Reinke Faces Life

http://article.nationalreview.com/?
q=MmQ2MDY4ZmFjZDkwZTUyZTIy
NTAwMjIyY2Q5NWM5ZTM=

February 9, 2007 6:00 AM
When You Tax Profits, You Tax People
The economics behind Hillary Clinton’s anti-business Chavezian threat.
By Larry Kudlow

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Washington economist Kevin Hassett has shown that the U.S. workforce bears a full 70 percent of the cost of corporate taxes. So, if folks are indeed worried about wage inequality, they should be lobbying their congressional representatives to cut corporate taxes in order to increase worker wages.

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Only “real” people pay taxes.

Anyone, who knows anything about business, knows that they are just conduits of costs. If I make widgets that you buy, you can rest assure that, if I am in an ongoing business, every cost associated with that widget is built into the price you are paying. If there’s an income tax, sales tax, use tax, gas tax, or a tax specifically on widgets, it’s all added into the price.

That’s what makes determining the total tax load so difficult. My widget, Hershey’s candy bar, and Mom’s apple pie from Drake’s all have taxes built into the price. You buy a my widget for a buck. How much tax did you just pay? No one knows and the thieves in Washington, Trenton, and city hall like that just fine.

That’s why taxes like the gas taxes are so insidious. They’re build into every single thing you buy. You couldn’t break that out if you wanted to.

That’s why the cost of regulations are also insidious. They can’t be broken out either. If I can only assemble my widget in Borneo because of environmental regulations, it has to be shipped to you. Now, figure out the cost of that “regulatory” tax. Good luck!

Sigh.

Then don’t forget that there is an “inflation tax”. Regardless if you think inflation is 2% or 15%, or somewhere in between (as I peg it now at about 7% based on 200 basis points over the Certificate of Depreciation rate I can get), that to is an insidious silent tax. So how much of that is in your products that you buy?

No the dead old white guys were quite right in insisting that taxes be on imports only. It’s really easy to see that. Everything else gets buried.

And, it’s not like they do anything useful with the proceeds of their theft.

http://hosted.ap.org/dynamic/stories/E/ECONOMY?
SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&
CTIME=2007-02-01-08-56-21

http://tinyurl.com/3dh2ve

2006 Personal Savings Drop to 74-Yr. Low
By MARTIN CRUTSINGER
AP Economics Writer

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WASHINGTON (AP) — People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.

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Now we know that the FED (The Federal Reserve Bank which is neither Federal, a Reserve, or a Bank) tells us there is no inflation. We know the politicians tells us there is no inflation. And, we know that we are not in the Jimmy Carter era of runaway 18% inflation.

But, could one explanation for the negative savings rate be that there is an underlying belief that cash is crap?

Why save if tomorrow will be worse than today in buying power?

Could we be seeing the marketplace discounting for an expected future inflation?

In a variation of the “Customer is always right”, the marketplace is always right.

If people are not saving, whatever the reason, they are “right”. Even when they are wrong, they’re “right”.

The cost of the war, the cost of social security, the cost of medicare, the cost of the drug benefit, the cost of all the social programs, and the cost of the TSA’s security kabuki dance is all going to come due.

Hmmm?

ESOP
Posted by: “Reinke’s Networking Persona”
Mon Jan 22, 2007

Posted by: “jairam_sridharan” Sun Jan 21, 2007 6:09 am (PST)

>My company is planning to give me a ESOP.

Be careful to be very precise in your thinking. “Give” could mean: toss you a gold bar, or scrap, for free, invite you to invest in, make it the only option in a 401k or retirement plan, or be real, or “shadow”, options.

(It’s not that I’m so smart, it just that I stayed in a Holiday Inn Express once upon a time. That, and I worked on Wall Street for two decades.)

>My employer wants me to be a part of this program.

Don’t think that they are being solicitous of your welfare. There is probably a legal, regulatory, or financial reason for their “concern”. Legal in the sense to get tax benefits they have to include the peons. Regulatory in that there may be a prohibition against not including a balancing number of peons. And / or financial in that they may want to dump some paper and collect some operating capital from you. All the while making you believe in the Tooth Fairy, Santa Claus, or A Leprechaun’s Pot of Gold.

> What are the pros and cons of a ESOP?

It can be a great investment. Ask the Microsoft millionaires. Or it can be a pile of smelly stuff. Ask the Enron employees.

If I was an “investment advisor”, and I am not, and am not licensed, nor do I play one of TV, I would tell you that:

(1) one should clearly and completely understand any investment (otherwise, double your money by folding it and putting it in your pocket)!

(2) You should have a properly diversified investment strategy. (Don’t put money you can NOT afford to lose into ANYTHING!) Wall Street rule of thumb is not more that 5% in any one thing or type of thing.

