Hats Off To The 400 But Perhaps Their Taxes Are Too Low? May 13, 2011March 24, 2017 DON’T BREATHE AT AIRPORTS The headline: ‘Idling airplanes produce more harmful pollution than previously thought.‘ Now if only someone would invent a way for planes not to have to turn on their main engines until shortly before they took off. Ahem. THE TOP 400 Michael Fabricant: ‘Re yesterday’s post regarding protecting the rich, here‘s an IRS study that shows the income percentages of the top 400 income earners in the country. The last year of the study shows that the top 400 taxpayers earned over 3% of all taxable interest, almost 5% of all dividend income, and over 13% of all capital gains reported in 2008. That’s 400 people out of 307 million.’ ☞ Good for them! But I do think their tax rates are too low. Including the tax rates that apply to the Koch brothers. KOCH U. See how the Koch brothers are meddling with academic independence. Here. They get to approve the professors, the publications . . . can this be good? LABOR APP And just in case you’re not of Kochian wealth . . . ‘The U.S. Department of Labor today announced the launch of its first application for smartphones, a timesheet to help employees independently track the hours they work and determine the wages they are owed. Available [here, free] in English and Spanish, users conveniently can track regular work hours, break time and any overtime hours for one or more employers. . . . Additionally, through the app, users will be able to add comments on any information related to their work hours; view a summary of work hours in a daily, weekly and monthly format; and email the summary of work hours and gross pay as an attachment. This new technology is significant because, instead of relying on their employers’ records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records.’
At All Costs: Protect the Rich May 12, 2011March 24, 2017 DEALING WITH OUR DEBT The Republican plan: further cut taxes for the rich. Boehner’s awe-inspiring hypocrisy on the debt limit By Matt Miller There’s politics-as-usual. There’s even hypocrisy-as-usual. But then – at rare moments – there is political behavior that can only be dubbed Super-Duper Hypocrisy So Brazen They Must Really Think We’re Idiots. Sad to say that’s where the Republicans have taken us on the debt limit. . . . ☞ The Agenda Project’s Erica Payne writes supporters: [Tuesday] on the Today Show, House Speaker John Boehner told Matt Lauer he was unwilling to do what is necessary to make our country strong again. Even though HE KNOWS that we need every Patriotic American to work together to strengthen our country, Congressman Boehner refused to even consider raising taxes on incomes over $1,000,000 a year. He said it was ‘totally off the table’ – even raising taxes on incomes over A BILLION DOLLARS is ‘totally off the table’. Doesn’t he know that only 375,000 people out of 307,000,000 make that money every year? Doesn’t he know that incomes over $1 million a year are taxed less than they have been since the Great Depression? Some AMAZING Patriotic Millionaires are fighting back. Take a look at a video about the Patriotic Millionaires Campaign for Fiscal Strength. These amazing Americans are demanding that Cong. Boehner, Senator Reid and President Obama raise their taxes ‘For the fiscal health of our nation and the well-being of our fellow citizens.’ SAFER CARS What would happen if you crashed a 2009 Chevy Malibu at 40 miles an hour into a big ol’ boat of a 1959 Chevy Bel Air? Watch. Turns out, one driver would have walked away largely unscathed while the other would have died. In many ways, these are the good old days.
Revving the Engines of Capitalism May 11, 2011March 24, 2017 WHICH IS BETTER: $11,000 OR $475,000? Joel Grow: “You wrote yesterday that the stock market does better under Democrats than Republicans. From 1929 to the end of Bush’s second term, Dems and Reps have each had the White House for 40 years. During the Dems’ 40 years, $10,000 in the S&P index would have grown to just over $300,000. Under the GOP presidents, to … $11,000 and change. This is before Obama’s bull market.” ☞ You can see the graphics here. It’s a striking contrast. Updated from October 10, 2008, when this was calculated with the S&P at 899, you have $10,000 under Republicans growing not to the $11,733 shown but – with the S&P opening at 849 on Obama’s Inauguration morning – to just $11,080. Meanwhile, with the S&P now around 1350, the Democratic $300,671 shown in the graphic swells a further 59% to $475,000. As I understand it, none of these calculations includes dividends. Both numbers would be higher if they did, which would mute the contrast somewhat. Even so . . . To have grown from $10,000 to $11,000 under one broad political philosophy but to $475,000 under the other suggests, however crudely, that one of the two is better for investors – and America – than the other. As I wrote yesterday, anyone you know who wants to keep government out of the bedroom and out of the doctor/patient relationship . . . who finds the enormous Reagan/Bush/Bush debt accumulation repellant (as well as the enormous shift of wealth from the broad middle class to the top 1% of the top 1%) . . . who thinks the mentally ill should not be able to buy assault weapons at gun shows . . . is warmly welcome on our side of the aisle. MARRIAGE Turns out, two