Archives For Money

2014-03-20_09-06-16Tesla’s campaign to sell its electric cars directly to consumers shifted into high gear this week as state lawmakers debated Tesla-related bills while powerful auto lobbyists braced for a fight. In New York, a measure designed to ban Tesla from opening new stores passed a key hurdle, while in Arizona, lawmakers pushed a bill to make it easier for Tesla to sell its cars without establishing a dealer network.

The escalating conflict underscores Tesla’s role as a disruptive force in the U.S. auto industry, not only because the company’s cars don’t use gasoline engines, but also because Tesla is trying to upend the dealership-franchise model that has underpinned the automobile industry for decades. That model — and laws protecting it — emerged in the 1930s as a way for automakers to build a national sales and service force and help foster local economic growth.

SOURCE: Tesla’s War With the States Shifts Into Overdrive |

I have mixed feelings about the above topic.  This is kind of like a David/Goliath type thing. The little dealership guys are being squeezed out by the big corporations the same way as WalMart is squeezing out local retailers.  But size is a relative thing. Yeah Telsa is probably bigger then most auto dealerships but it is very small compared to its other automotive competitors. It is also pretty easy to see that those who own local or regional auto dealerships are usually much wealthier than the rest of us.  It is not uncommon to see mufti-millionaires auto dealer owners.  So David/Goliath is a relative thing.

Realtors are also in this type of corundum. When I sold my house in New Jersey it never actually went on the market. My realtor happened to have someone waiting for my type of house. When we closed on the house the realtor received a check from me for almost $18,000 for two hours work or so.  The only ones who even come close to that hourly wage are big time surgeons and some CEOs  :)

The other example in my part of the country is in liquor distributorships. If you can land one you are assured a big annual paycheck. They are given out mostly as a political favor by State level politicians.

I don’t know but it seems like these sort of things need fixing. We should be able to buy direct and bargain with others for what are currently set as “standard” fees. Wages for most of us haven’t changed much in the last decade or more so the little guy needs all the help he can get in today’s world even as a consumer.


2014-02-17_11-16-13What they haven’t been doing is giving extra cash to employees, despite s a year of solid – and often record – profits and huge cash hoards. A survey by Aon Hewitt on compensation trends for 2014 shows that companies plan to raise salaries by just 3% this year – the highest since 2008, when the average raise was 3.7%. Economist Ed Yardeni notes that employee compensation and capital spending as a percentage of GDP has been the lowest since the mid-1950s.

But suppose each company with $1 billion in cash took 5% of that stash and give it to employees as a bonus. Unlike a raise, which is an ongoing cost, a bonus is simply a one-time payout – a way of thinking workers for a good year. What would each employee get?

SOURCE: If companies shared their cash with employees.

What happened to the idea of the three legged stool concept of corporate governance? It used to be that there were three pretty equal priorities for American business: Owners, Customers, Employees.  All were considered of equal importance to the well being of an American corporation. It seems in the last thirty years that the owners have become far and away the only leg. Of course this trend is also analogous to the accumulation of wealth at the top end of the economic scale.

I can remember in the 1970s getting year end bonuses. They were never even close to approaching the ones given out on Wall Street and board rooms today but it was always a good feeling to know that we got a little extra for our contribution to our company’s economic health. It made us feel we were appreciated.

There are thousands of companies today that have mammoth stockpiles of cash sitting in company coffers.  Their employees have worked hard and made the company a success. Why aren’t they thanked the same way as those who buy their stocks? If that were to happen maybe at least a small amount of company loyalty would return to American business.  Everyone likes to know that their contributions to any effort are appreciated. A little pat on the back both physically and economically will go a long ways.

The source article goes on after the above quote to show that it would mean about $3,000 to each of the S&P 500 companies. It would mean about $270 for each McDonald’s employee. That is almost the equivalent of one week’s pay at the typical minimum wage that most earn. Wouldn’t it be nice to know that you are appreciated even for flipping hamburgers?

