Crooks on Wall Street

The following is a quote from the columnist Larry Elder regarding events on Wall Street:
“Add the name Bernard Madoff to the pantheon of big-time thieves. The legendary billionaire hedge fund manager…now stands accused of running a massive Ponzi scheme…. To many, the Madoffs of the world confirm this "truism": the rich get rich not through hard work, risk-taking or crafty assumptions about the future. No, the rich get rich the old fashioned way: They steal. They profit through inside information, use their clubby network of eyes and ears, get a heads-up when storm clouds appear, and plunder the unsophisticated, and thus cleverly dodge the common misfortunes suffered by the "little guy."”

This columnist is not attacking free enterprise. He goes on to say: “… most rich folks do it the hard way. They get up early, bust their tails, and work harder than their subordinates. They treat their staff…with respect. In return, employees…work hard for a boss who shows his appreciation. Decades of work later, the boss suddenly wakes up rich.”

Honesty, the free enterprise system, education, the rule of law…we must believe in these in spite of the Bernard Madoffs of Wall Street.

Ltr to H-T 12/08

Good Financial Advice

October 17, 2008
Op-Ed Contributor
Buy American. I Am.
By WARREN E. BUFFETT
Omaha

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.

Socialism by Increments

Do you know how much tax you pay? Consider this example: to buy a Chevrolet priced at $20,000 in Indiana you must pay a 7% sales tax plus licensing and excise tax. To manufacture your car General Motors, suppliers and dealerships must also pay taxes. These include corporate income taxes, real estate taxes, inventory taxes , employee social security tax and so on. Of course these hidden costs are included in the price of the car. How much does all of this add to the price? According to a Harvard economist the answer is 18% or about $3000.
So to purchase your Chevy you must earn an extra $3000 for the government tax burden. However, your earnings are also taxed. For simplicity let’s assume your net federal income tax rate is 15% after deductions. In Indiana you will also pay state income tax of 3.4% plus a 1% local option tax. Do the math and we find that we must earn about $24,800 to keep $20,000. So, adding it all up, the total tax burden in this case is $7,800 or 39% of the purchase price. Taxation is nearing the point where the USA will soon be a Socialist economy.

The Next Generation of Thugs is on the Way

INDIANAPOLIS — A study shows Indianapolis Public Schools have the lowest graduation rate for black male students among 63 urban districts nationwide.
School leaders say they're working to turn around the statistics. In the 2005-06 school year, just 19 percent of black males graduated from IPS, according to the rankings compiled by the Schott Foundation for Public Education.
IPS has introduced dropout prevention programs and has worked to ease the transition into high school.
"This continues to emphasize what I've been trying to emphasize: the urgency of turning this district around as fast as possible," said Superintendent Eugene White. "I think we have the things in place now to do that."
One reason the district's graduation rates may be so low is the district's high concentration of students from low-income families.
That is a key predictor for which students are at risk for dropping out.
Urban districts elsewhere often encompass larger areas of the city, including more wealthy students in the mix. Only about a quarter of public school students in Indianapolis attend IPS, which has about 35,000 students.
IPS School Board President Mary E. Busch said the 2005-06 statistics do not reflect recent efforts, such as the district's push to connect with students and require alternative schools instead of expulsions.
"We're working hard to bring the graduation rates up," she said. "We have special initiatives and strategies in place to truly address the situation. We're not pleased with where we are."
But Mark A. Russell, director of education at the Indianapolis Urban League, said more work needs to be done.
"There is not a person in the state Department of Education charged specifically with addressing the achievement gap between blacks and whites. Does the IPS board have a committee on it?" he asked. "If we're wanting to save these children, where is the effort?"


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He ventured forth to bring light to the world

The anointed one's pilgrimage to the Holy Land is a miracle in action - and a blessing to all his faithful followers

Gerard Baker

And it came to pass, in the eighth year of the reign of the evil Bush the Younger (The Ignorant), when the whole land from the Arabian desert to the shores of the Great Lakes had been laid barren, that a Child appeared in the wilderness.

The Child was blessed in looks and intellect. Scion of a simple family, offspring of a miraculous union, grandson of a typical white person and an African peasant. And yea, as he grew, the Child walked in the path of righteousness, with only the occasional detour into the odd weed and a little blow.

