Archive for March 19th, 2009

We don't like you … so give us all of your money

March 19, 2009

Ken’s Take: Sure, the AIG FP execs are scum, but abrogation of contracts and retroactive confiscatory taxation can’t possibly be a good idea.  Once the precedent is set, there’s no way to stop them from doing it to me or you … just because they don’t like us. 

(OK, you run less risk because you’re probably more likeable than me.)

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Excerpted from Wsj,”Obama’s AIG Pani”, March 19, 2009 

Congress looking to string up AIG bonus recipients and, more generally, bankers in whatever bunker they can be found.

Senators Grassley and Baucus want to double the current income tax on bonuses, to 70% from 35% …Congresswoman Carolyn Maloney,  wants to tax it all — at 100%.

This is all too much even for Rep. Charlie Rangel, the House’s chief tax writer, who says the tax code shouldn’t be deployed as a “political weapon.”

He’s right. AIG’s managers may be this week’s political target of choice, but the message to every banker in America, indeed every business and individual  in America, is that you could be next.

At least we haven’t yet seen the resolution that was proposed in the English parliament, in 1720 in the aftermath of the South Sea bubble, that bankers be tied in sacks filled with snakes and tipped into the Thames.

But this fracas is still in its early days.

Full editorial:
http://online.wsj.com/article/SB123742023932678335.html

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Posted in Obama Administration, Taxes | 2 Comments »

We don’t like you … so give us all of your money

March 19, 2009

Ken’s Take: Sure, the AIG FP execs are scum, but abrogation of contracts and retroactive confiscatory taxation can’t possibly be a good idea.  Once the precedent is set, there’s no way to stop them from doing it to me or you … just because they don’t like us. 

(OK, you run less risk because you’re probably more likeable than me.)

* * * **

Excerpted from Wsj,”Obama’s AIG Pani”, March 19, 2009 

Congress looking to string up AIG bonus recipients and, more generally, bankers in whatever bunker they can be found.

Senators Grassley and Baucus want to double the current income tax on bonuses, to 70% from 35% …Congresswoman Carolyn Maloney,  wants to tax it all — at 100%.

This is all too much even for Rep. Charlie Rangel, the House’s chief tax writer, who says the tax code shouldn’t be deployed as a “political weapon.”

He’s right. AIG’s managers may be this week’s political target of choice, but the message to every banker in America, indeed every business and individual  in America, is that you could be next.

At least we haven’t yet seen the resolution that was proposed in the English parliament, in 1720 in the aftermath of the South Sea bubble, that bankers be tied in sacks filled with snakes and tipped into the Thames.

But this fracas is still in its early days.

Full editorial:
http://online.wsj.com/article/SB123742023932678335.html

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Click link =>  The Homa Files Blog

Posted in Obama Administration, Taxes | 2 Comments »

The “wealth effect” … err, make that the “drop in wealth effect”

March 19, 2009

Excerpted from IBD, ” Wealth Connection”, March 13, 2009

Economy: The Federal Reserve last week announced that Americans’ net worth took an $11.2 trillion hit in 2008 — the biggest on record.

Net worth — basically, the value of everything you own minus the debt you took on to buy it — plunged 9% from 2007’s $64.4 trillion to $51.5 trillion last year. In the fourth quarter alone, Americans lost $5.1 trillion in wealth. Both are records.

This is more than just a paper reduction in wealth. Such a big shift affects our behavior, making us less prone to take risks, less able to borrow, less able to spend and more anxious about the economy.

This is known as the “wealth effect.” When wealth rises, we spend more; when it falls, we spend less. For each $1 change in wealth, spending changes by 5 cents or so, economists say.

Across the economy, such impacts can be enormous. An $11.2 trillion drop in national wealth, for instance, translates into a $560 billion drop in spending — about $1,963 for every American.

This is why economists worry about net worth. If we don’t do something about stemming the decline in wealth and encouraging wealth accumulation, our economy will continue to struggle.

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image

 

Full article:
http://www.ibdeditorials.com/IBDArticles.aspx?id=321837955855701

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What do field goals, 3-pointers, and hotels on Vermont have in common?

March 19, 2009

Answer: they’re all “advantaged assets” …

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Field Goals
As professional kickers have specialized and improved their technique, field goals have become more common. National Football League teams last season made nearly 85% of field goals, compared with barely 60% in 1974, according to Brian Burke of Advanced NFL Stats. There were two successful field goals for every three touchdowns last season, compared with barely two for every five touchdowns in 1974.

3-Pointers
In college basketball, meanwhile, three-point shots are falling with about the same level of accuracy of closer jump shots, even though they’re worth 50% more. To address this, the three-point line has been moved away from the basket by a foot, as college-hoops fans may notice during March Madness. Yet shots from 21 feet and 22 feet, the shortest three-point distances, were accurate more than 37% of the time this season — easier than those from any distance between five feet and 19 feet from the basket, according to college-basketball analyst Ken Pomeroy.

Hotels on Vermont
in Monopoly, paying $50 for that hotel on Vermont Avenue pays itself off in fewer than 15 rolls of the dice by your opponent, compared with more than 40 rolls for other hotel-adorned squares, according to simulations of 32 billion rolls by Truman Collins.

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Excerpted from Wsj, “Price Drop: Stocks, Homes, Now Triple-Word Scores”, March 18, 2009
http://online.wsj.com/article/SB123731266862258869.html?mod=djemalert

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Outliers’ KFS … be smart, but not too smart

March 19, 2009

This is one of several posts extracting some key points from the book Outliers: The Story of Success by Malcolm Gladwell, Little Brown, 2008

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Gladwell’s Observation

Success requires intelligence plus personality plus ambition.  But, intelligence and achievement are far from perfectly correlated.  That is, high intellect doesn’t always translate into a greater likelihood of success.

Why?

First, because “general intelligence” does not assure “practical intelligence” … think book smart versus street smart.

[Often, people with high intellects tend to become linear logic specialists … that is, they may have vision, but not peripheral vision … they can connect the dots (convergence) but not think out of the box (divergence).]

Below a certain level of intellect, success is very unlikely.  But, there’s a “threshold effect” … if a person is just smart enough or talented enough to pass the qualifying threshold, then success is more a function of personality and ambition, moreso than incremental intellect.

Example cited: affirmative action law schools … some students may not have as high an intellect as others do, but they do well because they are “smart enough” to succeed.

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Posted in Book Summaries, Success Factors | 1 Comment »