will tell you that I have no bias toward gays as I believe that sexual preference is a matter of personal choice and further I believe there is credible evidence that there is a genetic factor involved.
My first point is that the American Public, regardless of polls, is not ready to accept the gay life and I can prove this. Every day on the soaps and often times in prime time TV you can see a man and a woman, usually not married, in bed together and most of us pay very little attention to it. Imagine, instead, two men rolling around in bed together, scantily clothed, hands roaming and open mouth kissing. What do you, or just as important, the public, think about this. While I think there is something beautiful about two men loving each other and the world can certainly use more love, I am uncomfortable when I think of the intimate activities involved in this type of love,
Second point. I started visiting chat rooms after 9/11 and made an interesting discovery. If I used a neutral sounding nick I would often get an asl from some other chatter and more often than not it would be a sexual inquiry. I started asking these people if they were gay and when they answered yes, I asked for their opinion on don’t ask, don’t tell but the way I asked about it was to say, would you be aroused if you showed with other men and the majority of the time they answered yes. If this is the case, I believe it is a legitimate reason for separate showers but none of this has been discussed. Would they consider unisex showers if the rule was no contact? Obviously not! What will happen to transvestites? Will they need three different showers?
I offer this just to point out that there is a lot more to this question than just the political implications, which is what most elected officials are concerned with. To make it personal, would you feel uncomfortable if you were showering and knew that some other person was getting sexually excited looking at you. How you answer that question might tell you more about what you think about this issue than you care to know.
Thanks for listening.
John Novick
Since I am from out of your district I doubt you will ever see this but some of your staff might. I heard your remarks about gays in the military and would like to add my two cents worth. I have two points to make but first I will tell you that I have no bias toward gays as I believe that sexual preference is a matter of personal choice and further I believe there is credible evidence that there is a genetic factor involved.
My first point is that the American Public, regardless of polls, is not ready to accept the gay life and I can prove this. Every day on the soaps and often times in prime time TV you can see a man and a woman, usually not married, in bed together and most of us pay very little attention to it. Imagine, instead, two men rolling around in bed together, scantily clothed, hands roaming and open mouth kissing. What do you, or just as important, the public, think about this. While I think there is something beautiful about two men loving each other and the world can certainly use more love, I am uncomfortable when I think of the intimate activities involved in this type of love,
Second point. I started visiting chat rooms after 9/11 and made an interesting discovery. If I used a neutral sounding nick I would often get an asl from some other chatter and more often than not it would be a sexual inquiry. I started asking these people if they were gay and when they answered yes, I asked for their opinion on don’t ask, don’t tell but the way I asked about it was to say, would you be aroused if you showed with other men and the majority of the time they answered yes. If this is the case, I believe it is a legitimate reason for separate showers but none of this has been discussed. Would they consider unisex showers if the rule was no contact? Obviously not! What will happen to transvestites? Will they need three different showers?
I offer this just to point out that there is a lot more to this question than just the political implications, which is what most elected officials are concerned with. To make it personal, would you feel uncomfortable if you were showering and knew that some other person was getting sexually excited looking at you. How you answer that question might tell you more about what you think about this issue than you care to know.
Thanks for listening.
John Novick
War
President Bush 2 introduced the concept of per-emptive war, which means we do not have to wait for some foreign power to attack us before we can respond. It means that if we feel we have an eminent threat we can attack first. When this policy was announced the immediate reaction by many liberal thinkers was disbelief and dismay. They publically announced their disagreement and went home, and after of few days of thinking it over they went silent. They thought through the scenario of a president who knew we were about to be attacked and did not respond and we were attacked. They thought about how the president would justify his inaction and concluded that there could be a time when pre-emption was the proper course of action. It reminds me of the “ticking bomb scenario” where a suspect is in custody and there is evidence that he knows the whereabouts of a nuke and it will detonate in a few days and the question is, can he be tortured to force him to reveal the location of the bomb? There are four alternative options. First he is not tortured and there is no bomb. Second he is not tortured and the bomb explodes, Third he is tortured and there is a no bomb and forth he is tortured and bomb is found and dismantled. The question again arises what happens to a president who fails to approve torture and bomb explodes. Let is make it more difficult. The suspect knows of two dozen bombs in two dozens cities and says that one will go off every week for the next 24 weeks. The president refused to torture and the first bomb goes off. Does the president then change his mind and allow torture or does he stay the course over the next 23 weeks at which time the entire economy has collapsed and the headline is, “President saves constitution and loses the country”.
