Friday, October 31, 2008

What's Selling?

Consumers are pulling back, but not on booze and guns. With gas prices high, people aren't driving anywhere, so this tells me that America is at home, loaded, and armed? This is bad for the home burglary business, I would guess.

I'm Speechless

Holy Friggin' Moly! This dumb-ass actually thinks she won't have to pay for gas or pay her mortgage....This is where a little man appears on my shoulder and whispers in my ear, "No Donny B., it is you who are the dumb-ass. We are at the point where 51% of the population are voting to pee in the cornflakes of the other 49%. Peggy Joseph is right. Barack Obama means it. Enjoy your cornflakes."

Anyway Peggy, I am devoutly opposed to paying for your gas and your mortgage and when Barack comes a lookin', well, he won't find much.

Thursday, October 30, 2008

Johnson: We're Fat and Lazy, the Hungry & Quick Will Eat Our Lunch

"I see you're going back to the windmill in Britain. We Chinese cannot afford that."

I thought the same thing last year when I took my kids on the Millennium Eye in London. I saw these silly windmills on top of office buildings that couldn't possibly provide meaningfully economic power and I knew it was not a sign of progress but of stasis.  Johnson is right, we are fat and lazy to the point where we can indulge all this silly liberalism.  

Selling Tax Shelters to Pro-Obama New Yorkers!

This is typical New York City brand 'wear your liberalism like fashion' loserdom, but it actually makes financial sense. If Obama wins, taxes on income and financial assets are going up, so you want to shelter that income via the juciy mortgage interest deduction. If McCain wins, taxes are unlikely to go up so a tax shelter is less valuable. Not that this is how this is being marketed. I am 99.9% sure that the marketing pitch goes like this - 'If McCain wins, we're gonna stay in the crapper forever so you don't want to own anything, so we'll give you that out; but, if Obama wins, well of course, it is all milk and honey so we won't feel bad about making you honor your purchase commitment.'

NYCers want to keep more of their own money from the government just like anybody else, but they just would never admit it. Too socially unacceptable. That's New York baby!

Tuesday, October 28, 2008

A Tax Avoidance Game Plan for an Obama Administration

A while back, I said that in response to a President Obama's redistributive tax policies, it's time to think about how to seriously shelter some income. There are lots of ways and I don't claim to be an expert on this, but here is a good, basic approach for the small business owner. First, I hope you bought a house recently to take that mortgage interest deduction, because that's alot of your juice. Good. Second, if your small business is an LLC, you gotta have a simple IRA. That 's your second biggest juice.

Here is how it works. So let's say your small business is going to throw off $250,000 per year for you in the coming years. Well, that means you're rich according to The One and you're gonna get socked. Well, if you have a simple IRA, you can take $10,500 in deferred compensation and your employer, namely you, can match you up to 3%. So your LLC can pitch in $7,500 and your effective income is reduced to $232,000. Then you have the mortgage deduction. A nice healthy chunk in your house, at least 20% to avoid PMI, but not too much more, can give you major juice. In my case, let's say the mortgage interest deduction is somewhere around $40,000. That would indicate a decent exposure to your home, but as I've said before, I think real estate is a good investment these days. Then HELOCs are going cheap, you can leverage your home equity a little more with a capital addition or an improvement and increase your mortgage interest deduction (hell, you can buy a 6% yielding stock or some munis with a 4% HELOC, just don't tell your bank!). In my case I tack on another $3,000 in deductible mortgage interest thanks to the HELOC. So I've got my taxable income down to $189,000. But wait, it doesn't stop there. I've got a high deductible health care policy that let's me throw $5,800 into an HSA. That money is pre-tax, earns interest and I can spend it anytime in the next few years. With three munchkins, you can bet your keister I'm gonna have those healthcare expenditures eventually, so better to keep it from The One and have it lying around for a broken arm or a sprained ankle. There you have it, $250,000 in income has become $183,200. Granted you have to live a little leaner but your money goes into productive assets (IRA assets, your home, an HSA) that can store that value for after the The One has faded from his public role and is on the lecture circuit. Oh, and please folks, no cheating. That would be wrong, because Obama needs the money!

Like I said, I'm not an expert, so I welcome any suggestions and feedback on how to shelter income from The One. Anyway, Happy Tax Avoidance!

UPDATE: People seem to get it. Mortgage apps are up.

Wednesday, October 22, 2008

Argentina Hurtles Toward the Dark Ages

Theft and liquidation.

