Bringing it Home

News headlines from the Wall St. Journal on July 19, 2011:

Apple reports earnings of $7.31 billion…Sales

surged to $28.57 billion, topping expectations of

$24.99 billion.

Goldman Misses Profit Mark, Plans Job Cuts

B of A Swings to Loss

Coke’s Profit Jumps 18%

DJIA’s 200-Point Rise Is Biggest in 2011

So, Bank of America drops 9 billion (mainly still due to the mortgage mess), and Goldman’s profit is significantly lower than expectations, and they plan to cut 1,000 jobs. Coke and Apple are up. Why would the market have such a good day, and what do these have or not have in common? As a rank outsider to the markets, but one who has owned and run substantial small business operations, I’d say this: Apple and Coke MAKE THINGS that people want. B of A and Goldman make money with other peoples’ money.

A CEO of a major communications company did a TV interview today and lamented some of our poor trade agreements and losing jobs overseas, and pointed out what a lot of us on the retail & service sector side of things (as opposed to high finance) have been shouting for quite a while now…we in the US need to get back to making things.

If we can’t make cheap consumer goods due to extremely low labor costs in other countries, how about making greener and more efficient energy-saving items, or large products that go into infrastructure where the shipping cost savings is enough to counteract the labor savings due to near-slave wages in certain countries?

Of course Coke is made here, and it’s easy to point out that Apple has most of its products produced overseas. Apple, however, designs and tests them here, they don’t just slap their name on someone else’s designs from overseas, and they are also retailed here and when necessary, repaired here. That takes good old American bodies…not as many as the manufacturing, but it all helps.

Just A Personal Rant- Renting vs. Owning

In the 12 years I lived in an apartment, the trim, fences, and deck were painted once. The outside was never cleaned. In just over a month in this townhouse, they have already pressure washed the buildings again. If you think it’s a case of ‘you get what you pay for,’ the payment and HOA fee for the condo are much less than the rent for the apartment was. I’ll take a little noise once in a while for a lot more clean!

Here’s A Tax Law Change to Stimulate Business

You may or may not know that you can write off a yacht as a second home and get a tax deduction. The vessel needs to have a place to sleep, a head (toilet), and some reasonable facsimile of a galley (kitchen), and you’re good to go with a nice tax deduction. While a substantial number of people own first homes (the present housing and mortgage mess notwithstanding), it’s a MUCH smaller universe of folks that own a yacht as a second home.

Here’s a thought: bring back the deduction for interest on new and used car loans. A huge number of people would be affected immediately with this, and it would stimulate a lot more business- the auto business is much more widespread than the yacht business. In fact, you must even have a car in order to collect unemployment if you live somewhere where there’s no mass transit. This would affect everyone but the top couple percent of Americans, who generally pay cash for their cars. (When I was in the luxury auto business, over 85% paid cash for their new German luxury cars. Not even close to 15% of regular folks paid cash for more pedestrian vehicles, they nearly all financed them.) OK Congress, how about a break for those in the bottom 98%?

Pundits vs Facts

This is something of a rant, concerning what passes for news and accurate informantion on cable news channels.

Over the weekend, Charlie Cook (who is one of the best political observers around), did a segment on MSNBC on Medicare taxes vs. benefits. the following was put up in graphics concerning Medicare contributions:

Single man: $55,000 contribution, $161,000 benefit

Single woman: $55,000 contribution, $181,000 benefit

1 earner couple: $55,000 contribution, $343,000 benefit

2 earner couple: $109,000 contribution, $343,000 benefits

This is all well and good, but doesn’t take into consideration the time value of money. Some of us will have paid into the system for 50 years before retirement. As the quote below from the government indicates, there really isn’t a trust fund per se, however the government has dumped the excess into US government treasury securities, which pay interest. No one ever brings this up!

With an insurance policy, the insurer collects the premium, and invests the money. The law of large numbers dictates that not everyone will collect or many won’t live long enough to collect a major portion. The insurance industry collectively whines when a big payout hits, but is generally a very profitable business.

The government doesn’t even NEED to make a profit, and doesn’t! Pundits and politicians can’t leave the time value of money out of these outrageous claims they make about the systems going broke. (This doesn’t even address the social value of providing for a country’s elder population and covering medical care…which every other civilized country in the world does anyway!)

