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America's Debt = "We're Screwed!" (pg. 23)
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| Shakka |
| quote: | Originally posted by jerZ07002
To my knowledge, no credit card gives you airline miles without an annual fee.
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The trick is to get a miles card that has no annual fee for the first year and then cancel it before it rolls over(or call them and threaten to cancel and see if they'll give you another free period!). A lot of cards give you a nice chunk of miles just for using the card the first time. I used to do this with a different Amex card. Most cards give you that first year free anyway. I collected miles but thought they might be at risk of becoming worthless given the state of the airline industry (and the fact that miles tickets were becoming more expensive and harder to attain given restrictions and what not). There are times that I would love to have the lounge perks, but I don't personally travel enough for it to be a big deal. |
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| Shakka |
| quote: |
Washington seems in disarray
February 13, 2009
Imagine! There is a Congressman who actually wants to delay the vote on the stimulus bill so he can read it and make sure it says what he was told it says. Kudos for him. There is still hope for our country.
This 575 page piece of legislation is being rammed through Congress without any hearings, without any detailed examination, without any vetting. It is loaded with pieces of spending that are not going to trigger job creating activity for months or even years or maybe never. It is larger than all the money spent on the Iraq war. Its size rivals the Defense Department appropriations. It will be funded through federal borrowing. And there has not been any comprehensive vetting of the component parts.
Now we are continually told that there will be a "catastrophe” or a "disaster” if this 789 billion dollar package is not passed at once. Note that there is a continuing reference that ONLY government can fix the economic problems in the United States.
Not once did anyone mention that Cisco financed a 4 billion dollar bond issue without any TARP funds and without any government guarantees. Note that Intel announced an investment of billions into an entire new facility that will be located in the United States (Arizona) and will be privately funded. Intel didn’t need TARP funds. Intel didn’t need the stimulus package. Not one official in the Obama administration has even acknowledged the Intel commitment.
All we hear is that government can fix what will otherwise be a complete disaster. And all we hear is that banks are not lending and that there is no credit available.
Yesterday our chief monetary economist, Bob Eisenbeis, cited bank lending figures compiled by the federal authorities which show that bank lending is not at a dead stop. Sure credit is tightening. But creditworthy borrowers are getting loans. We see that among the clients in our firm.
In the United States our government is meeting behind closed doors and working up an $800 billion spending package and then giving the country no time to examine it. Even the Members of Congress who have to vote on it haven’t had time for their staffs to examine it. Campaigner Obama promised transparency. President Obama seems to have forgotten his message.
And for those of us in the business of managing the wealth of clients, we must deal with the conflict of emotions when we see the policy prescription in Washington on a collision course with the investment needs of our clients. Our job is to protect the wealth of our clients as best we can. Our job is to try to allocate among the component choices available to them. And our job is to tell our clients, their consultants and those readers who listen to us what we see and how it impacts them.
We see a Washington in disarray. We see repeated failure in assembling a cabinet. We see nominees having to withdraw their names because of their failure to comply with our tax laws. The first scofflaw was confirmed and he used up a lot of the new president’s political capital. The series that followed have had to withdraw.
Senator Gregg apparently withdrew when he realized that the Census Bureau was going to be moved from the Commerce Department to the White House. And he realized that this formerly neutral agency would be at risk of political influence. At least his withdrawal was not for failure to pay his taxes.
In Washington we see harsh and shrill rhetoric attempting to force immediate passage of legislation without vetting. And we see apologetic admission of “screwing up.” What we don’t see is a stimulus bill that will put people back to work promptly.
We do not believe the United States will fail immediately if something is not done at once. We think the 135 million Americans who still go to work every day and pay taxes and try to save and invest are the backbone of the country. And we think that government is NOT the only answer.
Today we fly to South America. In Argentina we will visit a country that squandered its great natural resources and ran up its debt and has defaulted several times. Argentina can claim the award for the largest US dollar denominated default in history. It, too, had a banking crisis. I remember visiting when “no al corralito” was chanted in the streets by citizens who could not get their money from the banks. We will also visit Chile, a country where dictatorship has been replaced with democracy and market based systems that seem to work. Chile is a success story. Argentina is an example of how populism and socialism destroyed what was once the fifth largest economy in the world.
This is our tenth trip to that region and to Patagonia. The people are friendly and welcoming. They do not trust their government. They have good reasons.
We will travel as best we can in South America. In these times we will carry a satellite phone when in remote areas where black berry has not penetrated. While away on our trip our Cumberland colleagues made up of tax paying employed private sector employees are available to serve our clients.
Our asset allocation remains unchanged. We are invested 50% in Stocks and 50% in bonds and zero in cash equivalents. Cash earning zero is a bad deal in our view. Our normal allocation is 70% stocks and 30% bonds. So we are under on the stock side and over on the bond side. In the bond accounts we are favoring tax-free municipal bonds and in the taxable accounts we favor higher grade taxable spread issues and we are avoiding treasury issues. In stock accounts we are using only exchange traded funds and we are broadly diversifying risk.