When he was twelve years old, they found him in the temple in the City of Chicago, arguing the finer points of community organisation with the Prophet Jeremiah and the Elders. And the Elders were astonished at what they heard and said among themselves: "Verily, who is this Child that he opens our hearts and minds to the audacity of hope?"

In the great Battles of Caucus and Primary he smote the conniving Hillary, wife of the deposed King Bill the Priapic and their barbarian hordes of Working Class Whites.

And so it was, in the fullness of time, before the harvest month of the appointed year, the Child ventured forth - for the first time - to bring the light unto all the world.

He travelled fleet of foot and light of camel, with a small retinue that consisted only of his loyal disciples from the tribe of the Media. He ventured first to the land of the Hindu Kush, where the

Taleban had harboured the viper of al-Qaeda in their bosom, raining terror on all the world.

And the Child spake and the tribes of Nato immediately loosed the Caveats that had previously bound them. And in the great battle that ensued the forces of the light were triumphant. For as long as the Child stood with his arms raised aloft, the enemy suffered great blows and the threat of terror was no more.

From there he went forth to Mesopotamia where he was received by the great ruler al-Maliki, and al-Maliki spake unto him and blessed his Sixteen Month Troop Withdrawal Plan even as the imperial warrior Petraeus tried to destroy it.

And lo, in Mesopotamia, a miracle occurred. Even though the Great Surge of Armour that the evil Bush had ordered had been a terrible mistake, a waste of vital military resources and doomed to end in disaster, the Child's very presence suddenly brought forth a great victory for the forces of the light.

And the Persians, who saw all this and were greatly fearful, longed to speak with the Child and saw that the Child was the bringer of peace. At the mention of his name they quickly laid aside their intrigues and beat their uranium swords into civil nuclear energy ploughshares.

From there the Child went up to the city of Jerusalem, and entered through the gate seated on an ass. The crowds of network anchors who had followed him from afar cheered "Hosanna" and waved great palm fronds and strewed them at his feet.

In Jerusalem and in surrounding Palestine, the Child spake to the Hebrews and the Arabs, as the Scripture had foretold. And in an instant, the lion lay down with the lamb, and the Israelites and Ishmaelites ended their long enmity and lived for ever after in peace.

As word spread throughout the land about the Child's wondrous works, peoples from all over flocked to hear him; Hittites and Abbasids; Obamacons and McCainiacs; Cameroonians and Blairites.

And they told of strange and wondrous things that greeted the news of the Child's journey. Around the world, global temperatures began to decline, and the ocean levels fell and the great warming was over.

The Great Prophet Algore of Nobel and Oscar, who many had believed was the anointed one, smiled and told his followers that the Child was the one generations had been waiting for.

And there were other wonderful signs. In the city of the Street at the Wall, spreads on interbank interest rates dropped like manna from Heaven and rates on credit default swaps fell to the ground as dead birds from the almond tree, and the people who had lived in foreclosure were able to borrow again.

Black gold gushed from the ground at prices well below $140 per barrel. In hospitals across the land the sick were cured even though they were uninsured. And all because the Child had pronounced it.

And this is the testimony of one who speaks the truth and bears witness to the truth so that you might believe. And he knows it is the truth for he saw it all on CNN and the BBC and in the pages of The New York Times.

Then the Child ventured forth from Israel and Palestine and stepped onto the shores of the Old Continent. In the land of Queen Angela of Merkel, vast multitudes gathered to hear his voice, and he preached to them at length.

But when he had finished speaking his disciples told him the crowd was hungry, for they had had nothing to eat all the hours they had waited for him.

And so the Child told his disciples to fetch some food but all they had was five loaves and a couple of frankfurters. So he took the bread and the frankfurters and blessed them and told his disciples to feed the multitudes. And when all had eaten their fill, the scraps filled twelve baskets.

Thence he travelled west to Mount Sarkozy. Even the beauteous Princess Carla of the tribe of the Bruni was struck by awe and she was great in love with the Child, but he was tempted not.

On the Seventh Day he walked across the Channel of the Angles to the ancient land of the hooligans. There he was welcomed with open arms by the once great prophet Blair and his successor, Gordon the Leper, and his successor, David the Golden One.

