My Blog

Category: Finance

  • France’s Richest Man Moves to Belgium

    The richest man in France has officially transferred his multi-billion pound fortune out of his homeland to Belgium.

    Bernard Arnault, head of luxury goods group LVMH, insists he has moved his assets for ‘family inheritance reasons’.

    But others are convinced that the 63-year-old has joined other tycoons and celebrities in wanting to avoid taxes – including a 75 per cent top rate on income – introduced by Socialist President Francois Hollande.

    via Mail Online.

    This story does not exist to any U.S. media outlets.

    The left wing media does not want anyone to think the Laffer Curve actually exists.

    So now instead of getting a decent amount of money in taxes from this guy — they had to get greedy and push the tax rate to 75% — and now they get NOTHING.

    There’s a quote going around today:

    The problem is Socialism is that sooner
    or later you run out of other people’s money.
    — M. Thatcher

  • Government Dependents Outnumber Private Sector Workers

    In 11 of the 50 states in the US, residents dependent on the government outnumber private sector workers.

    “America is rapidly becoming a nation of takers,” economic blogger Michael Snyder writes. “An increasing number of Americans expect the government to take care of them from the cradle to the grave, and they expect the government to dig into the pockets of others in order to pay for it all.”

    Snyder explains that in the states California, New York, Illinois, Ohio, Maine, Kentucky, South Carolina, Mississippi, Alabama, New Mexico and Hawaii — all states won by US President Barack Obama during the November general election — the number of Americans dependent on government aid dwarf those going into work to receive a paycheck.

    According to a report published by the Heritage Foundation, 62 percent of government spending in fiscal year 2012 has gone towards entitlement programs that benefit needy Americans, with more than one-fifth of all of Uncle Sam’s funds going into Medicare, Medicaid and other health care programs.

    And although the United State spends more money on their military program than any other nation in the world, only 19 percent of government spending goes towards national defense. By comparison, that’s two-percentage points lower than the amount spent on Social Security.

    via RT.

    This is amazing.  Amazingly sad.

    Do people understand that we cannot sustain the country as it has been going?  You cannot have 50% of the population sit around and do nothing; just taking from the working minority.  The system will collapse.

    Soon.  Soon, it will collapse.

  • Gov Official Warns Cook County Retirees Of Local Debt

    In May, 2012, the collective debt reported by the local primary taxing agencies in Cook County was more than $140 billion! To put that in context, the total debt-per-household in the City of Chicago was $87,720, and $35,774 in the suburbs. Since local governments cannot print money, they rely on property taxes as their main revenue source to operate.

    Homeowners might be able to give their homes to their children, but that future generation won’t be able to afford to keep them because of the property taxes, which have doubled over a 10-year period.

    via Forbes.

    So you know it’s bad when an elected official is out there telling you it’s bad.  It’s really really mo fo bad.

  • GM Exit Strategy: Taxpayers Eat Billions

    The Obama administration said Wednesday it will sell 200 million shares — or 40 percent of its remaining stake in General Motors Co. — back to the automaker and announced plans to completely exit the Detroit automaker by March 2014.

    The Detroit automaker said it will purchase 200 million shares of GM stock held by Treasury for $5.5 billion — or $27.50 per share — nearly $2 above the stock’s closing price on Tuesday. GM shares jumped sharply on the news and were up 7.5 percent to $27.36, or $1.90, early afternoon in very heavy trading.  …

    Still, taxpayers will almost certainly lose billions of dollars in the $49.5 billion GM bailout – and the government would need to sell its remaining shares for about $70 each to break even. If the government sold the rest of its stock at current prices, taxpayers would lose more than $13 billion. But profits from the bank and AIG bailouts will largely offset the auto bailout losses.

    via The Detroit News.

    No surprise here right?  We all knew this was coming… now that the election is over?  Right?

  • Pensioners Take Note, Municipal Bond Storm Coming

    [B]ut California too is now starting to hand it to bondholders. Cities in California are now testing the limits of bankruptcy law, and not paying the debt nor the payments for retirees to the state system. Thus this article describes how the state retirement system (CALPERS) is suing to demand payment, and saying that retiree obligations come AHEAD of creditors (municipal bond holders) in the queue.

    “The issue is, do Calpers obligations supersede unsecured bondholders?” Fabian said in a telephone interview. “There’s an awful lot of unsecured bondholders in California. If you put pension obligations to Calpers as secured and senior to unsecured debt, in effect those bonds have been downgraded.”

    In the Stockton and San Bernardino cases, Calpers is arguing that pension contributions must be made ahead of payments to other creditors because they are so-called statutory liens, or debts that state law requires to be paid. Bondholders and other creditors that oppose Calpers argue that pension debt is a contractual obligation like any other.