Dual Income Requirements…

February 24, 2014

We know that the majority of households now require both spouses to work outside the home. That fact has contributed significantly to the number of seniors in nursing homes and other assisted care facilities. Simply put there is just no one at home to care for aging parents or grand-parents anymore. As a result more seniors are institutionalized than ever before.

Of course this is just another example of the problem with the gross income inequality here in this country and even around the world to maybe a lesser degree. Just when our population above 65 starts to explode there are fewer and fewer of us who will be able to stay with our families.  I know from personal experiences with my parents, nursing homes are very expensive. They quickly zap whatever wealth might have been accumulated. After that personal wealth is gone then Medicaid often takes over the expenses and that of course raises taxes for all of us. That seems to be the major Catch-22 of this early century.

When a mother is required to work outside the home she often only adds a small percentage increase to the family income since her children are now forced into childcare outside the home. That eats up much of the income gained. I wonder if anyone has ever done an economic analysis of these type situations?

I suspect that we are actually doing more damage to our society by continuing to squelch income at the bottom end of the scale.  While history shows us that when we raise the minimum wage the threat of losing a significant number of jobs does not materialize, that argument continues to be made today. I realize that raising the minimum wage is not an answer to all our problems but maybe it solves more problems than are realized.  Raising education levels to meet the requirements of 21st century jobs is also an important part of the solution. But then again, there will always be the need for someone to do the things that are now minimum wage jobs. Those jobs will not suddenly disappear with an educated population or be replaced by a robot. Minimum wage jobs will always be part of our world. We need to make sure that anyone who is working full time has at least the minimum income to sustain sustenance.

To Avoid Taxes…..

January 20, 2014

ZURICH (Reuters) – Two more Swiss banks said they would work with U.S. officials in a crackdown on wealthy Americans evading taxes through hidden offshore accounts, a trickle that could rise to about one third of the country’s private banks.

SOURCE: Two more Swiss banks join U.S. tax deal: Fidelity.

It sure would be nice if we could get the rich to somehow pay their fair share of taxes.  Swiss banks prosper because they help them hide money to avoid taxes. As the article says still less than one-third of them have joined this new procedure.  I think those that are resisting see the writing on the wall that the 1%ers will simply move their money someplace else if they can’t hide it in their banks.

Will Rogers had a lot to say about bankers and financial people during his day and not much of it was good. I wonder what he would say about today’s world in that regard?


Narcissism And The 1%….

September 11, 2013

Angry driverRecent studies show, for example, that wealthier people are more likely to cut people off in traffic and to behave unethically in simulated business and charity scenarios. Earlier this year, statistics on charitable giving revealed that while the wealthy donate about 1.3% of their income to charity, the poorest actually give more than twice as much as a proportion of their earnings — 3.2%.

“There’s this idea that the more you have, the less entitled and more grateful you feel; and the less you have, the more you feel you deserve. That’s not what we find,” says author Paul Piff, a psychologist at the University of California, Berkeley. “This seems to be the opposite of noblesse oblige.”

(MORE: Why the Rich Are Less Ethical: They See Greed as Good)

In five different experiments involving several hundred undergraduates and 100 adults recruited from online communities, the researchers found higher levels of both narcissism and entitlement among those of higher income and social class.

SOURCE:  The Rich Have Higher Levels of Narcissism and Entitlement, Study Shows |

I have had some pretty harrowing experiences with narcissists in my life. I just can’t image someone being so self-focused especially those who call themselves religious. Almost all of religions spiritual documents take a very firm stand against that trait.  My definition of a narcissist is someone who has their head stuck so far up their rear-end that they can see nothing but themselves. I simply have no patience or compassion for a narcissist. I know I am told to love them but, with only a few exceptions, I find it almost impossible to manage that feat.

One of the things that often comes with any degree of success in the financial world is ego and that seems be often be a major trait of most narcissists. Those who manage to make a few bucks soon convince themselves that they are the greatest person in the world and that no one knows more about real life than they do.  Now before you start piling on I will freely admit that not all, or probably even most, successful money gatherers are narcissists or have infinite egos and thank heavens for that. But I am convinced that they have their inordinate share and the source above seems to re-enforce that belief.