The enduring quality of these great United States is that our institutions survive our politicians and endure in spite of them. The real fabric in America is the willingness of its citizens to participate in the government. And it is in the ability of our society to voice criticism and to debate ideas without fear of retribution by the government. Those wonderful characteristics are still alive.
I would still rather be a citizen of our country than anywhere else. But I am very concerned about the start of the new Obama Administration. I supported him and I voted for him I want him to succeed. I repudiated what seemed to be a failed policy of the last few years; that was my personal choice. But I am now very insecure in the way the government is being run by the new folks. I find the thought of a Pelosi dominated policy repugnant. And it seems to me that the House of Representatives is now a one party system without any respect for the tradition of debate on the issues.
2009 is certainly an interesting year. Happy Valentine’s Day and Happy Presidents Day.
David R. Kotok, Chairman and Chief Investment Officer, email: [email protected]
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| jerZ07002 |
| quote: | Originally posted by Shakka
The trick is to get a miles card that has no annual fee for the first year and then cancel it before it rolls over(or call them and threaten to cancel and see if they'll give you another free period!). A lot of cards give you a nice chunk of miles just for using the card the first time. I used to do this with a different Amex card. Most cards give you that first year free anyway. I collected miles but thought they might be at risk of becoming worthless given the state of the airline industry (and the fact that miles tickets were becoming more expensive and harder to attain given restrictions and what not). There are times that I would love to have the lounge perks, but I don't personally travel enough for it to be a big deal. |
i travel alot. when you don't have status with an airline miles are difficult to use. When you have status, there are far fewer restrictions, and the miles are much easier to use.
Also, I can't do the sign up and cancel thing because I'm a frequent flier with continental, so it makes no sense to sign up for delta points, US airway points, or with any other airline. |
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| Shakka |
| quote: | Originally posted by jerZ07002
Also, I can't do the sign up and cancel thing because I'm a frequent flier with continental, so it makes no sense to sign up for delta points, US airway points, or with any other airline. |
Not that I'm an expert but I think there are several cards out there that will credit miles to a number of airlines. But I don't travel much so I can't be certain--I just thought that might be the case. Or you can always get a card that gives you generic reward points that can be used towards hotels or other things like that. Or if you can make it a corporate card in your job, obviously that is good too since you generally get reimbursed for your expenses but get to keep the miles. I have friends that have gone on nice honeymoons for free using Marriott points and miles and such.
Personally I just get a cash back card with no annual fee. It may not be that exciting but I'll be using last year's rebate to get iPhones for me and the Mrs. and should have a good bit left over to get something like a PS3 or something. |
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| Groundhog Boy |
| quote: | Originally posted by jerZ07002
if there's a 75K income limit i'm -outta-luck. Our government is full of idiots! Why would they limit the benefit to the people who probably can't afford to purchase houses? It seems to me that giving peeps on the upper fringe of the middle class the benefit would do more because we actually can afford to purchase houses and we still have access to credit. You have to love how they are aligning the incentives in the same way that caused the issue in the first place (trying to lure people who should be renting apartments into buying homes). |
Ding, ding, ding
As far as reselling, I believe I read that the $8K tax credit had to be repaid if you sold in less than 3 years. |
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| Groundhog Boy |
| quote: | Originally posted by jerZ07002
People have no business having $40K in CC debt anyway. If your CC debt is that high, and you don't have the income to pay the balance in a short period, you are a risk (whether actual credit risk or timing risk).
On another note, I'm sick of people bitching because they don't have access to something that doesn't belong to them, or because a company followed a legally binding agreement that harmed them. These people signed contracts that allowed variable interest rates on their credit cards. |
People use credit cards like they think their life is the collateral. They think that it'll either default or will be paid by life insurance when they die. |
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| Shakka |
I kinda want to start a catch-all "Pork" thread, but I like keeping this one alive, so I'll post it here. Latest thoughts from Merrill Lynch's David Rosenberg, who has had a great macro call for a while. Here are some thoughts on the porkulus package.
| quote: |
More about redistributing income than creating wealth
The best that we can say about the fiscal stimulus plan, $787 billion covering over 1,000 pages of documentation, is that something is certainly better than nothing. It is often dubbed the 'infrastructure package', and yet of the $507 billion of new spending less than 10% is directly aimed at infrastructure outlays. Of the $282 billion in tax cuts, fully one-quarter is the typical annual provision that spares tax filers (24 million of them this year) from being ensnared by the AMT. The largest part of the tax relief part of the plan, just over 40% of it, is in tax credits for individuals earning up to $125,000 (and couples with income up to $250,000). Individuals see up to $400 and couples up to $800 of proceeds via lower withholding taxes on their paychecks. It remains to be seen how an extra $8 per paycheck is going to end the recession, but we are willing to keep an open mind. We do know that it is reductions in tax rates that, at the margin, influence households to change their behavior, and similar attempts to kick-start the economy in last year's second quarter exerted a very temporary impact on the pace of economic activity.
