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Monthly Archives: October 2011

Children!  Children, gather ’round.  I wanna tell you the story of the Leftist.

When someone you disagree with enters into a war to overthrow a brutal dictator, you protest him, call him Hitler and burn him effigy.  It is IMMORAL to use force against a foreign nation in an attempt to overthrow an evil brutal dictator.

But.  But….if Barack Obama would like to do the same, it is okay if:

  1. He does it quickly.
  2. There is no #2.

See, if one President goes to the United Nations and obtains resolution after resolution forcing the evil bad-guy dictator to allow this or allow that, and the evil bad-guy dictator doesn’t, AND the President gathers a coalition of foreign nations to assist in the overthrow of that evil bad-guy dictator AND that President goes to, you know, CONGRESS, AND….AND Congress authorizes force to remove evil bad-guy dictator AND that evil bad-guy dictator is captured AND that evil bad-guy dictator is imprisoned with human right’s representatives on guard AND that evil bad-guy dictator is given a trial and found guilty; well, THAT is immoral and the President is a douche.

He is greedy and is Hitler.

But, if the other President is Barack Obama, well, then we can target the evil bad-guy dictator in an assassination attempt, never go to Congress, the UN or any other body, watch as he is strung up on the hood of a truck like a deer, beat and shot without trial THEN allowed to have his body, decaying, be placed on public display for all to see while crooning:

We came, we saw, he died.

THAT is a foreign policy success, and the President is macho.

The Left is without morals.  They have none.  Which is why they try to legislate morals to force ME to abide by ’em.  They demand the rich donate to charity, but never do the same.  They demand that the Right care for the poor, but never do the same.  They scream that the Right engages in immoral wars, yet don’t care that they are the worst offenders.

They legislate others to do what they themselves can’t or won’t.

Here’s an interesting illustration for the 99% camping out in tent cities all across our nation:

Reed Hastings was soaking in a hot tub with a friend last month when he shared a secret: his company, Netflix, was about to announce a plan to divide its movie rental service into two — one offering streaming movies over the Internet, the other offering old-fashioned DVDs in the mail.

That is awful,” the friend, who was also a Netflix subscriber, told him under a starry sky in the Bay Area, according to Mr. Hastings. “I don’t want to deal with two accounts.

Mr. Hastings ignored the warning, believing that chief executives should generally discount what their friends say.

He has since regretted it. Subscribers revolted and many dropped the service. The plan further tarnished a once widely respected Internet service that had already been wounded by an unpopular price increase in the summer. Mr. Hastings was forced to reverse the planned split — but not the price increase — three weeks later and apologized.

On Monday, the company revealed the damage that had been done. It told investors that it ended the third quarter of the year with 800,000 fewer subscribers in the United States than in the previous quarter, its first decline in years. The stock plummeted more than 25 percent in after-hours trading

The market works.

Even the 99% can impact the 1%.

Learn and implement.

I like to listen to Clark Howard.  If you can get past the obnoxious campy “always-in-a-good” aspect of his delivery, the advice he gives is normally really strong.  Good conservative kinda stuff.

However, every time he talks about payday loans I get all hot-n-bothered.

See, Clark thinks that the industry should be shut down or regulated.  He feels that charging someone 10-20% on money for 1-3 weeks is out of the world crazy.  And, I admit, that kinda rate, even if you call the loan a “1 month loan” is way high.

But look at the numbers.  See what happens when you assume a 10% default rate:

Number of Borrowers Amount Borrowed Default Rate
100 $100.00 10.00%
Total Amount Lent $10,000.00
Loans Unpayed 10
Money Lost $1,000.00
Fee to Cover Money Lost $11.11
Loan + Fee $111.11
Repayment % 11.11%
Effective Annual % Rate 133.33%
Profit $0.00

If the lender accepts ZERO profit, the effective annual rate is 133.33%.

