My Blog

Category: Finance

  • John Kerry = Inside Trader and Profiteer

    Another oldie but goodie:

    For years, Kerry has invested millions in a number of green energy companies that have benefitted from the president’s efforts to aggressively subsidize the industry with taxpayer dollars.

    These companies include Exelon, which received a $646 million taxpayer-guaranteed loan in 2011 to build a solar facility in California and created only 20 permanent jobs, as well as Fisker Automotive, the fledgling electric car company that offshored its manufacturing operation to Finland after receiving a $529 million federal loan guarantee in 2010.

    The loan guarantees, approved by the Department of Energy, were made possible by funding allocated in the 2009 stimulus bill, which Kerry supported. According to Kerry’s own office, the Senator “played a key role” in crafting the portions of the legislation designed to offer federal support for green energy projects.

    Additionally, Kerry co-authored the controversial cap-and-trade legislation that would have effectively imposed a tax on carbon-dioxide emissions. Though the bill ultimately failed, the New York Times noted that Exelon and companies like it “would emerge as financial winners” if the legislation was enacted.

    Kerry has hundreds of thousands of dollars invested in Kleiner Perkins Caufield & Byers (KPCB), a venture capital firm run by John Doerr, a prominent Obama donor who served on the president’s Economy Recovery Advisory Board.

    The firm, where former vice president Al Gore is a partner, invests heavily in alternative energy companies such as Fisker Automotive and Amonix Inc., a Nevada-based solar panel manufacturer that laid off two-thirds of its workforce earlier this year despite receiving nearly $6 million in federal tax credits.

    Amonix was one of 16 companies (out of 27 overall) listed in Doerr’s “green-tech” portfolio to receive some form of federal support under Obama.

    via Washington Free Beacon.

    People — the problem in NOT in Washington.  The problem in on Main Street.  The goofballs in Massachusetts keep voting for this guy (the Lord knows we have our own corrupt politicians.)  That said, how is the not a crime? And, where is the MSM on this story?

  • Labor Force Participation Rate Lowest Since 1981

    This story is actually over a month old.  It’s been sitting in the “drafts” folder.  Still just as relevant as the day it was published.

    In April the number of people not in the labor force rose by a whopping 522,000 from 87,897,000 to 88,419,000. This is the highest on record. The flip side, and the reason why the unemployment dropped to 8.1% is that the labor force participation rate just dipped to a new 30 year low of 64.3%.

    via ZeroHedge.

    Whenever you see anything about the “unemployment” rate always keep in mind that number only tells part of the story.  The bottom line is that things are really really bad out there.  Well that and the MSM doesn’t want to tell you about it.  Which is why you have to go to site like ZeroHedge to find out what’s really going on.

  • More And More Americans Are Leaving

    Last year, nearly 1,800 Americans surrendered their citizenship. In a nation of 300 million folks, 1,800 émigrés is hardly a rush for the exits. But the recent trend is, nevertheless, intriguing.  …

    Who knows the exact reason why 1,800 Americans chose to leave last year — nine times as many as left four years earlier. Certainly, each one of them had their reasons. But like a corporate insider that sells his own stock, there’s one thing you know for certain about his motives: he is not selling because he believes the stock will go up. Maybe he doesn’t believe the stock will go down, but no one sells a stock they believe will go up.

    via Business Insider.

    I wrote about this before.  Still no mainstream press on this issue.

  • Bankrupt Stockton Chicago

    Yesterday’s news:

    Officials in Stockton said Tuesday that mediation with creditors has failed, meaning the Central California city is set to become the largest American city ever to declare bankruptcy.  …

    The river port city of 290,000 in Central California has seen its property taxes and other revenues decline, while expensive investments and generous retiree benefits drained city coffers.

    via NY Daily News.

    Tell me something I don’t know, right?

    Stockton, with 300,000 residents and $700 million in debt, would be one of the largest cities ever to file for Chapter 9 protection, according to municipal finance experts and bankruptcy officials.

    via WSJ.com.

    Humm…. ok.  Let’s compare that to Chicago.

    Calling local government debt “staggering,” Cook County Treasurer Maria Pappas announced Tuesday that the $108 billion debt tab across various governing bodies in the county translates to $63,525 per Chicago household and nearly $33,000 per suburban household.

    via Chicago Sun-Times. (Sept 29, 2011 — we now know the number to be higher.)