The reason I write this is that President Obama in his speech before the graduates of West Point talked about his policy and the press reported that he refuted the Bush policy of pre-emption but if you read his speech he did no such thing. Here is a quote from the Washington Post,
Obama’s document appears to water down the concept of preemptive war favoured by the Bush administration, but preserves the option for a US president to deploy military might unilaterally. It says Washington will “adhere to standards that govern the use of force.
Is this double talk or what? What pray tell is the difference between pre-emptive strike and deploy military might unilaterally. The press is so opposed to pre-emption that they seem to read into words meanings that are not there. To them the news is not what is but what it is supposed to be.
In other parts of the speech Obama states his preference for diplomacy before war. Duh! Thank God for the Internet as it permits thinking people the opportunity to look at many sides of an issue before forming opinions. As an aside I recently saw a TV show where a panel of academic types were asked to opine on the ticking bomb idea and they concluded that the president should allow the torture and then be charged with a felony and removed from office. I believe this is why it is often said that a professor would have trouble changing a light bulb.
John/Jack
--------------------------------------------------------------------------------
The reason I write this is that President Obama in his speech before the graduates of West Point talked about his policy and the press reported that he refuted the Bush policy of pre-emption but if you read his speech he did no such thing. Here is a quote from the Washington Post,
Obama’s document appears to water down the concept of preemptive war favoured by the Bush administration, but preserves the option for a US president to deploy military might unilaterally. It says Washington will “adhere to standards that govern the use of force.
Is this double talk or what? What pray tell is the difference between pre-emptive strike and deploy military might unilaterally. The press is so opposed to pre-emption that they seem to read into words meanings that are not there. To them the news is not what is but what it is supposed to be.
In other parts of the speech Obama states his preference for diplomacy before war. Duh! Thank God for the Internet as it permits thinking people the opportunity to look at many sides of an issue before forming opinions. As an aside I recently saw a TV show where a panel of academic types were asked to opine on the ticking bomb idea and they concluded that the president should allow the torture and then be charged with a felony and removed from office. I believe this is why it is often said that a professor would have trouble changing a light bulb.
John/Jack
--------------------------------------------------------------------------------
Friday, April 16, 2010
I was always told that the power in the constitution that gives congress the right to enact various welfare type programs comes from Article one section eight where the phrase, “provide for the common welfare” is written. With all the new government programs recently proposed I decided to look further into this and much to my surprise I came face to face with the semi colon. This rather innocuous punctuation mark is at the center of the debate over this constitutional clause. Recall that the founding fathers were well educated and considered grammarians and spent days arguing over little things like punctuation marks. They knew that marks like the semi colon could change the meanings of words.
It is in the opening sentence of section eight where the phrase, “provide for the general welfare” occurs and this sentence ends in a semi colon. The plot thickens. The use of the semi colon is used in this case to make a general statement followed by a more detailed understanding.
The general statement is
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfareof the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
After that there follows 18 statements elaborating on the blue items but nothing more in the green (welfare).
Proponents of wealth redistribution often quote the sentence but not the semi colon but others point out the importance of the semi colon and one of these was Sam Adams who said,
The utopian schemes of leveling [wealth redistribution] and a community of goods, are as visionary and impractical as those which vest all property in the crown. These ideas are arbitrary, despotic, and, in our government, unconstitutional. Famous Quotes on Wealth Redistribution, Class Warfare and Envy Samuel Adams
It is in the opening sentence of section eight where the phrase, “provide for the general welfare” occurs and this sentence ends in a semi colon. The plot thickens. The use of the semi colon is used in this case to make a general statement followed by a more detailed understanding.
The general statement is
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfareof the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
After that there follows 18 statements elaborating on the blue items but nothing more in the green (welfare).