Now look what happens if the lender actually wants to realize a profit on his money:

Number of Borrowers Amount Borrowed Default Rate
100 $100.00 10.00%
Total Amount Lent $10,000.00
Loans Unpayed 10
Money Lost $1,000.00
Fee to Cover Money Lost $11.11
Loan + Fee $111.11
Repayment % 11.11%
Effective Annual % Rate 133.33%
Profit $0.00
Desired Profit Margin 1.00%
Profit $100.00
Fee + Profit per good loan $12.22
Loan + Fee + Profit $112.22
Repayment % 12.22%
Effective Annual % Rate 146.67%

The rate jumps to 146.67 for a 1% profit margin. Consider that; do you know anyone willing to risk 10k large in the hope of getting back $100.00?  Me either.

So, let’s look at 5%:

Desired Profit Margin 5.00%
Profit $500.00
Fee + Profit per good loan $16.67
Loan + Fee + Profit $116.67
Repayment % 16.67%
Effective Annual % Rate 200.00%

Wow!  If our lender would like to realize a 5% profit rate, he would have to charge an effective interest rate of 200%!  But wait, what if the default rate isn’t 10%, what if it’s 15%?

Desired Profit Margin 5.00%
Profit $500.00
Fee + Profit per good loan $23.53
Loan + Fee + Profit $123.53
Repayment % 23.53%
Effective Annual % Rate 282.35%

The annual rate soars to 282%!

The problem isn’t the payday lender.  Not at all.  The problem is the borrower population.  The rest is just numbers.

So, if Clark just asked the right questions he would walk away with a better understanding of the situation.  And just think, this profit margin and annual rate assumes a PERFECT efficiency in administration costs.  No labor, insurance, rent or processing.  ALL of which add to the cost before profit that the borrower has to pay.

It looks bad, but a closer look reveals an industry that really isn’t as predatory as we like to think.

The State of Minnesota is reporting that they may soon have a record number of job openings available for state government jobs:

The executive director of the Minnesota State Retirement System, Dave Bergstrom, said Monday that 2,733 state employees have retired as of this month, up 675 from the record 2,058 who retired in 2010.

This news should cause much happiness and relief for the State, right?  As more and more people feel comfortable leaving the work force, younger folks can move up and be replaced at THEIR level by new job market entrants.  This is the nature of things.  Further, it may spell a growing confidence that we have seen the worst when it comes to our economic doldrums.

However, the State doesn’t see it that way:

However, State Demographer Tom Gillaspy said the wave of retirements does pose some problems for state government, which is faced with replacing senior employees with unique skills in subjects like school finance, tax collections and building roads in Minnesota’s hard climate.

Now, to be sure, from the perspective of Minnesota State executives, this IS a problem.  Finding quality staff to replace senior staff is definitely an issue.  Both in the government sector and in the  private sector.  However, from MY perspective, the fact that we have people less good at school finances and tax collections is a most wonderful condition.

The harder the State finds it to take and spend my money, the happier I am.

By the way, how, in this jobless recovery, is THIS possible:

The retirements could also bring into focus the state’s difficulty hiring top quality replacements, given that pay and promotions in state government now lag the private sector and academia, Gillaspy said.

I was looking through articles and news about Warren Buffet, his compensation and his taxes.  He makes a remarkable amount of money.  And I have great admiration for the man.  His simple down to earth nature, his favorite activity is to have a bowl of popcorn and watch the Corn Huskers play football.  I like his common sense approach to business, I think he once mentioned that if he had purchased the Red Sox, he wouldn’t try and manage how Ted Williams approached hitting.

No, tax policy aside, I have great regard for the man.  And even in the tax debate, he showed a glimpse of his genius:

Becky: OK, there were a couple of emails that came in that people that said if you think the government should be able to tax more money, why don’t you just give your money away to the government instead of charity.

Buffett: Well, that’s a choice and it’s an option that… If I had to give it to a single individual, or make some young Buffett a multi-billionaire, or give it to the government, I’d absolutely give it to the government. I think that on balance the Gates Foundation, my daughter’s foundation, my two sons’ foundations, will do a better job with lower administrative costs and better selection of beneficiaries than the government.

Indeed.  I have little doubt that Buffet’s three children would do a better job with that money.

My only question is this:

Why does Buffet reserve the right to keep and spend his money as he sees fit but denies that same right to all other people?

Warren Buffet is now famous for claiming that his secretary pays more in taxes than he does.  Forget for a second that she doesn’t literally pay more.  Also forget for a second that she most certainly doesn’t pay the rate that Buffet claims she does.