As the study says the wealthier you are the more likely you are to treat others poorly or to donate  any significant percentage of your income to charitable causes.  I know Mr. Romney ranted about how the 47% of us feel entitled to take money from the real wealth makers but according to this study he simply got it bass-ackwards and the electorate let him know that…..

While the cyclical outlook looks bright, the U.S. will be hampered in the longer term by such structural headwinds as an aging population, a plateauing of educational achievement and increased inequality, Gordon said.

Source: U.S. Expansion Poised for Longevity – Bloomberg.

I have always found it strange that my more conservative friends seem to want to see all Democratic administrations fail in one regard to another. They always say that their Republican heroes did it better than any Democrat ever could.  When they mention this I just love to pull out the statistic that shows if you invest $1000 in only Republican administrations since 1940 you would now have about  $1400 but if you had invested in only Democratic administration it would be  $10,000.

I am getting off topic here. What I really intend this post to be about is this very slight quote from the article. Here again some financial author over at Bloomberg want to blame us old folks for keeping our economy from blooming. They say an aging population is partly to blame.  I could see that if they went further to say that the reason for this is that all those people who really understand how to create prosperity are retiring and there is no one qualified enough to replace them.  Now, before all you guys start jumping on me for this statement please realize that it is said in jest but I expect there is an ounce of truth in that statement. The younger generations just haven’t been tempered as much as we were.

The other reason given is the plateauing of educational achievement. What that really means is that the kids today are just not going into the necessary advanced fields of education to achieve real prosperity. And of course the last thing on the list above is a very serious one for me. Increase inequality is something that has gotten me very fearful of the future.  The one thing that I am convinced has made the U.S. great over the last century is equality of condition.  That is, there is no aristocracy that gobbles up the majority of our produced wealth.  Of course we all know that has been changing greatly over the last thirty years or so.  If we can’t turn that around we may just all be in trouble when it comes to our longevity. Teddy Roosevelt took down the robber barons a century ago but there just doesn’t seem to be anyone like him to be found this time around. At least not yet….

Banner -In The News

IRSThe difference between what is legally owed the federal government and what it actually collects in taxes each year is called the “tax gap,” which the IRS recently estimated reached $385 billion in 2006. Other studies have placed that figure higher — at upwards of $600 billion.

So who owes this money and why? The single biggest contributor to the tax gap — accounting for 84% of it — are people who simply under-report their income. This doesn’t usually happen to folks whose employers withholds taxes from their paychecks, as 99% of people in that position end up paying their income taxes in full and on time. The biggest headache for the IRS is collecting business income from the self employed, who must voluntarily report their earnings…

Source:  The $600 Billion the IRS Can’t Collect |

This being Tax Day our current system of taxation is on my mind. When I was self-employed for six years I paid taxes on all the money coming in. I believed I had an obligation to pay my “fair share”.  I didn’t want to be a free-loader on society. But I will admit that I took advantage of several tax loopholes offered for small business owner that pretty drastically reduced what I  owed.

I don’t think I am the only one who thinks that our tax system in the country is completely haywire. After decades of special interest loopholes have been added turning the tax code into a 10,000 page document its time to pretty much throw out what we have and replace it with a new system. The simpler system the better.  There are all kinds of proposals around but which would be the best? To find that out we need to understand just who is championing each new idea.

It is no secret that lobbies pretty much run the country now. If you have enough money/influence/power you can get just about anything turned into law. (because of that influence it is almost a good thing that our government is in such gridlock).  Whatever replaces those thousands of pages of current tax code must be a moral document. It must be seen as fair and compassionate for all of us.  Of course there will always be those who are anti-everything that will scream about the government stealing their hard-earned gains. We can do nothing to appease them but for most of  the rest of us we know it is our duty to support our government and especially our shared infrastructure. It is important for us to give our fair share.