    Math (not new math, the old fashioned kinda math.)

    Stockton:
    $700M / 290,000 residents = $2,413.80 of debt for every man woman and child in Stockton.

    Chicago:
    $63,525 * 1,033,022 households = $65,622,722,550 in total debt;
    $65,622,722,550 / 2,695,598 people in the city = $24,344.40 of debt for every man woman and child in Chicago.

    In order for the situation to be comparable, the dazzling urbanites of Chicago would have to earn 10 x as much as the poor downtrodden folks of Stockton.

    Back to the Census:

    Chicago Per Capita Money Income in Past 12 Months — $27,148

    Stockton Per Capita Money Income in Past 12 Months — $20,176

    So the average joker in Stockton has to work for about a month and a half (2413 / 20176 *365 = 44 days) to pay off their portion of the debt.

    The average joker in Chicago has to work for nearly a year (24344 / 27148 * 365 = 327 days) to pay off their portion of the debt.

    And so I ask you which one of these municipalities should really be filing for bankruptcy?  Which is in worse financial shape?  Who’s employee’s should be more worried about their pensions?  Who’s politicians are doing the right thing by dealing with the issue square-on and not trying to pawn it off on future generations?

    I’m just asking.

    Hat Tip to Anthony Curran for the concept of this post.

  • More Bad News on the Pension Crisis

    If I was Rahm I would so totally throw Daley under the bus on this issue.

    The debt from 10 Chicago-area pension plans swelled more than 600 percent to $27.4 billion between 2001 and 2010, according to a study released Monday by the nonpartisan Civic Federation. That’s $8,993 for each man, woman and child in Chicago, according to the report.

    The shortfall comes on top of more than $83 billion in unfunded pension liabilities at the state level, driving the cost up to nearly $15,000 per Chicagoan, the report shows.

    via chicagotribune.com.

    Shear insanity.

     

  • JP Morgan: Public Employee Pension’s Set to Explode

    But they wanted to keep the story to themselves:

    JPMorgan recently circulated a “strictly confidential” report among leaders at the bank and with trusted hedge fund allies outside of the bank which details an impending public pension crisis. And we mean big time nastiness.

    Massive cuts in services will have to happen, or massive tax increases will have to happen, or both, to keep many pensions and municipalities from going over a cliff. The politicians know that disaster is coming. JPMorgan and their hedge fund buddies know that it’s coming. The public, though it has a sense of impending doom, still doesn’t grasp the avalanche that is headed toward states and cities in the very near future.

    Charlie Gasparino details in the attached article that JPMorgan did not want the information in the report to become public because it feared angering the politicians in the municipalities and states where default due to public pensions is a very real possibility. Many local politicians are lying when they tell their fire fighters and teachers that pensions are in good shape. According to what the report supposedly says these workers should probably start making alternative plans for retirement. But to say that is very messy politically.

    JPMorgan didn’t want to lose its very profitable muni bond underwriting business in these same localities, which is determined to a large degree by these same lying local politicians, so this information was kept quiet.

    via AgainstCronyCapitalism.org.

    To the actual article:

    OK, it’s no secret that nation’s public pension funds are in big trouble, holding large “unfunded” liabilities owed to public workers once they retire. But most politicians (New Jersey Gov. Chris Christie is an exception) will tell you the problem is fairly containable, that there are simple fixes — such as raising taxes on the rich or pruning benefits. …

    Not so, warns a “strictly confidential” report JP Morgan issued last year. It describes in straightforward, frightening detail how underfunded pensions are huge ticking timebombs for many of the nation’s big cities and states.  …

    Nationwide, the actual size of unfunded public pension liabilities is four times larger than the $900-plus billion that officials are ’fessing up to. That’s right, the bank sees a $3.9 trillion hole; to plug that, states and cities will need large tax hikes, massive budget cuts or both. Plus, public-sector unions will have to accept smaller retirement packages, and later retirement ages, to keep the pension systems going.  …

    In New York, for example, JP Morgan said state officials would have to immediately cut spending by 12.3 percent or raise taxes on everyone by 7.4 percent. And they’d need to make these tax hikes and budget cuts permanent for the next two decades to fully fund public-employee pensions.