people loving each other – even if one is black and one is white or both are men or both are women – is not such a scary thing once you get to know those two people. As a result, relatively few now question Supreme Court Justice Clarence Thomas’s right to have married his wife. And fewer and fewer question the right of people like Charles and me to share the same legal rights and responsibilities of civil marriage as any other couple, had we wanted to. (We didn’t want to. But shouldn’t that have been our choice to make, not Mitt Romney’s or Rick Santorum’s to make for us?) The Republicans are on the wrong side of this one – as they were wrong in trying so hard to keep us from serving in the military – and they lose ground on it every day, as more and more people think it through. A particularly telling example: Anti-gay Facebook page hacked by its own administrator By Helen A.S. Popkin Who says people don’t change? After five years of writing anti-gay blogs, making anti-gay YouTube videos and going on the National Organization for Marriage’s “Summer of Marriage,” NOM Facebook administrator Louis Marinelli deleted the organization’s Facebook page, taking all 290,000 “fans” with it. Marinelli now supports civil marriage equality! . . . CVV Of this February suggestion for money you can truly afford to lose, Aristides’ Chris Brown writes: “As you’ve probably seen, CVV reported earnings this morning. On the whole, they met my high expectations. Fourteen cents eps on $6.2 mil in revenue. Backlog implies the company received an additional $2.1 mil of orders in the second half of March, and the company announced $4 mil of orders thus far in Q2. Gross margins slipped this quarter sequentially vs. q4, but operating expense was essentially unchanged, so they had excellent fixed cost leverage. Based on recent order trends, I would expect them to soon reach a revenue run rate of $10 mil per quarter, which at current gross margins and allowing for 15% higher operating expense, with a 32% tax rate, converts into about $1.08/year for an eps run rate. So, company is trading at roughly 1.5x the revenue run rate I expect them to achieve soon, and about 11x the eps run rate I would expect. Remember that this company’s closest public peers are all semiconductor capital equipment companies, and that many people are calling for those company’s earnings to peak in 2011, and slump severely in 2012. If you believe that 2011 will be a peak year for CVV, the stock is expensive here. If you believe management that this company is going to have years of secular growth, the shares are cheap cheap cheap, at essentially half the multiple of the Russell 2000. Company remains a core position for us.”
Welcome! May 10, 2011March 24, 2017 FIVE PROUD MINUTES Take them to see what’s been accomplished as a result of your helping to elect the President – here. Especially the last minute of the clip. Ralph Sierra: “And How about Obama on ‘60 Minutes’ last night? He made me very proud to be a Democrat. ” NOT-SO GRAND OLD PARTY Meanwhile, the opposition party has been opposing rescue of the American auto industry (GM reported a $3.2 billion first quarter profit), opposing creation of a bipartisan budget deficit commission (after they killed it, the President established the Bowles-Simpson Commission by executive order), opposing health care for children, opposing credit card reform and a Consumer Financial Protection Bureau, opposing equal pay for women, opposing equal rights for gays and lesbians . . . voting to end Medicare, to protect the tobacco industry and – last week – to continue tax breaks for Big Oil. (Exxon made $30 billion last year; does it really need a tax break?) This is the party that wants further tax cuts for the wealthy even as it – rightly – decries the enormous, future-jeopardizing National Debt that its own last three presidents racked up. I’m not trying to back my Republican friends into a corner . . . just to suggest that until they get their party back, they are hugely welcome to identify as moderate Democrats – who favor small government and personal choice (keeping government out of the bedroom and the doctor’s office) and competent government (how can a party that disdains government do a “heck of a job” at it?) and science (so we install a Nobel Prize winning physicist to run the Department of Energy instead of a Secretary who – as a United States Senator – called for it to be abolished) and balanced budgets (like the ones the previous Democratic President achieved and the ones the current Democratic President is working to achieve). As DNC Chair Joe Andrew liked to say, “We don’t care whether you’re white or black or brown or purple – you are welcome in the Democratic Party. We don’t care what religion you are or how big your bank account is – you are welcome in the Democratic Party. We don’t care whether you walked in here or rolled in here, whether you’re first generation American or a Mayflower descendant – you are welcome in the Democratic Party. And we don’t care what gender you are or what gender you like to hold hands with. So long as you like to hold hands, you are welcome in the Democratic Party.” To which I would add: the stock market does better under Democrats than Republicans. Welcome! And as I said at the top, see what’s been accomplished as a result of your helping to elect the President – here.