And suddenly, with the men appeared the archangel Gabriel and the whole host of the heavenly choir, ranks of cherubim and seraphim, all praising God and singing: "Yes, We Can."

 
 

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Psychiatric hotline

Ring!
Ring!
-click-
Hello, welcome to the psychiatric hotline.
If you are obsessive-compulsive, please 1 repeatedly.
If you are co-dependent, please ask someone to press 2.
If you have multiple personalities, please press 3,4,5 and 6.
If you are paranoid-delusional, we know who you are and what you want. Stay on the line while we trace the call.
If you are schizophrenic, listen and a little voice will tell you which number to press.
If you are manic-depressive, it doesn’t matter which number you press…no one will answer.
Beep!

Build It and They Will Come

Back in the 60s the proud liberal sponsors of the great society said that the housing of the poor had to be improved before they could advance. The taxpayers ponied up for huge apartment projects and the keys were handed over per the liberals plan. The new residents were not without support in their new homes. A Housing Authority police force was funded to supplement city law enforcement. The usual array of welfare, Aid for Dependent Children, and so forth was in place.

We all know what happened next. The brand new projects turned into cesspools of crime...giving bad connotation to the phrase "the projects". Notably in Chicago the infamous Cabrini-Green apartments were finally torn down after years of crime and vandalisim. And in St. Louis the Pruit-Igloo project met a similar fate. Once again the liberals get an A for intentions and an F for results.

In the story below notice that the apartment building mentioned is pre-WWII and yet is still a very much desired habitat. I believe the historic Dakota apartments on Central Park West were built before 1900. The point is that it's not the housing...it never was...it's the residents that determine the quality of life. Another obvious point liberals cannot understand.

New York Post June 12, 2008 --

A beloved Park Avenue doorman who won $5 million in the state lottery wants to move on up - and into the elegant, pre-war building where he works.

That way, "I'll have the doorman open the door for me," says Richie Randazzo, 44, a bachelor who lives in a two-story home in Brooklyn.

But the lucky winner will have to wait because the only apartment for sale in the building at 1021 Park Ave. at East 85th Street is out of his range. So for now, Randazzo, who plans to continue working, will be a millionaire who opens the door and hails taxis for millionaires.

The only apartment on the market in his building is an 11-room beauty that is going for a cool $9.95 million. And even though $5 million is nothing to sneeze at, it just isn't enough scratch - even for a scratch-off millionaire.

....But, taking the advice of his parents, Cora and Frank, who live in West Palm Beach, Fla., he decided to keep his job, because "it's too much too soon."

A thoughtful and true quote

“Artists use frauds to make human beings seem more wonderful than they really are. Dancers show us human beings who move much more gracefully than human beings really move. Films and books and plays show us people talking much more entertainingly than people really talk, make paltry human enterprises seem important. Singers and musicians show us human beings making sounds far more lovely than human beings really make. Architects give us temples in which something marvelous is obviously going on. Actually, practically nothing is going on."

Kurt Vonnegut
—“When I Was Twenty-One," Warnpeters, Fama and Granfefloons, 1974

Our wealth goes to OPEC

From and article by Tom Friedman (NYT):
If this huge transfer of wealth to the petro-authoritarians continues, power will follow. According to Congressional testimony Wednesday by the energy expert Gal Luft, with oil at S2oo a barrel OPEC could “potentially buy Bank of America in one month worth of production, Apple computers in a week and General Motors in just three days.”

Woman uses her wiles on Dilbert

Everybody hates me

Our 8 year old Grandson was acting-up so we told him he we were not going to have a 'pity party' and then Mamaw sung this song she remembered from her childhood (Children's rhyme...sing to Polly Doodle tune.):

Nobody loves me, everybody hates me
Think I'll go and eat worms
Long ones, short ones, fat ones, thin ones
See how they wriggle and squirm

I bite off the heads, and suck out the juice
And throw the skins away
Nobody knows how fat I grow
On worms three times a day
Ohh...nobody loves me.

