Year: 2001

“This Congress will protect 100 percent of the Social Security and [Medicare] trust funds. Period. No speculation. No supposition.” – Jim Nussle, Republican House Budget Committee Chairman last month

“Yes, that was me. I still mean that today as much as I did then. Unfortunately the economy wasn’t listening.” – Jim Nussle, Republican House Budget Committee Chairman last Thursday

Guess what, folks. The giant budget surplus that stretches as far as the eye can see and will help pay down some of our $5.7 trillion National Debt is gone. (Not that we have to pay it off, but it would be good, when we can, to pay it down so that in bad times there’s room for it to build back up.) Yet we’re now locked in to massive tax cuts for the wealthy as far as the eye can see.

Much of this will presumably be rolled back sometime down the road – it’s hard to imagine we will really cut the estate tax for centi-millionaires to zero.

But we had this lovely fiscal balance, which still allowed upper-income folks to do very nicely, thank you, and to grow their after-tax incomes faster than everybody else . . . and the Republican leadership felt that just wasn’t good enough – a prescription drug benefit for the elderly might have to wait or be trimmed or be shelved altogether – the research budget for alternative energy and better-mileage-cars might have to be halved, and money to boys’ and girls’ clubs cut back – but, first things first, let’s pass this urgently needed tax cut for America’s most fortunate. It’s a matter of priorities.

It is a grand time to be rich in America.

Pete Kirby (worried that the market may drop): ‘I am looking for a decent way to hedge my portfolio. I have looked at the QQQ [the NASDAQ 100 index tracking stock] and while its spread is narrow, the puts you can buy on it don’t drop very much even with a relatively large market drop. OEX puts [options you buy betting that the Standard & Poor’s 100 index will fall] track the market better but the spread you suffer between the bid and asked price of the option is not very attractive. Can you tell me why the bid/ask spread is so high on OEX options?’

☞ No. But I can tell you that the best way to hedge the market, in my experience, is simply to sell some of your holdings. If you have to take a big tax hit to do so, it makes it less appealing. But ordinarily, even then, the simple way – selling some of your shares – winds up working out better than, in effect, buying insurance against a market decline. Insurance, whether purchased via puts on a stock index or in some other way, doesn’t come cheap.

Well, as you may have noticed, Marc Fest (Quickbrowse founder and my very over-qualified webmaster) got tired of listening to all my reasons for not adding a search capability to this site and just went ahead and did it. See the new SEARCH field for this site at lower left. I really should raise the subscription rate for this so I can pay him TWO dollars a year instead of one.

Thanks to the estimable Marc Fest for figuring out an easy way to search my archives (or those of any other site). Just go to google.com and, if you were searching for comments on ‘annuities,’ enter annuities site:andrewtobias.com.

(Marc also recommends a visit to Google’s Zeitgeist page. It tells you things like each week’s Top 10 Gaining Queries, Top 10 Declining Queries, and Top 5 Misspelled Queries.)

Meanwhile, what if you are searching for the tax dollars you sent Uncle Sam last year? Heather Wells: ‘Ever wonder where all that money went? The IRS has put up this site to break it all down for you. Simply enter the amount you paid and their site will tell you how many of your dollars went to national defense, interest payments, farm subsidies, space programs, and more.’

But first . . .

From last Thursday’s New York Times: ‘If there are more than a couple of sites you check regularly, QuickBrowse will make your day. It’s one of a new breed of metabrowsers that combine your favorite sites onto one long page for quick viewing.’

Long-time readers will know the QuickBrowse story. Yes, we’re still here, and next Monday we begin charging $12.95 per quarter. As frugal as anyone else, I’d say you should only pay if it saves you enough time/hassle to be worth $1 a week. I value my own time at $12 an hour, so it would have to save me 5 minutes a week to be worth the cost. If I were an electrician billing at $60 an hour, it would have to save me a minute a week to be worth the cost. Of course, it’s also cool, which is worth something all by itself.

And now . . .

Here’s the problem with the missile shield. Let’s say it works perfectly. Five hundred billion dollars later, the thing’s a miracle. It knocks missiles out of the sky all but instantly . . . can pick out the warhead from amongst hundreds of decoys . . . rarely takes out a 747 or a satellite launch by mistake – in short, makes us untouchable.

I don’t think that’s likely, and $500 billion is a vast sum to take from combating other threats, like the threat of your dying-or-suffering-or-going-to-bed-hungry because you can’t afford the prescription drugs you need. But at least you won’t get nuked by a rogue state. (Suppress thoughts of Idaho; I’m thinking Iraq here.)

Yet forget all that. Let’s just assume the missile shield makes us untouchable.

That’s the problem, and you need only think back to your childhood to see it. It’s the same problem any kid faces when he is invulnerable. ‘You can’t touch me, nyah, nanny, nyah, nyah.’ Remember that kid? That is a kid who will be despised. That is a kid the other kids will spend a great deal of time finding ways to bring down – if not now, when they get older.