Comedy May 9, 2011March 24, 2017 NEW YORK BONDS Joe Cherner: “Since you are writing about interest rates, why not write about New York tax exempt 10-year notes yielding 100 basis points more than U.S. treasuries. Throughout history it’s been the other way around. Is New York really headed for bankruptcy?” ☞ Unlikely – so as between the two, I’d buy the New York bonds. A 4% tax-free return is nothing to sniff at these days, especially for a high-bracket New York taxpayer. (But is there a potential trap here that, while NY bonds may be the better buy, both leave you exposed to the risk of inflation?) COMEDY Here is the President at this year’s White House Correspondents Dinner in case, like me, you missed it. Very funny. And here is Seth Myers, who followed. Also very funny. (Note the President’s relaxed smile at the Bin Laden joke a little more than two minutes in. You’d never know what he had planned for the next day.) But – and I never thought I’d say this – Myers almost made me feel bad for Donald Trump.
Paying Up for Safety May 6, 2011March 24, 2017 Geez, you take two rotten snow days and the biotechs tank; your dredging stock gets a nice plug here and it tanks (so, too, your paper stock); gold – as if to mock your pre-snow column – tanks; the Canadian dollar, in which you have some of your cash, tanks. The Dow tanks. Where is all this money going? If people are selling all these things, they have to be putting the proceeds somewhere. One guess: U.S. Treasuries. Have you seen these things? The three-month Treasury bill was yielding an annualized one-hundredth of one percent interest yesterday. Whoop-de-doo. The three-year note promised not even 0.95% a year. The five-year note, 1.88%. Clearly, no one is expecting inflation, or they’d never accept rates so low. The five-year Treasury Inflation Protected Security (TIPS) maturing April 15, 2016, which promises to pay one-eighth of one percent a year above inflation (and Uncle Sam’s perhaps conservative calculation of inflation, at that), was selling yesterday at nearly 103 cents on the dollar, which works out to a yield of minus .47 percent a year. Clearly, everyone is expecting inflation, or they’d never accept a negative interest rate. So . . . which is it, kids? Inflation? No inflation? I suppose the folks who think inflation looms are chasing the five-year TIPS, while those who see us following the Japanese model (loads of National Debt but decades of near-zero interest rates) are chasing the standard five-year bond. They can’t both be right – at least not both at the same time. (One could be right for a while and then the other.) Much as I laud recently-issued TIPS as both a deflation hedge and an inflation hedge,* I sold my own short-term TIPS yesterday. And if I owned any standard Treasuries, I would have sold them, too. Both the inflation-fearers and the deflation fearers may be overpaying in their flight to safety. One thing neither set of folks seems the least bit concerned about is the creditworthiness of the United States of America. The market is assuming we will not default on our Treasuries. Which is why all hell would break loose if we did. *They will pay off $1,000 even if the prices of everything have collapsed; they will pay off $3,000 if the prices of everything else have tripled.
Snow Day May 4, 2011March 25, 2012 It must be snowing someplace, so I’m taking a couple of days off to shovel out from under. Back Friday. Brrrr.
Gold May 3, 2011March 24, 2017 GLD, the exchange traded fund that represents gold, closed down $2 a share last night at about $150. That was still up 65% since GLD was suggested here in 2009; and 28% since suggested here ten months ago. Is it time to take profits? The first thing to say, of course: I don’t know. I’m holding my own GLD shares hoping they will fairly poorly – because if they do, that means inflation expectations are low and the world is not perceived to be headed for turmoil. It’s like fire insurance: if you like your house (or, in this case, your economy), you hope fire insurance will prove to have been a lousy investment. Killing Bin Laden may have more symbolic and psychological than practical importance – but symbolism and psychology matter. Especially to markets. If enough people see this event as a marker, the beginning of the end of the worst terrorism, that’s good for the world and bad for gold. Couple that with the newfound emphasis on taming the growth in our National Debt – which may lead to slow but fairly steady progress of the type we had in the 35 years following World War II (when high tax rates and economic growth shrank the National Debt from 121% of GDP to 30%) – and the markets may come to think we’re turning a corner toward another 35-year period of gradual financial strengthening. Again, not great for gold. That said, I’m not sure $1,569 an ounce (or whatever the exact all-time recent high was) is the top. In January, 1980, gold topped out at $850 an ounce. Will the top of this cycle, after 31 years, be not even twice as high? Maybe, but there is certainly not yet the frenzy we had in 1980. I hate owning gold, but am hanging on to my little insurance stash anyway. It’s hard for me to see how paper currency will not depreciate at least somewhat further in the years to come.