Here’s a quote about the so-called ‘trust funds’ from the Department of HHS:

<The U.S. Treasury Department tracks their financial flows through accounts that by law are labeled “trust funds.” The label “trust funds” can be confusing in that it may suggest that the money collected for the programs is somehow segregated and managed differently than other receipts. It isn’t. When received on a day-to-day basis, any revenue that comes in for Social Security and Medicare is commingled with other federal revenues, and any such revenue in excess of what is needed to pay each day’s program costs gets used for whatever other obligations the government has to meet. The excess is not invested outside the government, such as in stocks, corporate bonds, or securities of other nations. At the same time, the appropriate trust fund balance is increased by a corresponding amount by crediting it with U.S. Treasury securities, which is tantamount to the government investing in itself. It is one account of the Treasury giving credit to another — i.e., from the Treasury’s general fund to the Social Security or Medicare trust funds.>

Source:

http://aspe.hhs.gov/health/ss-mcare-trust05/index.htm

On the same topic of how leaving out facts shades the information we get, another pundit, (this time on CNN), states that post-recession, 37% of jobs created are in Texas. He does say as a qualifier that Texas is a low wage and low tax state. This is a bit of an understatement as Texas has NO personal income tax…NONE! They make enough off oil not to have ever had a personal income tax.

Having so-called ‘learned panels’ and pundits is one thing, but if they leave out giant swaths of fact, they need to be called out on it by hosts that are smart enough and well-educated enough to do so. This is a terrible example of spreading half truths and misinformation, and not even doing it on purpose…as one network on cable regularly does!

Speaking on the O’Reilly Factor on Fox, Gretchen Carlson incorrectly claimed that “about 35 percent of the in-state tuition people or students” at University of California schools “were illegals.” In fact, only 0.34 percent of undergraduates in the University of California system in the fall of 2008 were “potentially undocumented” students who received the in-state tuition rate. It’s amazing what essentially moving a decimal point a couple digits can do to stir people up.

Send emails to these networks and complain…do some of your own fact-checking with multiple sources. Be informed, the cable channels AREN’T going to inform you at this point!

Internet Posts- Libel, Slander or Other?

Libel and slander are two forms of defamation, a definition of which is:

‘An act of communication that causes someone to be shamed, ridiculed, held in contempt, lowered in the estimation of the community, or to lose employment status or earnings or otherwise suffer a damaged reputation. Such defamation is couched in ‘defamatory language’. Libel and slander are defamation.’ Libel typically refers to defamation that is written or published, while slander is usually limited to oral defamation.

In an article just posted by the Nieman Journalism Lab, (link to the article below), there’s a scholarly discussion concerning modernizing libel and slander laws further to apply more appropriately to internet social media like Twitter.

Much of social media postings, while written, much more closely resemble the spoken word than the traditional written word. Certainly when libel was first formulated, the written word was found in books, manuscripts, and periodicals. Never even imagined was the modern capability for changing posts and ‘republishing’ so quickly and in such a fluid manner as is now possible on the web.

Careful people assume that anything they may post anywhere on the web will live for all time, so they exercise caution with what they do write or post. What about items that are ‘hacked in’ or posted in a person’s name? When negative things can be attributed to someone that can do harm to their career, reputation, or even end a life, there should be serious consequences in law for those who misuse the web to the detriment of others! Will the law be able to catch up and truly cover social media defamation? So far, there’s NOT an app for that!

Is Twitter writing, or is it speech? Why we need a new paradigm for our social media platforms

SmartPhones Changing Policing-Book

In the law, you often hear about a ‘slippery slope.’  Once some rights are nibbled away, others fall like dominoes. A book called ‘Always On’ addresses the new ways police can track all of us using the tech built right into our smartphones. In this case, it’s not a result of the courts, or the legislative or executive branch taking away privacy rights, we have actually (and in many cases unknowingly) given them up ourselves.