Proponents of wealth redistribution often quote the sentence but not the semi colon but others point out the importance of the semi colon and one of these was Sam Adams who said,
The utopian schemes of leveling [wealth redistribution] and a community of goods, are as visionary and impractical as those which vest all property in the crown. These ideas are arbitrary, despotic, and, in our government, unconstitutional. Famous Quotes on Wealth Redistribution, Class Warfare and Envy Samuel Adams
Monday, April 5, 2010
bank loans
The governments program known as Home Affordable Modification Program was designed to help people whose homes were worth less than the outstanding mortgage, so called underwater mortgages. Of the 4 million homes in this category only 170,000 were helped and the question is why so few.
The reason it is so difficult to get a loan modification is that there is too much money to be made by short sales and foreclosures. How does this work?
Here is a typical example of what is going on.
One of the big banks that failed was Indybank and the FDIC closed it down in July of 2008. In March of 2009 FDIC sold it to One West Bank. Who owns One West Bank? Steven Munchen CEO of Goldmen Sacs, Billionaire George Soros and John Paulson both heads of large hedge funds. People from Goldman Sachs are in high positions throughout the government starting at the Secretary of Treasury.
The deal the FDIC gave to One West was that they could purchase all mortgages at 70% of value and all HELOC’s (home equity loans) were purchased at 58% of value. In addition the FDIC agreed to cover 80 to 95% of any losses due to short sales or foreclosures. Now the FDIC allows One West to calculate any loss using the original loan value not the value that One West paid for the mortgage. Here is a typical example.
One West purchased a home with an actual loan amount of $478,000 plus 6 months of back payments for a total of $485,200. One West paid $334,600 for that loan. The owner has an underwater all cash offer that nets $241,000 to One West Bank. According to the FDIC formula you take the original loan amount of $478,000 less the short sale offer of $241,000 and that leaves the adjusted loss of $244,200 to One West. Now the FDIC pays One West 80% of the loss or $195,360. This money comes from the taxpayers by way of the FDIC. Now add the $195,360 to the all cash offer of $241,000 and One West gets $436,360 on an investment of $334,600 and all they had to do is to sell if for whatever they wanted. They make over $100,000 on just this one deal and there is no risk.
As long as banks can make money like this they are not likely to loan money on regular mortgages and the government Affordable Loan Modification Program is not likely to attract any bankers. Why should they risk ordinary loans when they have guaranteed profit using the FDIC system?
The reason it is so difficult to get a loan modification is that there is too much money to be made by short sales and foreclosures. How does this work?
Here is a typical example of what is going on.
One of the big banks that failed was Indybank and the FDIC closed it down in July of 2008. In March of 2009 FDIC sold it to One West Bank. Who owns One West Bank? Steven Munchen CEO of Goldmen Sacs, Billionaire George Soros and John Paulson both heads of large hedge funds. People from Goldman Sachs are in high positions throughout the government starting at the Secretary of Treasury.
The deal the FDIC gave to One West was that they could purchase all mortgages at 70% of value and all HELOC’s (home equity loans) were purchased at 58% of value. In addition the FDIC agreed to cover 80 to 95% of any losses due to short sales or foreclosures. Now the FDIC allows One West to calculate any loss using the original loan value not the value that One West paid for the mortgage. Here is a typical example.
One West purchased a home with an actual loan amount of $478,000 plus 6 months of back payments for a total of $485,200. One West paid $334,600 for that loan. The owner has an underwater all cash offer that nets $241,000 to One West Bank. According to the FDIC formula you take the original loan amount of $478,000 less the short sale offer of $241,000 and that leaves the adjusted loss of $244,200 to One West. Now the FDIC pays One West 80% of the loss or $195,360. This money comes from the taxpayers by way of the FDIC. Now add the $195,360 to the all cash offer of $241,000 and One West gets $436,360 on an investment of $334,600 and all they had to do is to sell if for whatever they wanted. They make over $100,000 on just this one deal and there is no risk.
As long as banks can make money like this they are not likely to loan money on regular mortgages and the government Affordable Loan Modification Program is not likely to attract any bankers. Why should they risk ordinary loans when they have guaranteed profit using the FDIC system?
Subscribe to:
Posts (Atom)