Here is an excerpt from the New Yorker magazine about this:

Behavioral economists call the cultural tendency to pay duties, “tax morale.” As James Suroweicki of The New Yorker defines it:

We don’t pay our taxes just because we’re afraid of getting caught; we also feel a responsibility to contribute to the common good. But that sense of responsibility comes with conditions . . . we’ll chip in as long as we have faith that our fellow-citizens are doing the same, and that our government is basically legitimate. Countries where people feel that they have some say in how the state acts, and where there are high levels of trust, tend to have high rates of tax compliance. That may be why Americans, despite being virulently anti-tax in their rhetoric, are notably compliant taxpayers.”

Banner -Off The Top

Cash MountainHow did we get into the problem of insane pay for U.S. corporation leaders? The problem basically originated from the title above. Every board of directors wants to pat themselves on the back for selecting that exception person who will lead their company to outperform all the others.  They need to do that so that they can somehow rationalize their board being paid thousands of dollars per hour for their time. So the statement is made:

Our CEO is exceptional so we must guarantee him a paycheck in the top 20% of all CEOs.

On the surface this is a rather innocuous statement that is bound to be true for some. But the problem is that almost every board now makes this statement and backs it up with a iron-clad golden parachute to match.  So when 100% of the CEOs are to be paid in the top 20% of all CEOs it becomes an impossibility to actually occur. The only thing that can happen is that CEO pay goes through the stratosphere seeking a never-ending top 20%.

The impossibility that all CEOs can be in the top 20% seems rather easy for most people to understand so why can’t the typical board of directors figure it out? Again there is a again simple answer and that is most CEOs are actually on the board of directors for several other companies. So, when the above pledge is made they also guarantee an ever dramatic increase in their own pay.  This is the typical “I’ll scratch your back if you scratch mine”.

There is one simple solution to this dilemma and that is for the shareholders to put an end to it. That is where more greed comes into the equation. Everyone who buys stock in a company want the cost per share to increase dramatically so they can rake in some big profits. In order to do that they must think that the guy in charge is the best in the business. Or at least in the top 20%.  You get the idea.

The only way to stop this ever escalating CEO pay is for the stockholders to cause it to end. It will not be an easy matters as the CEO and the board of directors will probably fight tooth and nail for their wealth. But it can and actually does happen once in a while.  So, the next time you start complaining about CEO pay remember that you the stockholder are allowing it to happen. Even if you only have one share in a company you have power to cease this ridiculous practice.

But I’m just a simple guy so what do I know.

Banner -Off The Top

budgetI know the current version of the Republican party is supposed to be all about fiscal austerity but I have trouble actually seeing them live out that concept. When it comes to the safety net and so-called “entitlement” issues they scream about needing to cut back or at least for total accountability. But when it comes to the bloated military expenses, homeland security and tax breaks for the rich they appear to throw that concept out the window. Of course that means that their austerity programs, if they are implemented as they suggest, will end up being done on the backs of the poor as almost everything else is “off the table”.

We spend more than the other 96% of the world combines on our supposed security. Our military budgets eat up so much of our prosperity as to force future looking programs off the stove.  Education, our R&D forces, and our colleges suffer as a result of our insistence that to be safe we must spend so much on our war machine. In fact we throw so much money into the military that they don’t even bother to try to determine if it is going to the best place. For that matter they really don’t even try to categorize where it is even spent.  But that doesn’t seem to phase the Republican senators and congressmen in Washington. They continue to demand more and more of our precious resource for this bloated machine.

For that reason I have little confidence that my budgeted minded friends are really serious about budgets but are really more concerned in reducing or even eliminating the very function of government or at least making sure that 47% don’t get things they supposedly haven’t earned.  If they were really serious about our current deficits they would be looking at  our war machine first not last.  When you throw trillions of dollars into a black hole you dictate that much of it will be spent unwisely or even fraudulently.  They demand total accountability for agencies supporting our safety net and nothing for our industrial/ military complex. How strange is that???