The hot new tech, GPS, and ‘always on’ tiny computers we carry around in our pockets and purses can rat out bad guys quickly and efficiently when police are working to solve a crime. In the case mentioned in the excerpt from ‘Always On’ (link is below), it was a good thing, as a child taken by a relative was returned safely to the parent. Conspiracy theorists and privacy aficionados may fume, but the proverbial horse is already out of the barn, and we opened that barn door ourselves!

http://www.wired.com/gadgetlab/2011/06/always-on-excerpt/

The Supremes Rule California Must Cut Inmate Population

In a 5 to 4 ruling today (May 23), the Supreme Court decreed that California must whittle down it’s prison population by over 30,000 inmates to address extreme overcrowding. The case arose from problems with physical and mental health care…in 2009, there was around a death per week which allegedly could have been prevented or delayed with better medical care.

There are presently over 143,000 inmates in facilities that were designed to hold 80,000. One unspoken political issue that has affected California governors of both parties is the very powerful prison guards union. Of course less inmates means less guards, and they have lobbied hard to prevent the loss of those jobs.

This case may now give Governor Brown the cover he needs to release lower level offenders to other jurisdictions, such as the counties. Of course, there has been some call for him to simply commute and release pot offenders, which would put a substantial dent in decreasing the population as the the Supreme Court has called for. Will that fly…even in California?

Olfactory Exigent Circumstances

The Supreme Court ruled today 8-1 that Kentucky police did not err in kicking in the door of an apartment that reeked of pot and was suspected of harboring a drug suspect. The police asserted that they believed from sounds emanating from the apartment that evidence was being destroyed.

Writing for the majority, Justice Samuel Alito penned that “Exigent circumstances, including the need to prevent the destruction of evidence, permit police to conduct an otherwise permissible search without first obtaining a warrant.”

While at first blush, it appears that this case further erodes Fourth Amendment rights, it seems after a closer reading to be an extension of an already long-standing exception.  In fact, as the title alludes to, this may well become known as the ‘olfactory exigent circumstances’ exception!

Spurring Employment With a New Tax Break for Hiring

A lot is being made about the tax breaks (credits if you will) for the Big 5 oil companies, and numerous other companies which, while making record profits and  while holding a record amount of cash, pay little or no tax, and are not really hiring at a rate anywhere near what is needed to pull the middle class worker out of the recession. While Wall Street continues to rake in cash, Main Street and the under and unemployed are still suffering.

One tool advanced to some of our finest in Congress by this author and no doubt, numerous others, is a bill that would allow special write offs over a period of years for hiring or re-hiring at decent wages– good old, hard working American workers. If business could essentially ‘depreciate’ workers by writing down the expense of employing them (with appropriate safeguards to ensure continued employment of same), it might spark an uptick in hiring that would actually put the US economy back on track again. This would have to be at a level well above what has been contemplated by Congress in order for business to really respond! A bonus level could be built in for bringing jobs previously outsourced overseas back to the US.

It has been noted repeatedly, but is worth pointing out again that our economy is heavily dependent on consumer spending in order to really hum along. The best way to increase consumer spending is for more consumers to be gainfully employed at a living wage. Henry Ford got this concept, and put his money where his mouth was years ago, and it paid off handsomely.

So, Congress…how about it?

The Speaker and the Debt Ceiling Problem

The GOP will come together with the Democrats and raise the debt ceiling. This will happen in spite of whatever words that are uttered to the contrary.

Speaker Boehner rattled his saber in a speech to the New York Economic Club, emphatically stating that the ceiling won’t be raised without cuts of trillions. The Speaker is playing a game of chicken with the Democrats and his party’s Wall Street benefactors, in order to curry favor with the Tea Party folks, which the GOP needs badly in 2012. He and the GOP leadership will, in fact, get cuts, but no where near what they are demanding right now.

The ominous words aside, Boehner and the GOP leadership know full well that to even come close to the deadline without raising the debt ceiling will not only tank the US economy in a way that will make the mess of 2008 look like a walk in the park, but  would also  likely sink the entire world economy for an extended period of time.

The Speaker is playing to what comics call a “tough room.” He has to appease the Tea Party and their black and white approach to the debt, while reassuring the financial sector and our debt holders around the world that we will do the adult thing and raise the debt ceiling in a timely manner. The Tea Party came out today with a statement that any GOP Congressperson who votes to raise the debt ceiling will get a zero rating, and any that vote against an increase will get 100%. Tough room, indeed.