It is questionable how long-lasting the effects will be
There are other provisions, which we will go into in more detail, but suffice it to say that we think it really is questionable as to how long-lasting the effects of this fiscal package are going to be. Our primary concern is that it is a plan that relies heavily on multiplier impacts. If they don't occur, then we would expect to see the economy relapse after what could be a brief spurt of growth in the third quarter. That by no means suggests that there will be no winners - education, health care, energy, asphalt, the environment and technology - but it does mean that enhancing the social safety net does not necessarily translate into sustained growth in economic activity or wealth creation.
Investors should pay for growth that is sustainable
Now to be sure, while the equity market did enjoy a tradable rally ahead of last year's fiscal stimulus (which was aimed solely at low- and middle-income consumers), particularly the early cyclicals (transports, homebuilders, retailers), it was brief and the last time we saw the S&P 500 at 1400 was when the last of the tax rebates were being mailed out. Investors who have a longer-term view should be paying only for growth that is sustainable; we believe rallies that occur around the prospect of the odd statistical rebound in quarterly GDP are rallies to rent, not own.
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| jerZ07002 |
| quote: | Originally posted by Shakka
I kinda want to start a catch-all "Pork" thread, but I like keeping this one alive, so I'll post it here. Latest thoughts from Merrill Lynch's David Rosenberg, who has had a great macro call for a while. Here are some thoughts on the porkulus package. |
I'm not happy at all with the package from what i've read about it. admittedly, I haven't read too much (just not enough time). I hate temporary tax cuts, and I think much more of the package should have went to infrastructure projects that were necessary regardless of the downturn. |
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| zookeeper |
| quote: | Originally posted by jerZ07002
I think much more of the package should have went to infrastructure projects that were necessary regardless of the downturn. |
Living in New York State, where we have the highest state taxes in the country (except California, but not by much), there is constant construction of roads with LOTS of people working on these projects, what will this stimulus do...MORE construction and MORE delays?!!
...a sidebar here, a NY joke:
"What is big, bright yellow and sleeps 5?"
" An NYS Thruway Authority service truck"
If "infrastructure" also includes the upgrade of the national grid and electricity delivery systems, I might be all for that. But as Jer said, I don't have enough time to read all/any of this package, and I don't think anyone else did either.
Well, it's law now, and I guess we'll have to wait and see. |
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| Fir3start3r |
| quote: | Originally posted by zookeeper
Living in New York State, where we have the highest state taxes in the country (except California, but not by much), there is constant construction of roads with LOTS of people working on these projects, what will this stimulus do...MORE construction and MORE delays?!!
...a sidebar here, a NY joke:
"What is big, bright yellow and sleeps 5?"
" An NYS Thruway Authority service truck"
If "infrastructure" also includes the upgrade of the national grid and electricity delivery systems, I might be all for that. But as Jer said, I don't have enough time to read all/any of this package, and I don't think anyone else did either.
Well, it's law now, and I guess we'll have to wait and see. |
Your joke reminds me of the two seasons we have; winter and construction... |
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| jerZ07002 |
| quote: | Originally posted by zookeeper
Living in New York State, where we have the highest state taxes in the country (except California, but not by much), there is constant construction of roads with LOTS of people working on these projects, what will this stimulus do...MORE construction and MORE delays?!!
...a sidebar here, a NY joke:
"What is big, bright yellow and sleeps 5?"
" An NYS Thruway Authority service truck"
If "infrastructure" also includes the upgrade of the national grid and electricity delivery systems, I might be all for that. But as Jer said, I don't have enough time to read all/any of this package, and I don't think anyone else did either.
Well, it's law now, and I guess we'll have to wait and see. |
i probably pay even more in taxes than you as a result of living in NJ and commuting to work in NYC (although people living in NY commuting into the city have it worse with the 4% city income tax, on top of the state income tax - ouch!). i pay the NY state income tax as a result of working in the city, i pay the NY sales tax on most of my purchases, and i indirectly pay the property tax on the property (which belongs to my family - but is not in my name) upon which i live in NJ (which has the highest property taxes in the country because we lose out on so much income tax as a result of commuting residents working in philly and NYC). The property tax on my property is $12,000 a year!!!!!!!
anyway, increased delays isn't a concern so long as more people are working. |
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| Krypton |
Anyone seen this, about the stimulus. How viable is this?
| quote: | Three contractors are bidding to fix a broken fence at the White House. One is from Chicago , another is from Tennessee , and the third is from Minnesota .
All three go with a White House official to examine the fence. The Minnesota contractor takes out a tape measure and does some measuring, then works some figures with a pencil. "Well," he says, "I figure the job will run about $900: $400 for materials, $400 for my crew and $100 profit for me."
The Tennessee contractor also does some measuring and figuring, then says, "I can do this job for $700: $300 for materials, $300 for my crew and $100 profit for me."
The Chicago contractor doesn't measure or figure, but leans over to the White House official and whispers, "$2,700."
The official, incredulous, says, "You didn't even measure like the other guys! How did you come up with such a high figure?"
The Chicago contractor whispers back, "$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence."
"Done!" replies the government official.
And that, my friends, is how the new stimulus plan will work. |
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