Instead, focus on Buffet.  And his salary:

Warren Buffett, the billionaire chief executive officer of Berkshire Hathaway Inc. (BRK/A), was paid a $100,000 salary for a 30th straight year after warning that excessive executive compensation can hurt shareholders.

Buffett, 80, received no bonus in 2010 and he doesn’t get stock options or grants, the Omaha, Nebraska-based firm said today in a filing. Buffett’s personal and home-security services paid for by Berkshire cost $349,946. The company’s compensation committee has determined salaries since 2004. Buffett, Berkshire’s chairman and largest shareholder, formerly recommended his own salary to the board.

It’s reasonable to conclude that Buffet will earn another $100,000 next year.  Plus, of course, the security compensation.  So, if he gets his way and Obama and the Democrats raise the marginal tax rate from the 35% it is now to what ever they wanna move it to, guess what happens to Buffet’s tax burden?

It remains almost exactly the same.

See, Buffet makes his money in other ways than a simple paycheck:

  • Buffett’s adjusted gross income last year was $62,855,038
  • Buffett’s taxable income last year was $39,814,784
  • Buffett paid $15,300 in payroll taxes last year
  • Buffett’s federal tax bill came to $6,923,494, or 17.4% of his taxable income last year
So, if we DOUBLE the current top marginal rate, Buffet is only impacted on the first $100,000 + whatever the security compensation costs him.  The rest, the $39,400,000 or so left over, won’t be impacted.
Don’t be fooled.  Buffet doesn’t wanna pay more taxes.  He wants OTHER people to pay more taxes.

I know that the Left doesn’t like the ruling that allows corporations to donate to campaigns.  Or, perhaps more importantly, actively campaign for the candidate of choice.  The granting of free speech rights to corporations does seem, in some ways, a bit silly.

Further, I resonate with those who feel that massive corporations can impact a campaign in a way and manner that can seem, how to say, unfair.  And in many ways, this political donating is similar to how I feel about unions.  The individual members of the union, or the workers/shareholders of a corporation may not WANT their money going to candidate A or to party B.

But I don’t know how to fix it.

I know that individuals are limited in the amount of money they can contribute to a candidate.  But after that, if an individual wants to spend private money to purchase air time on the radio in support of a candidate, she can, right?

I think so.  Even if it means that this woman can donate massive amounts of money to Minnesota Democrats:

For more than 30 years, one of the most influential charitable and political donors in Minnesota has been a woman passionate about issues but guarded about her privacy.

Alida Messinger, an heir to the fabled Rockefeller fortune, has quietly given at least $10 million to candidates and causes over the past decade. Some recent gifts have been extraordinary: $500,000 to a group that last year backed her former husband, Mark Dayton, for governor. And before that, $1 million to help bankroll the ballot campaign for the Legacy amendment, which raised the state sales tax to create 25 years of new funding for conservation and cultural projects.

Now, Messinger is preparing for a new showdown that will be expensive, contentious and, for the first time, public.

She is vowing to do all she can to help the DFL regain control of the Legislature and get President Obama re-elected. Her millions could also become a force in the fight over the constitutional amendment on the ballot next year to define marriage as a union of man and woman — not gay couples. Messinger, 62, contends GOP politicians are harming Minnesota. “We are not a quality-of-life state anymore,” she said. “Citizens need to get involved and say we don’t like what you are doing to our state.”

A single citizen, full of money, is helping to shape the political climate of a state.  Going so far as to elect her ex-husband to the Governor’s mansion.  And that’s not all of it.  Part of her giving, $500,000, went to a GROUP that worked to elect the good governor.

I don’t like it when a single individual can influence politics that much.  I suspect that much of my chagrin this afternoon has to do with the fact that Ms. Messinger donates to Democrats.  But I get that for ever rich Messinger, there is a rich Koch, or two.  For every Steve Jobs, there is a rich….well, a rich Republican.  I get that.

And maybe just because I don’t like it doesn’t mean it’s not capital “R” Right.

Let’s see if Obama can let the Republicans craft policy in the same way that Bill Clinton let the Republicans in his day:

(Reuters) – The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.