At Last May 2, 2011March 25, 2012 Charles and I knew only one person killed on 9/11. Ironically, it was our wonderful friend Rob Deraney, filled with life and sunshine — who first introduced us. (Rob brought Charles to what was then my, but became our, July 4th party. Charles thought I was a lunatic. It took us four more summers to get together, 17 summers ago.) Hats off to our men and women in uniform. Hats off to our commander in chief and his team. I’m taking the day off.
BZ Is Up, Up Is Down Come To New York June 23 April 29, 2011March 24, 2017 You’ve doubtless seen footage of the monster tornadoes that caused such carnage across the South this week. “Scientists” . . . who work with “numbers” . . . at elitist “universities” (they may be elite, but let’s call them elitist, which turns a positive into a negative) have been telling us for years that the greenhouse gasses we dump into the atmosphere will cause ever more violent weather. So some of those scientists will probably – yet again – point to Wednesday’s 160 tornadoes and issue their tired old warnings. There is another school of thought, which is that God sends natural disasters to punish sinners, and that greenhouse gasses are irrelevant to His thinking. He can suspend cause and effect any time He wants, so that – if we do something He likes – He can close the hole in the ozone layer as our reward. (It wasn’t our ban on hydrofluorocarbons that caused this result; it was His decision to close the hole back up.) It won’t surprise you to know that I’m a fan of elite universities . . . that I don’t think God suspends cause and effect (or why would He have created it in the first place?) . . . and that, while we’re laying out our differences, I “believe in” evolution. I don’t know of a single Democratic leader who doesn’t “believe in” evolution. Yet we all know of three 2008 Republican presidential candidates who don’t – watch them again here – one of whom, Mike Huckabee, is on the short list to be the 2012 Republican nominee. A well-known Republican campaign strategist I was with at dinner Tuesday believes Huckabee wins it. Romney could have trouble getting through the primaries, he thinks, for reasons ranging from his Massachusetts health care plan to the religious right’s nutty perception of his religion.* Which brings me to Paul Ryan’s Republican-backed budget plan. Its overall goal – dealing with the deficit – is shared by all. (You may recall that I’ve long decried the Reagan/Bush/Bush policies that sent our National Debt soaring from 30% of GDP when Reagan took over to 100% when Bush handed Obama a $1.5 trillion deficit and an economy on the brink of depression.) And some of the ideas in that budget also make sense – like simplifying the tax code and removing loopholes and unnecessary incentives. (Does the oil and gas industry really still need tax subsidies? The Republicans think so, but I’m hoping we may be able to change their minds.) But privatizing Medicare? Slashing tax rates for the rich – yet again? Eviscerating the Education Department, the Energy Department, and the Environmental Protection Agency? These are not good ideas. The connection between the climate-change deniers and the Republican budget enthusiasts is that both are massively funded by corporate interests, now entirely unleashed by the Republican Supreme Court and its Citizens United decision. That’s the one that stacks the political system even more heavily in favor of the rich and powerful, and allows their influence to be hidden. It’s not that the giant funders of the political right themselves believe natural disasters are God’s wrath visited upon women who take Plan B. They don’t think Katrina was the result of Bourbon Street carousing. But they represent Big Oil and Big Coal and others who reflexively oppose any threat to their profits. And so we have a flood of ads now trying to tell us that up is down. Just as candidate Bush assured us that “by far the vast majority” of his tax cuts would go to “people at the bottom end of the economic ladder” – up is down – so the secret right wing funders are telling people that the Republican budget saves Medicare. (It ends it.) Up is down. The Big Lie. It worked for Bush. The Bush years were a positively grand time to be rich and powerful in America. Will it work again? Watch Rachel Maddow to see how the rich and powerful have their thumb on the scale. *His religion is nutty, too. Taken literally, what religion isn’t? One has to assume Romney doesn’t literally believe all the things you see on Broadway. BZ WARRANTS With BZ up nicely yesterday and the warrants at $1.82 – up 90-fold from what some of us lucked out and paid two years ago – you asked, “What now, with the warrants set to expire June 18?” After first asking each of them to donate liberally to the President’s reelection, I replied that I am inclined to just watch it play out to the end, almost for the fun of it. Having sold 95% of mine at gains ranging from ten-fold to 75-fold, NOTHING from here on out could keep me from enjoying the rest of the ride, even if it’s to zero. And who knows? We might get $2 for these last few. Or even more. Meanwhile, five days later . . . JUNE 23 Any interest in attending our June 23 national LGBT Obama Victory Fund 2012 dinner in New York? Our honored guest will be the President of the United States. Straight allies welcome! Click here to sign up. (It would be nice to meet you after all these years.)