There may be a way, ultimately, to get world agreement on the importance of installing some mechanism to take down missiles launched from specific areas, or directed at major cities, worldwide.

But as long as it’s unilateral, it taunts. It inspires people to like us less, and to find ingenious ways to end our domination. Like hacking into our electronic funds transfer system, bringing world commerce to a halt. Or . . . well, you know the litany. The bomb in the garage of the World Trade Center – only nuclear.

Better, perhaps, to go light on the missile defense shield for a while – funding some more research but not pushing too hard – and use the money we save for something else? A Marshall Plan for the Developing World? That could strengthen economies and democracy and maybe even win us some friends.

I think this is important.

A week ago, I reprinted the summary of a purported report on presidential IQ’s (George W’s was 91), saying it must either be a hoax, or else very poorly done – both Bushes were far smarter than this e-mail, which I’ve now gotten 12 or 13 times, suggested.

Well, it IS just a joke, after all.

And what’s important, of course, is how much stuff goes around the Internet that just isn’t true.

In that regard, UrbanLegends.com may someday be almost as important as the NYTimes.com for knowing the truth. Click here for the Bush IQ debunking, and (while you’re at it) here for a particularly thoughtful Tommy Hilfiger debunking.

I had an article in yesterday’s PARADE with some pretty basic and for the most part highly uncontroversial explanations of things like ‘what the Fed does.’ Yet I got some really wacko e-mails from people convinced the Fed is a privately owned, foreign controlled bank designed to control and wreck America (or something like that). Where do people get stuff like this? They obviously believed it and sounded as if they had a pretty good arsenal stashed down in the cellar. Well, it seems to me that it’s tough enough for people to agree, or at least get along with each other, when presented with a common set of facts. Disinformation just makes it harder. We should all bookmark UrbanLegends.com.

[And speaking of misinformation . . . Kathryn Lance: ‘I agree that ‘The Closet’ is a great movie – one of the best I’ve seen in years. Wonderful cast, wonderful script. However, not quite true when you say that there’s not a gay person anywhere in it. The next-door neighbor . . .’  ☞ Indeed. My brain was on strike when I wrote that.]

Two cases of mistaken identity, one (much) funnier than the next.

A lot of you have doubtless already seen this first one, a Net classic . . .

An employee for Anset Australia Airlines, who happened to have the last name of Gay, got on a plane recently using the company’s ‘Free Flight’ offer for staff. However, when Mr. Gay tried to take his seat, he found it being occupied by a fare paying passenger. So, not to make a fuss, he simply chose another seat.

Unknown to Mr. Gay, another Ansett flight at the airport experienced mechanical problems. The passengers of this flight were being re-routed to various other airplanes. A few were put on Mr. Gay’s flight and anyone who was holding a ‘free’ ticket was being ‘bumped.’ Anset officials, armed with a list of these ‘freebee’ ticket holders boarded the plane, as is the practice, to remove them in favour of fare paying passengers. Of course, our Mr. Gay was not sitting in his assigned seat as you may remember.

So when the Ticket Agent approached the seat where Mr. Gay was supposed to be sitting, she asked a startled customer “Are you gay?”

The man shyly nodded that he was, at which point she demanded, “Then you have to get off the plane.”

Mr. Gay, overhearing what the Agent had said, tried to clear up the situation, “You’ve got the wrong man, I’m Gay!”

This caused an angry third passenger to yell, “Hell! I’m gay too! They can’t kick us all off!” Confusion reined as more and more passengers began yelling that Ansett had no right to remove gays from their flights.

It is reported that Ansett have refused to comment on the incident.

But did you see this Associated Press report last week, based on another farcical misunderstanding?

‘Willie Huston, 38, his girlfriend and another couple had just returned from a cruise on a showboat — which docks beside [Nashville’s] Grand Ole Opry – when [he was shot to death Sunday]. Huston’s girlfriend had apparently asked him to hold her purse while she and the other woman went to the restroom, police said. Shortly afterward, Huston’s other friend – who is blind – asked Huston to escort him to the restroom.

Police say the two men encountered the suspect, who began teasing them. He then followed them out of the restroom, grabbed a gun from his car and shot Huston at close range, authorities said.

Huston ‘was there to have a good time … with his girlfriend and his other friends,’ said police spokesman John Lash. ‘This guy jumped him because he came in holding a man’s arm – a blind man’s arm – and carrying a purse.’

Why are we so intolerant of difference? It must be hard-wired into us, from our caveman days. If you crack your soft-boiled egg from the top and I crack mine from the bottom, we have reason enough, as Jonathan Swift satirized, to go kill each other.

If you can find it, go see ‘The Closet,’ a recently-released French film starring Gérard Depardieu. Lots of mistaken identity. Fun!

Luis Viera: ‘My question relates to a 401K plan I had with my previous employer, Bank of America. The plan currently has approximately 50% tied up in BAC stock. My dilemma has been when to rollover this account to my current employer’s Vanguard 401K. The primary reason for the delay has been my hope that the performance of BAC stock would improve. Any thoughts on this issue?