The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.

A second downgrade — either from Moody’s or Fitch — would follow Standard & Poor’s downgrade in August on concerns about the government’s budget deficit and rising debt burden. A second loss of the country’s top credit rating would be an additional blow to the sluggish U.S. economy, Merrill said.

“The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan” to cut the deficit, Merrill’s North American economist, Ethan Harris, wrote in the report.

Everyone knows that the Republican Congress has passed job creating bill after job creating bill only to have Harry Reid kill it in the Senate.  Obama’s job bill was defeated by Democrats and then Senate Democrats supported the Republican version.  And this was after Obama’s first shot at a jobs bill was defeated 99-zip.

This is Obama’s economy.

There’s an old joke:

While speaking with a friend’s daughter, I asked what she wanted to be when she grew up.

Marcia proudly announced, “I want to be President!”

This caused her parents, both of whom are liberal Democrats, to beam with pride.

I then inquired, “If you become President, what is the first thing you would do?”

Marcia replied, “I would give houses to all homeless people.”

“That is a worthy goal,” I said, “but you don’t have to wait until you’re President to do that.  You know our dog, Poco?  Well, he likes to poop in our backyard and I have to clean that up.  I’ll pay you $5 a week if you’ll do that for me.  Then I’ll then take you to see a homeless man up there by the grocery store so you can give him the money to help him buy a home.”

Marcia looked at me and asked, “Why don’t you ask him to clean up the poop himself?”

I smiled and said, “Welcome to the Republican Party.”

I laughed out loud, really, when I came across the real life version of this:

PORTLAND, Ore. (AP) — When “Occupy Wall Street” protesters took over two parks in Portland’s soggy downtown, they pitched 300 tents and offered free food, medical care and shelter to anyone. They weren’t just building, like so many of their brethren across the nation, a community to protest what they see as corporate greed.

They also created an ideal place for the homeless. Some were already living in the parks, while others were drawn from elsewhere to the encampment’s open doors.

I think this gets a little fuzzy.  I say that because I think there are dangers when personal obligations mingle with State obligations.  See, this is where the Left is able to effectively hammer the Right.  See, it is ABSOLUTELY our personal responsibility to perform charitable work for those of us less well off.  However, that same responsibility does not exist for the government.

Anyway, this nicely frames this nugget:

Homeless transplants from the city’s Skid Row have set up their tents within the larger tent city. No violence has been reported, but protest organizers are attempting to discourage people who are only at the encampment for the amenities.

I smiled and said, “Welcome to the 53%!”

One of the most powerful lessons I’ve taken away from all the reading, studying, arguing and debating I’ve done over the past 4 years of my “political awareness” has been that of incentives.  And how much they matter.  And until you can admit that people are driven by incentives, in general mind you, you will never be able to understand how laws and regulations shape our world.

Consider:

(AP) ONEONTA, Ala. – Potato farmer Keith Smith saw most of his immigrant workers leave after Alabama’s tough immigration law took effect, so he hired Americans. It hasn’t worked out: Most show up late, work slower than seasoned farm hands and are ready to call it a day after lunch or by midafternoon. Some quit after a single day.

Now listen, Alabama has an unemployment rate of 9.8%.

Nearly 1 in 10 Alabamians are out of work.  More I’m sure, if you count the folks who’ve given up.  And the numbers are worse if you add up those folks who are underemployed.  Yet farmers can’t keep help.

Too be sure, the value proposition is a tough one:

 It’s hot, the hours are long, the pay isn’t enough and it’s just plain hard.

At his farm, field workers get $2 for every 25-pound box of tomatoes they fill.

A crew of 25 Americans recently picked 200 boxes — giving them each $24 for the day.

That’s $3 an hour.  Hardly worth downsides of the job.

Finally, and here is the kicker, the government makes it too easy to say “no” to jobs:

It may make sense for some to sit on the couch. Unemployment benefits provide up to $265 a week while a minimum wage job, at $7.25 an hour for 40 hours, brings in $290.

Who in their right mind would choose to work back-breaking jobs in order to make an effective $25 a week?

No one.

There are jobs out there all right, just that we make it too easy to say no to ’em.