How to be Poor

Ever wonder why the USA has so many poor people? After all, being poor while a citizen of one of the richest countries in the world requires some explanation. The secret is making the right choices early in life. First, turn your back on the free education offered through 12th grade. Achieve this by refusing to do your schoolwork and quitting at age 16. Avoid the GED diploma as well. It is also important to stay away from vocational programs and apprentice work. Caution...during this time you will have to endure the concern and advice of relatives and counselors but you can shake this off if you are really determined to be poor. Of course, lack of high school will keep you out of University which should definitely be avoided .

In your mid to late teens it will help to have a child out of wedlock. After all, many teens are having multiple children with multiple partners so don’t hold back. Another touch is to develop a criminal record. It is easy to do, stays with you forever and eliminates being hired for many jobs. If, despite all of this, you somehow find yourself employed and earning money there are still things that can be done. Showing up late for work is effective. Another effective technique is to cultivate a hostile attitude toward management.

Finally, in the unlikely event you still find you have some money, make sure to avoid saving or investing. Impulse spending and debt are the way to go here. Even substantial sums can be frittered away quite easily so there should be no excuse for accumulating any assets. In conclusion, the road to poverty is not as difficult as it may seem even in the USA. There are two simple rules which will often get you through when you have to make life choices: 1)Always take the easiest path. 2) If it feels good, do it.

How the U.S. income tax works

How the U.S. income tax works

By Marshall Brain

 
 

http://www.JewishWorldReview.com | (MCT) Tax time is upon us once again, and we all heave a collective sigh of resignation. There is nothing we can do about taxes, true. But have you ever wondered where income taxes came from, and why we pay them today? This is actually a fascinating story.

It all started in 1894, when Congress passed the "Revenue Act of 1894." It was a very simple tax. If you made more than $4,000 per year, you paid a 2 percent tax on your income. In 1894, $4,000 per year was a tremendous amount of income - an indication of great wealth. So the income tax of 1894 did not affect very many people, and the amount of tax was small.

Even so, the Supreme Court found the tax to be unconstitutional and struck it down. To get around the Supreme Court, Congress did the only thing it could do - it proposed a constitutional amendment and got it ratified. The 16th amendment reads, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." This amendment specifically allows there to be an income tax in the United States. It was ratified in 1913.

Now you might be wondering: why in the world would the citizens of the United States ratify an amendment like that? Why would the citizens give congress the ability to create a new kind of tax? It is because, at the time, people were worried about the wealthy having too much money and power. The income tax was seen as a tax that would only be applied to the wealthy, in order to curb their power. The first income tax laws applied only to the very wealthy. As late as 1940, only about 5 percent of the population paid income tax.

Another feature of today's income tax system is the idea of a payroll withholding. Before your tax is due, the government takes it automatically out of your paycheck and holds your money in escrow until April 15. You get no interest on your money and cannot use it in any way. Where did an idea like this come from, and why would Americans allow it? This idea came in 1943 as a way to fund WWII. By withholding the tax up to a year ahead of its due date, the government got the money faster and used it to pay for the war.

So in 1943, the government has two key things: a constitutionally-approved tax system, and the ability take money out of people's pay checks without them ever holding the money in their own hands. All of the ingredients are in place for a massive expansion of the tax system. And sure enough, the system expanded.

One way to track the expansion is to look at the size of the tax code. In 1945, the federal tax rules fit in about 8,000 pages. By 1965 it took about 20,000 pages. In 2006, the number had grown to 66,000 pages. How many pages is that? A phone book might have 1,000 pages, so imagine 66 phone books lined up on a long shelf. It would be about 20 feet of phone books. That's our tax code.

If you look at the instructions for the basic 1040 form, you see the same kind of thing. The 1040 form is only two pages long. In 1945 it took four pages of instructions to explain it. By 1965 it took 17 pages. Today it takes more than 140 pages.

The complexity of the tax code means that many people can no longer file their own tax returns. So there are now more than one million paid tax preparers in the United States. Many of them are employed by the top three tax preparation companies: H&R Block, Jackson-Hewitt and Liberty. Together these companies handle more than 20 million customers per year.

Somehow, we all manage to muddle through, and we file something like 100 million individual taxable returns in a typical year. Using very round numbers here to keep things simple, these tax returns represent income of about $5 trillion. The total tax collected on that income is about $1 trillion, or roughly $10,000 per 1040 form, on average. That money combines with social security taxes ($900 billion), corporate income taxes ($260 billion) and other things like tariffs to create about $2.4 trillion in total federal revenue in 2007. It takes over 100,000 IRS employees to handle the load.