☞ ‘You never know, but if I were you, I’d do the rollover. Not that BAC necessarily seems overpriced, or that its 3.5% dividend yield isn’t attractive in today’s environment. But isn’t BAC near its 12- month high, up from 36 to 64? That’s not TOO terrible. And unless you know something the many pros who follow BAC, trying to gauge its fair value, don’t, I would diversify by making the switch.

Robert Doucette: ‘I love the Mutual Fund Cost Calculator [accessible by clicking just above the blinking ‘Ask Less’ at upper left] but sometimes I find myself in denial when I see the results. Intellectually I know that it is the very rare fund manager who can consistently beat the Indexes. But, I WANT to believe I have found her (or him). And if she can give me better than market growth, I’m willing to lose a couple of percentage points. Yeah, dumb, but what is logic to a man in love? Well, here are a couple of tools I now use to throw cold water on my delusions. FundAlarm.com has a massive database with practically every Mutual Fund out there, all compared with an appropriate Index fund baseline. If my “dream fund” hasn’t performed better than its baseline index, why am I paying a premium? For those wanting something more graphic, I go to Yahoo! Finance and chart my dream fund along with an index fund. And here is the big surprise: sometimes the two graphs look alike. So, my dream fund is actually an index fund with a high price tag – a stealth index fund.’

☞ The FundAlarm credo: ‘FundAlarm is a free, non-commercial Website. Our view of the mutual fund industry is slightly off-center. We help you decide when it’s time to sell a fund, instead of when it’s time to buy. The mutual fund industry is full of broken promises, arrogance, greed, hypocrisy — the list goes on. We try to shine a light in the darker corners, and poke holes in balloons that could use some poking.’

Brenda B. (re Tuesday‘s excerpt from the LA Times editorial on Bush’s ‘gigantic giveaway to the energy industry’): ‘I’d just as soon political payoffs went to Enron (now, under Bush) as to the teachers’ unions (formerly, under Clinton) – at least Enron really DOES deliver energy.’
☞ Every time I see another inner-city high school history teacher step out of her limo, I feel exactly the same way! But $36 billion?

Even if you agree with Republican Whip Tom DeLay that we should abolish the Department of Education, and do some of the other things that Clinton and the teachers unions opposed, why would one ‘wrong,’ as you see it, justify another? If anything, your blood should be boiling twice as hot – yet it sounds as if you’re largely indifferent to this.

Carol Iwamoto [re your 88-year-old pal]: ‘My father-in-law kept $100,000 in a non-interest-bearing checking account for over 10 years. When my husband finally closed the account upon his father’s move to a nursing home, the bank manager swore there was no such thing as a non-interest-bearing account for that sum. Was she ever embarrassed when she handed over a check a day later and confirmed my husband was correct. We can’t really blame the bank. In the old days checking accounts never earned interest and my father-in-law refused to believe that times had changed. My own 80-year-old father can’t seem to understand the concept of no-load mutual funds. And also couldn’t tolerate a 20% drop in stock he inherited. He sold at the bottom and put his money in annuities. It’s almost like people’s brains only fill up so far and after that there is no room for other ideas.’

☞ Yes! I reached that point myself Thursday. But then there are people like my mother and stepfather who, though even older than me, manage to make room for everything from web sites and Palm Pilots to TiVo and the latest in political activism. Go, seniors, go!

Will Klump (a reader I have never met, who says he is 80, not 88): ‘On July 23, I received a check for $230.40 with a note indicating that it was for tax relief for America’s workers. That the current administration of our country in which 43 million people do not have health insurance should find it fitting and proper to send me and millions of others like me this ludicrous tax relief is in my not at all humble opinion obscene. It is both idiotic and indecent! By snail mail, I shall send you the check made payable to the Democratic National Committee in the hope that even this paltry amount will be of some help in putting an end to the asinine antics of the current administration as soon as possible. The United States of Amoco is appalling.’

☞ Those who disagree with Will, and favor the administration’s approach, should consider sending their checks to Robert M. Duncan, Treasurer, Republican National Committee, 310 First Street, SE, Washington DC 20003 – or (since the RNC hardly needs the money, having raised $20 million at a single dinner last month alone) simply spending the checks on something they want or need for themselves, as intended. It is, after all, your money.

Those who agree with Will, but who run credit card balances, should use their tax checks to pay down those credit cards!

And, yes, those who agree with Will, and can afford to – and who believe, as I do, that the Bush / Lott / Helms / Armey / DeLay regime do not have the right vision for the 21st Century – would be patriots of the first order if they, too, endorsed their checks over to the DNC and sent them to Andrew Tobias, Treasurer, Democratic National Committee, 430 So. Capitol St., SE, Washington, DC 20003.

(Note that political contributions are not tax-deductible, and that either committee will need to know your OCCUPATION and EMPLOYER – which may be ‘retired/self’ or whatever applies – for its report to the Federal Election Committee.)