(3) Because ESOPs are generally “locked up” for long period of time, have tax ramifications of any escape, and are very illiquid, they should be evaluated with those restrictions in mind. (That is you probably can NOT touch it till you retire; if you do, the tax man will be the big winner; and getting out early will cost you in value).

>What are the important aspects that I must look forward to?

Who pays what? Is it “free”, do you have to kick in a percent, or do you pay everything? Who get the money? (In one case I know it was the execs. You were basically buying their restricted stock. p.s., the CFO went to jail on that one.) When can you exit stage left? (If the answer is “when you die”, then you have a problem. Don’t laff, saw one of those to!)

AND, politically, now that you’ve been invited to “participate”, what are the consequences of saying (politely deferentially and with solemnity “are you kidding me, invest in this chick poop outfit”) “no”. It could cost you your job, your ever getting promoted, and laid off on the next round of cuts as “disloyal”

>My employer says that if I participate in this program, I will get a 60 – 70 % hike in my salary

And, if I buy a winning lottery ticket, I can retire top Aruba and count my interest.

Who are you going to believe your employer or some faceless typist on the end of Yahoo Group?

Seriously, I’d take that one with a BIG grain of salt.

In the USA, it is illegal and a criminal matter to make any such statements.
(It can get the stock’s registration pulled for a “quiet period” violation.)

I would pose the question where is the 65% increase going to come from?

No that’s (charitably) “a misunderstanding”. Again, the Microsofties made grazillions and the Enronites got screwed. Your mileage may vary. Not may — will!

> Please can somebody advise me.

Divide the problem into buckets.

Can I say no politically without losing my job, promotion, or future?

If you can’t say “no”, that’s a different set of problems.

What is my “contribution” into this?

Can I afford it?

If I lose everything, like Enron, will I be eating dog food in my old age?

If I was making an investment, would I have picked this company to invest in?

Does it pass the “sniff test” (i.e., does it smell like poop or pie?) Is everything honest and above board? Is everything “reasonable”?

Is everything I am being told written down on a piece of paper somewhere?

>

Remember I’m a pretty negative guy. I worry about the bad stuff happening. Then, I can be pleasantly surprised when the sky doesn’t fall.

All in all, I’d assess your problem, just based on what have heard, as “mildly negative”, based on the 65% promise.

So I’d investigate further diligently without being nasty like me.

Good luck.

http://www.ft.com/cms/s/
572b41a6-a414-11db-bec4-0000779e2340.html

http://tinyurl.com/ycnuqo

Euro displaces dollar in bond markets
By David Oakley and Gillian Tett in London
Published: January 14 2007 22:08 | Last updated: January 14 2007 22:08

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The euro has displaced the US dollar as the world’s pre-eminent currency in international bond markets, having outstripped the dollar-denominated market for the second year in a row.

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Is this the beginning of the end of the US Dollar as the world’s reserve currency?

Try to envision what that means.

(1) Dollars stored overseas will come back to us as sort of IOUs. Foreigners will buy something with those dollars to take home. Anything of value. Remember the Japanese buying Rockafeller Center in NYC? The inflation that we exported overseas will come home to roost.

(2) Imports will get more expensive. Big Time! As we will have to pay for them in Euros, not Dollars.

(3) The general rise in prices caused by too many dollars chasing to few goods will hurt the poor, the elderly on fixed income.

(4) The non-productive parts of our economy (think government) will become more expensive as the prices go up. Government costs will rise faster. (Why? Only real people pay for things. Government and business are really fictions that just pass along costs to real people for payment. There’s “shipping and handling” on every transfer. Corporations, because of competition are motivated to minimize that. Governments are not. Thus if the cost to government goes up a dollar, I’d expect the cost to me goes up four dollars. While me quibble about the multiplier, it’s definitely there.)

Plan your finances accordingly.

Don’t hold dollars; buy things that will “surf” in inflation. Gold, Commodities, Equities, Treasury Inflation Protected Securities, things that appreciate in value.

http://www.brianrwright.com/index_files/feds_fear_liberty_dollar.htm

Monopoly Money: Feds fear Liberty Dollar alternative
01 December 2006
Brian Wright

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Live free and flourish!

Part of the noble equation of liberty is honest money. Fortunately the National Organization to Repeal the Federal Reserve Act (NORFED) has given us the Liberty Dollar system to help us achieve just that.

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With the monetary inflation rate being unknown due to the US Treasury no longer publishing the M3 number, one has to guess. To me, it “feels like” between 5 and 10%. My experience has been that the demand deposit rate is usually a smidge less that the inflation rate. During the Carter Inflation in the 70’s when the published rate was 21%, savings deposits were paying 17%. In the 90’s, when inflation was a “low” 4%, demand deposits paid 1%. The sad part is that inflation erodes the purchasing power of savings, “inflates” one into higher tax brackets, and when one sells assets “capital gains” tax is on inflation.