    New Jersey faces an even bigger hole. Even after Christie’s reforms, it would still have to cut spending 30.8 percent or raise taxes another 17.2 percent, keeping them in place for two decades, to solve the problem.
    via NY Post.

    No word on how Illinois fares.  But as we are the #1 unfunded pension state in the union it’s no doubt a bad, bad, bad situation.

  • Teens Employment Lowest Since WWII – Obama Not Helping

    This article was published yesterday about the same time that Obama was in the Rose Garden making the situation worse:

    Fewer than 3 in 10 American teenagers now hold jobs such as running cash registers, mowing lawns or busing restaurant tables from June to August. The decline has been particularly sharp since 2000, with employment for 16-to-19-year olds falling to the lowest level since World War II.  …

    The drop in teen employment, steeper than for other age groups, is partly a cultural shift. More youths are spending summer months in school, at music or learning camps or in other activities geared for college. But the decline is especially troubling for teens for whom college may be out of reach, leaving them increasingly idle and with few options to earn wages and job experience.Older workers, immigrants and debt-laden college graduates are taking away lower-skill work as they struggle to find their own jobs in the weak economy. Upper-income white teens are three times as likely to have summer jobs as poor black teens, sometimes capitalizing on their parents’ social networks for help.

    Overall, more than 44 percent of teens who want summer jobs don’t get them or work fewer hours than they prefer.

    via HeraldNet.com.

    Holy Cow!!  Three passages worth repeating:

    [T]he decline is especially troubling for teens for whom college may be out of reach,
    leaving them increasingly idle and with few options to earn wages and job experience.

    Just who are these kids who are now left with few options?  My guess is urban city kids.  In the country there’s always work on the farm.  But in the city & suburbs we have thousands and thousands of idle kids.  Hanging around with noth’n to do; just look’n for trouble.

    Older workers, immigrants and debt-laden college graduates are taking away
    lower-skill work as they struggle to find their own jobs in the weak economy.

    Isn’t this the truth.  Have you ever been to a Wal-Mart where the greeter was under 50?  And now everywhere you go, every single stinking fast food place, sit-down restaurant, Target, Wal-Mart, grocery store, and nearly everywhere else has adult immigrants working there.  In the ’70s and ’80s these jobs were good (great) jobs for kids to get.  Two people I know very well worked at Jewel when they were in high school.  One put herself through college; the other bought a Camaro.

    With the new (unconstitutional) Obama plan on immigration the job market will now have another few million young people who are eligible to work … but will struggle to find decent employment.  It serves no one when you just set people up to fail.

    Upper-income white teens are three times as likely to have summer jobs as poor black teens….

    This is what I wrote yesterday; inner city kids are going to be one of the biggest losers in the immigration debacle.  Contrary to what some people believe, one cannot just walk into a job that pays $100,000 per year.  Everyone has to start somewhere.  Usually that means that kids bus tables at a local restaurant, caddie, work retail, mow lawns, wash cars, whatever.  These jobs are important because they teach critical lessons necessary to move up in the world: show-up on time, look nice, smile, how to deal with conflict, how to deal with a boss, etc.  You can’t just wake-up one day and think you’re going to get a job as a banker without having decent people skills.

    Obama is dooming generations of inner city kids to lives of and on government sustenance.  These kids will never reach their full potential because they have so many factors stacked against them: poor educational systems, uneducated parents, no access to jobs, and a president who’s bargained their futures for political gain.

  • City Hall’s New TIF Troubles

    This story is actually from early April:

    According to a report issued today by Chicago Inspector General Joe Ferguson, a fluke of state law means that many neighboring business districts that collect an extra property tax to pay for security, advertising and the like actually have had to pay twice — once for security, et al., and once to the TIF.

    The report specifically deals with Special Service Areas: little neighborhood shopping districts such as Lincoln/Belmont/Ashland, South Shore, Greektown and Wicker Park/Bucktown in which the shop owners agree to impose an extra tax on themselves to pay for things of mutual interest. …

    The problem is that 80 percent of the city’s more than 60 SSAs also overlap wholly or partially with TIF districts.