So, as you are burning the midnight oil to complete you tax returns, scratching your head over some incomprehensible rule or form, you now know a little bit of the history that got us here. We've come a very long way since the first income tax in 1913!

 
 

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A Beauty Contest

They say young people are excited about Obama for President. This very much reminds me of 1960, the year I graduated from BHS. The young people then liked John Kennedy. I’m sure many older folks in Bloomington remember the day a platform (or flat bed truck?) was set up on the south side of the square and some celebrities spoke for Kennedy . The only speaker I can recall was the actor Jeff Chandler…probably because he was heckled and he threatened to come into the crowd and settle the issue. For young people it was the youth, charm and looks of Kennedy versus the older looking, lackluster and much uglier Nixon . It turned out to be a close election. The folks for whom issues mattered (Unions, Corporations, Taxpayers, etc) made it a horse race. Then, as now, the candidates made grand sounding statements and promised things would get better. The reality is that Congress is where the real power is but Congress has 535 members , numerous committees and rules so arcane the public cannot understand them. So we focus on the President. He is one man and we can understand that.
Ltr sent H-T 4Feb08

Update: After this letter was published I got a call from a guy who was at the rally. I believe his name is Jerry Gregory. He reminded me that the actress Angie Dickenson was there and had spoke before Chandler. Chandler opened by saying something like "Angie can even speak while lying down." There was a shocked silence from the crowd then catcalls began which triggered Chandler's outburst.

Population of Selected Countries

(click to enlarge)


 

China	1,321,851,888
India	1,129,866,154
United States	301,139,947
Indonesia	234,693,997
Brazil	190,010,647
Russia	141,377,752
Nigeria	135,031,164
Japan	127,433,494
Mexico	108,700,891
Germany	82,400,996
Iran	65,397,521
France	63,713,926
Spain	40,448,191
Canada	33,390,141
Iraq	27,499,638
Korea, North	23,301,725
Australia	20,434,176
Syria	19,314,747
Netherlands	16,570,613
Chile	16,284,741
Cuba	11,394,043
Greece	10,706,290
Belgium	10,392,226
Hungary	9,956,108
Sweden	9,031,088
Switzerland	7,554,661
Bulgaria	7,322,858
Hong Kong	6,980,412
Israel	6,426,679
Denmark	5,468,120
Norway	4,627,926
Ireland	4,109,086

About one in three persons in the world is either Chinese or Indian. The current world population of 6.6B is expected to grow to 9B by 2050. Almost all of this increase will be in Africa and Asia. Environmentalists say population growth is the largest threat to the environment. My opinion is that some of these countries will not have the needed political stability nor will their environment sustain such growth. China has a "one couple, one child" law and tries to enforce it. As far as I know, it is the only country with this law.

On the other hand, many advanced countries are shrinking because their people are choosing not to have children. They have such low birth rates they face huge social problems in the future such as not enough workers to support the elderly. Oddly enough Italy, the home of the Catholic church, has one of the lowest birth rates in Europe. America currently has a slightly positive popultion growth.

Some other observations: Ireland (4M) about the same size as the Pheonix, Arizona urban area. The Philadelphia urban area(5.9M) is larger than Denmark. The London metro area (8.6M) is larger than Israel. California (36M) has more people than Canada. If you are a small country like Denmark you have to be a little nervous about the future if some of the 9B decide maybe your tiny population does not merit all the your territorial rights.

NFL player sets example for fans

From 6Jan08 Parade magazine:
Tailback Travis Henry of the Denver Broncos has been ordered by judges in several states to pay child support for seven of nine children he fathered by nine women.

The groupie effect for athletes and rock stars is old news but I am curious to know if these were accidental pregnancies or intentional by women wanting the $ from a rich NFL player. Remeber Wilt Chamberlin's book where he claimed to have screwed over 2000 women? I don't know if he paid for any kids but they did not do DNA paternity checks back then.

I saw an episode of 'Cops' where they collared a young black guy who said he had four kids by three girlfriends in the neighborhood. These will be paid for by the taxpayers until age 18 because Dad is in jail...also at taxpayer expense. This will be the next generation of Gangstas.