It hits the poor, those on fixed incomes, and the financially illiterate worst.

I like to tell the story of my now deceased Father-In-Law, who was always proud that he had a Fifty Dollar bill in his wallet. He put it there as a kid so that he’d never be broke. It was in there about 50 years. When he put it in, it was valuable. When his heirs took it out, it was worth about a penny in terms of the purchasing power it once had! In an inflationary economy, money fails in one of its key roles as a store of value. He’d have been better off to have used it and been broke. It was an illusion.

At 1% inflation today’s “dollar” is worth 74 cents in 30 years. 10% yields a 6 cent dollar in the same 30 years. I like to think of inflation like a balloon. Want a bigger balloon, just put more air into it. Until it pops!

Imagine playing on a football field, where each year the definition of a “yard” changed. It doesn’t change the same each year. One year the field is really 106 yards in “real yards” and the next it might be 116.1! Talk about nightmare. And what good would records be? Think it would be confusing. Why is it different when the gubamint prints more money? And, it’s not actually the gubamint printing money. It’s the Federal Reserve Bank, which isn’t federal, doesn’t reserve anything, and isn’t a bank. It’s just a private club with a license to steal.

Economists like to reference Robinson Carusoe’s island, Caruso and Friday are on the island. Caruso fishes and Friday picks bananas. They work out an exchange. But put some more people on the island and you need money to have an easy exchange between fish, bananas, and coconuts. So one day a “Federal Reserve Banker” comes along and prints some paper “dollars”. The marketplace finds the right price for fish in terms of bananas, coconuts, or “dollars”. Now suppose our Federal Reserve Banker prints double the dollars. Just lots more “dollars”. Twice as many in fact. Now just printing more “dollars” doesn’t do anything to increase the wealth of the islanders. There are not twice the fish, bananas, or coconuts. Rather quickly the market price will double the price of fish, bananas, and coconuts. Increasing the money supply doesn’t make everyone rich. It just increases prices.

Why do it? Because the printer are unjustly enriched. He gets to spend those dollars before the prices adapt. Money that has nothing backing it of value (i.e., gold; silver; or even tiki lamps) is just paper. Worthless the minute that the fraud is discovered.

Read about John Law, the South Sea Bubble, the post WW1 german hyper inflation, the south american hyper inflation, and the Carter Inflation in the 70s.

So, sooner or later, the Arabs will get tired of getting pictures of dead presidents for oil. Ditto the Japanese for Toyotas. And the Chinese for plastics.

One needs to NOT hold paper money! But what should one “hold”. Things that appreciate in value (i.e., collectables). Real estate. Things that earn value (i.e., stocks that are recession / depression proof). Commodities. And precious metals. Debt in a recession is bad.

That brings us to NorFed and their alternative currency.

I think the jury is still out on that.

Here’s my thinking. The NorFed Twenty “dollar” coin is an ounce of silver that costs $20 FRB. Silver’s volatile. It varies currently from 12 to 18 Federal Reserve Banknote “dollars”. So, why pay a premium for basically an ounce of silver. I’d just buy (i.e., have bought and will buy more) bullion coins from reputable dealers. Is the paper NORFEB warehouse receipt worth that premium? Maybe? It’s better than a Federal Reserve Banknote. Called a FRBbie (pronounced FUR-BE!) by its detractors.

Note: Gold bullion 1 OZ American Eagle coins trade at Kitco who buys at 630.10 and sells at 667.92

http://www.telegraph.co.uk/
money/main.jhtml?xml=/money/
2006/11/29/cndollar29.xml

http://tinyurl.com/y7ur7w

US setbacks see dollar plunge to near 15-year low
By Ambrose Evans-Pritchard
Last Updated: 12:41pm GMT 29/11/2006

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The dollar tumbled to a near 15-year low against sterling yesterday on fresh signs of economic trouble in the United States.

An 8.3pc crash in US industrial orders and an admission by the Federal Reserve chairman that Washington does not know how bad housing really is set off another day of wild gyrations on the currency markets.

***End Quote***

Maybe if we had “honest money”, (i.e., backed by something other than the full faith and credit of a dishonest government) then we might not need to be overly concerned. When the printing press runs at the “Treasury Department”, (as if there was anything of value kept there), then everyone who holds a Federal Reserve banknote is taxed by inflation.

No vote in Congress. Nothing signed by the President. No politicians has to “do” anything. The politicians think the market is stupid.

No, even without the government’s M3 number being published any more, the market “knows” exactly how many extra green pieces of paper that the FRB prints. It takes a little time. But eventually there are more FRBies chasing the same amount of goods, so prices rise.