    You’d have to be nuts to buy California municipal debt if Calpers has precedence and employee retirement benefits can’t be cut, since this is the MAIN THING that is driving these cities into insolvency. In the future likely these municipalities would just contract out everything to third parties that wouldn’t pay their employees those giant benefits, but the cities have to jettison these liabilities to put their fiscal house in order today.

    via Chicago Boyz.

    In case this is a little tough to follow, in bankruptcy debts are paid according to a priority.  There’s a decent primer here.

    The “Illinois” based pensions are probably ok. e.g. ITRS.  There is no statute permitting a state to file for bankruptcy protection.

    However cities are corporations; they can (and do) file for bankruptcy protection.  CPS, CPD, CFD employees and retirees should watch these cases in California closely.  They may be getting a real haircut if they have to defer to the bond holders to get their money.

    It’s all very very sad.

     

  • $55 Million Paid to Kids to Do Nothing

    Records provided to CNN show that $54.5 million was spent on the NRI program, mostly through the governor’s discretionary fund, which doesn’t require legislative approval.

    The only data on the program’s accomplishments come directly from the Illinois Violence Prevention Authority. The NRI states that it created more than 3,484 jobs, provided counseling for more than 3,100 children, and helped 1,175 ex-cons.  …

    NRI participants were paid $8.75 an hour, first to receive mentoring from adults, and then go out to pitch positive messages and hand out fliers in their neighborhoods.  …

    [S]tudents earned $8.75 an hour to visit the DuSable Museum of African American History and to the National Museum of Mexican Art.

    What the ??

    Why would taxpayers pay for kids to attend mentoring?  It would be like paying them to play basketball or video games or go to school.

    $54.5 million / 3,484 jobs / $8.75 / hour = 1,787 hours & $15,642.94 per person.  This is nothing more than paying kids for doing the right thing.

     

  • Who Would Rather Not Work?

    This first came up (recently at least) with the Hostess workers:

    Interviews with more than a dozen workers showed there was little sign of regret from employees who voted for the strike. They said they would rather lose their jobs than put up with lower wages and poorer benefits.

    “They’re just taking from us,” said Kenneth Johnson, 46, of Missouri. He said he earned roughly $35,000 with overtime last year, down from about $45,000 five years ago.

    “I really can’t afford to not be working, but this is not worth it. I’d rather go work somewhere else or draw unemployment,” said Johnson, a worker at Hostess for 23 years.

    via Reuters.

    Yes, old news.  But I came across this today:

    welfare cliffs

    In the recent past we noted the somewhat startling reality that “the single mom is better off earning gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.”  …  the painful reality in America is that: for increasingly more Americans it is now more lucrative – in the form of actual disposable income – to sit, do nothing, and collect various welfare entitlements, than to work. … there is an earnings vacuum of around $40k in which US workers are perfectly ambivalent toward inputting more effort since it does not result in any additional incremental disposable income.

    via ZeroHedge.

    An interesting note is that the graphic comes from the PA Dept. of Public Health.  It’s a slide from a whole presentation about welfare’s failure.

    I recall a story from a friend of mine who used to run a mechanical company.  He had a nice lady working at the office whom he gave a raise.  She took her new pay stub and dutifully notified social services.  As a result of the modest raise she was going to lose her housing voucher.  So she had to go back to work and say, “Thank you very much but can you please take your raise back.  I need to keep my housing voucher.”

    The system is broken.  Very very broken.

  • $45k/yr is the “New Rich”

    Implemented in 1969 to make sure upper-income Americans pay their share of taxes, the AMT has increasingly snared more middle-income Americans over the years because it was never indexed for inflation.

    During the 2011 tax year for example, the higher tax hit single taxpayers with incomes as low as $48,450 and joint filers making only $74,450.

    But millions more Americans could be subject to the AMT in their 2012 returns if Congress fails to reach a deal on the fiscal cliff before year-end. That’s because the AMT is currently scheduled to hit individuals making as little as $33,750 a year and joint filers making $45,000.

    via CNBC.

    Being married and making over $45,000 a year is the “new rich.”

    Incredible.

  • 2/3 of Millionaires Avoid 50% Tax Rate

    Two-thirds of millionaires left Britain to avoid 50p tax rate

    Almost two-thirds of the country’s million-pound earners disappeared from Britain after the introduction of the 50p top rate of tax, figures have disclosed.

    via Telegraph.

    Shhhhh…  This is a secret.  No one tell the U.S. media.  They think the “rich” will just stay and give Obama all their money.

  • Milton Freedman on Social Justice

    When you aim for equality A and B decide what C shall do for D.
    Except they take a little bit of a commission along the way.

    [youtube http://www.youtube.com/watch?v=gMLjkt87ICo]

    Hat tip to // Hillbuzz