    The way a TIF district works is that property taxes are frozen at a current level, with the TIF getting the growth over the next 23 years — known as increment — to spend on TIF projects. But when an SSA levies an additional tax for its needs, the amount of the levy is imposed both on the old base levy and the increment.

    In other words, to help themselves, merchants have to pay twice. And that’s amounted to an extra $7.5 million to TIFs last year and about $7 million in preceding years, according to Mr. Ferguson.

    via Crain’s Chicago Business.

    Man I really hate TIFs.

  • CPS’s Safe Haven Funding Slashed

    With money tight,Chicago Public Schools’summer Safe Haven program will be scaled back and serve fewer students.Last year, the district used $975,000 in federal stimulus funds for Safe Haven, which encompassed 100 churches working with 5,000 students on issues including conflict resolution and anger management, as well as reading programs, tutoring and arts.

    via Chicago Tribune.

    That’s 100 churches getting nearly 10,000 each to do what exactly?

    Like nearly all government programs Safe Haven was doomed from the start.  It was a “spread some money around” plan that had no measure of success or failure.  Nearly a million bucks was doled out to politically connected reverends who held a few meetings, played a little basketball, and then sent the children back into the mean streets.  No one knows where the money really went.  But it’s safe to say that Safe Haven did little to curb violence.

  • Raise Taxes — Lose Revenue

    The current taxes on a pack of cigarettes in Chicago include $2 from Cook County, 98 cents from Illinois and 68 cents from the city. If Quinn signs the latest increase, the taxes in Chicago will be $4.66 per pack, compared with 99 cents in East Chicago.

    On Monday, a pack of Marlboros at a 7-Eleven on North Wells Street in downtown Chicago ran $9.69, before the state tax increase. At a 7-Eleven on Hohman Avenue in Hammond, the same smokes went for $6.20.  …

    “The cigarette tax increase passed the Senate last week. Quinn has said the hike is necessary to generate about $350 million for the Medicaid program.  …

    In 2006, the Cook County tax doubled to $2 per pack.  …

    But even as taxes on cigarettes climbed, the revenue in Cook County dropped. In 2006, the county garnered more than $200 million in cigarette taxes. That number plummeted to $131 million in 2010, according to annual reports.

    Let’s stop here for a second and think about that.  In 2006 the Cook County Government DOUBLED the cigarette tax in order to RAISE REVENUE.  What was the result?  Revenue fell by a third!!

    Legislators and experts agree some drop-off can be expected as tax increases price people out of the market or alter smoker behavior. The percentage of U.S. adults who smoke declined from nearly 21 percent to 19.3 percent between 2005 and 2010, according to the Centers for Disease Control and Prevention.  …

    So during roughly the same period smokers (albeit nationally) kicked the habit to the tune of 8%.  But Cook County revenue off by 34.5%.

    Cook County Sheriff Tom Dart has said he thought most of the revenue dip was due to fraud.

    Dart and County Board President Toni Preckwinkle joined forces in September to add more staff to the county’s Revenue Department to investigate fraud claims. Within three weeks, investigators seized more than $353,000 in unstamped cigarettes and imposed more than $400,000 in fines, Dart said.  …

    Well Mr. Dart, if your own statement is true then you completely suck at your job.  Your missing $69 million and you find $400,000.  You’ve located 0.58% of the missing money.  Less that one percent.

    So what’s really happening here?  We know that the double the tax, yet revenues off by a third, only 8% quit, and Tom Dart can’t find the missing money.  So where’s the money?

    Larry DeBoer, professor of agricultural economics at Purdue University, noted that Indiana benefits as taxes spike in neighboring states.”There’s no doubt that commerce goes back and forth across the borders,” DeBoer said. “If Illinois increases its tax by $1, we’ll realize about $10 million more in cigarette tax revenue.”

    via Chicago Tribune.

    Aaaah.  There’s the money!

    In Illinois we’re governed by complete morons.  The Laffer Curve is a real thing.  People will change their behavior to engage in tax avoidance.  In this case is primarily involves not buying cigarettes in the City and County but in the collar counties and in Indiana.

    More to the point, wouldn’t you think that when you double the tax and see revenue falling and falling and falling that someone would have stood-up and said, “Maybe we should roll-back that tax before we lose any more money?”  But not in this county.

    Stupid Quinn and his ilk are going to keep raising taxes until there’s no one left to tax.