It’s like a great calculating engine; probably the Intelligent Designer’s greatest gift to us.

No election. No counting of “votes”. No so called “laws”.

Just the free exchange of things between people. Eventually everything in the marketplace satisfies everyone. The real economists have all sorts of labels for it. But eventually every need is satisfied. Prices evaluate how much you really need or want something. As something gets “bid up”, people decide that they don’t want it as bad as the next person.

It’s the universal calculating engine, called the marketplace, that decides where scarce resources are allocated.

But, when there is counterfeiting going on, when the money is unbacked, when the standard measure is no longer standard, then the arithmetic is skewed.

And, the people are impoverished.

How are you preparing for the problems that the Federal Reserve is brewing up?

http://www.boston.com/business/personalfinance
/articles/2006/11/25/retiree_provides_the_skinny_
on_how_anybody_can_save_money_when_eating_
out/?rss_id=Boston.com+%2F+Business+%2F+
Personal+Finance+-+Money+Management+-+
Financial+Management+-+Boston.com

http://tinyurl.com/yypydv

Retiree provides the skinny on how anybody can save money when eating out
By Humberto Cruz | November 25, 2006

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I’ll give you this example: Save $100 a month for 15 years at a modest 6 percent rate of return and you will have in round numbers $29,000. And $29,000 in turn will earn another $1,740 a year at 6 percent, more than what you save yourself.

***End Quote***

Americans SAVE money? You don’t understand. We want it now. We are entitled to it now. We HAVE a credit card.

Sad to say there is a cliff at the end of this road.

Kinda like Merrill’s Yoddlee, but better promises, and a more “Stubs” for other accounts. So, of course, I played with it.

It took me about 90 minutes to find a flaw that you can work around.

Vangard shows a joint account in both spouses view. Thus Fidelity doubl counts the entry. Thus overstating the holdings. There’s no way to partially exclude something it discovers.

Interesting.

I think you’d only find that IF you took feedback from real world users (They don’t. Tsk,tsk, shame, shame) or you had a crackerjack team.

Sigh.Will I ever find stuff I can’t break.

http://bbs.freetalklive.com/index.php?topic=9717.15

***Begin Quote***

http://www.mises.org/story/2369

Return to a gold standard — or hell, a silver standard or a platinum standard or …

***End Quote***

I read this thread and two thoughts came to mind, actually three.

(1) The german hyper inflation that led to the rise of hitler. It could happen here. Politicians tax, borrow, and spend. (Sound familiar) the Fed runs the printing press. And runs it and runs it. I knew a Jewish family that send their wealth to Switzerland and the US in the form of diamond, postage stamps, and jewelry. Some of them got out; most didn’t. The old gent told me that, and his wife confirmed, that she would come by his office and take any money he collected that morning and go buy something. Anything. Because by nightfall it would be worthless. The hyper inflation was catastrophic. he would do the same thing on his way home with the afternoon’s collections. By the morning it too would be worthless. The country quickly devolved into barter, valuables, and metals. quite scary.

(2) If the us debt becomes to onerous. The Gubamint could just walk away from it. “Oh green funny pieces of paper? You should take that to the Federal Reserve Bank. We don’t have anything to do with it!” Repudiation would have some interesting consequences. If you think that the world is mad at us now, then wait till we pull the rug out from under them. The Chinese, Japanese, Arabs, and Europeans would find themselves sitting on worthless paper. It would be interesting to see it happen.

(3) There’s a “law” in Economics, (Not like a government law, but more like the Law of Gravity), that says something like “In an inflationary economy, bad money drives out good. In a deflationary one, the reverse is true.” Hyperinflation, or demonetization of a fiat currency, will imho act like a deflation (the ultimate kind). AND, if people stop taking FRBies, then money will be redefined QUICKLY into coins, “medallions”, or stuff like that.

I think we can roll back fiat currency if we educate, if we personally refuse FRBies when we can, and if we can “save” in metal backed stuff.

For example, I personally: nag people about “dead presidents” and “pretty green pieces of paper”. I like Mises’ line “only a government can take valuable paper and make it worthless by printing on it”.

For example, I REFUSE to take the dollar “gold” coin. It really annoys the cashiers who want to palm if off on me because it doesn’t fit in their draw.

For example, I make small buys of gold and silver bullion coins as “savings”. If the world goes to “hell in a hand basket”. I’ll have things of value “buried” at home.

The internet retailers all have wish lists, (i.e., nothing more than bridal registries without the sappy flowers). It surprises me that inet savy parents and children don’t use this to make relatives’ lives easier. Open up a registry for the child at WalMart, Amazon, or that ilk and email the relatives. Saves a lot of effort and duplicates. imho