UPDATE: B minus. Good work Christina.

Friday, October 17, 2008

Second Stimulus (and a Self Back Pat)

Back in August I was talking about a second stimulus for the economy. No, not the putative one talked about in the Great Sausage Factory, but the one coming from falling gas prices. I said a 50 cent reduction in gas prices meant about a $6 billion stimulus per month. Naturally, that's $72 billion per year. Turns out, we've seen gas prices drop $1.10. By my numbers then, that's $158.4 billion in annual savings to consumers. Mark Perry of Carpe Diem Blog, says it could be $188 billion. (Please note, DB's estimate is smack dab in the middle of Perry's range, and he's a professional economist. Not bad for a guy in his jammies, huh?) Furthermore, we appear to be crashing through $3.00 per gallon. If this is accurate, we're at $2.98, so tack on anther $6.8 billion. If we get back to $2.80 where we were just one year ago (and why wouldn't we?), throw another $30.8 billion onto the ole' camp fire, for a total of $225 billion. The checks the government mailed out in 2008 totaled something like $152 billion. That doesn't mean the economy won't be bad, but that is real money set to work exactly where and how it oughta be - in all of our hands for us to do with it as we will. No academic economist's mumbo-jumbo about "marginal propensity to consume" and no political mumbo-jumbo about "targeted" stimulus. Just plain ole' wide open, unfettered stimulus.

UPDATE: So the Baseball Family roadster hit the highways and byways this weekend, and we discovered gas at $2.73 per gallon in New Jersey, which is not known as a cheap gas mecca (unless you live in NY). Bloomberg reports that $50 crude options have soared and OPEC is scrambling to stem the slide (Iran and Venezuela are sweating profusely). The second stimulus is likely to blow through the $300 billion mark with any further declines.

I Actually Learned Something from the Media Coverage of the Election

I didn't know there were plumbers named Joe. I thought all plumbers were named Tony, but then, I am from Jersey.

Monday, October 13, 2008

Tolerance and Open-Mindedness, Liberal Style

One more item in the long list of examples why liberals or progressives or whatever they call themselves are the most intolerant and least open-minded people in the political arena.

More here. This is particularly lovely, too. Ah, lovers of peace.

Tuesday, October 07, 2008

Pretty Good for A Guy Sitting Around In His Jammies

Someone at Saturday Night Live reads NBfPB..., I guess. And now there's a wee bit of controversy. I even predicted that a video would mysteriously disappear, although not the video in question. Still, pretty good, for a guy sitting around in his jammies.

Here's the video.

Not even a hat tip. Where is the love?

Friday, October 03, 2008

Not Too Late To Veto, Mr. President

This is from economist John Seater via Don Luskin:
"I just read that the Senate has added a provision requiring insurance companies to cover mental illness. Somehow, insuring mental illness doesn't seem closely related to an imminent credit freeze, but it is just the kind of thing that one would expect our illustrious politicians to sneak through amidst a panic that they themselves have had a hand in creating."

I blogged on this mental illness coverage before, specifically regarding Timothy's Law. So we basically now have Timothy's Law gone national. Somewhere there is a government agency estimate on how much this law will cost, if someone can find that number for me, I will happily times that number by 7 to arrive at the minimum cost to you and me of this misguided provision that has absolutely nothing to do with the financial system. Regardless of whether you think we just bailed out Wall Street or in fact bailed out Main Street, we surely just bailed out the mentally ill by throwing billions at the very subjective and amorphous problem of mental health.

Two predictions. First, to the extent that Republicans were going to get slaughtered in November, you can increase those odds. They had an opportunity to pass this craptastic bill free and clear of normal Washington bullshit, but they cratered it and now we have the exact same plan adorned with the usual variety of disastrous Washington add-ons and distortionary rules. Forget about Nancy Pelosi's horrible leadership or all the Dems that voted no the first time around. This albatross will hang around Republican necks. Second prediction - health insurers will leave the business. This has the potential to grow like the Blob and it will wreck many a business model in the health insurance biz.

Which leads me to why the market is barfing now that we officially have this thing. Wells Fargo is going to raise $20 billion to absorb Wachovia. JPMorgan raised a few billion to take in WAMU. Warren Buffett let loose a few billion. The money is there to recapitalize the banks and it seems to be flowing in. So do we really need this $700 billion intervention? Probably not, but now we have it along with what could be a multi-billion dollar mandate that will drive healthcare insurance costs up for everybody. Thank you Washington.

Wednesday, October 01, 2008

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