Tuesday, January 31, 2012

Buffett Rule

There are some good points against such a rule in this Forbes article. Notably the inflation issue, which is a huge problem for long held cap gains. Also it was helpful for me to see some of the distinction. What it doesn't deal with, however, is the major issue that the Buffett Rule is supposed to solve, namely: It isn't fair that multi-millionaires and billionaires receiving (many) millions in cap gains per year but next to nothing else are taxed at a ridiculously low level.

I'm sure that there are better fixes available (some combination of corporate/debt tax rewriting), and it could be that the Buffett rule on its own is a bad plan, but so too is keeping things like they are.

Note: reinstatement of the estate tax to pre-Bush levels actually helps a lot, and combined with an inflation adjusted cap gains rate of 25%, reduction of the corporate rate to 20% (closing all loopholes), and probably something else...not gonna happen.

Friday, January 27, 2012

If I Had $1,000,000...

...I might buy you a monkey.
Really, though, $1M as a lump sum after taxes is something I could make real use of: pay off debt (mine, family's, others) and do a few things with my house, then bank some. (I probably wouldn't be nearly this effective, but, I like my job, and don't care as much to maximize. )

For $2M I'd be pretty much set for life.

At $5M, so too would be my family and others.

Beyond that, it's really, really hard to keep coming up with things to spend money on that aren't ridiculous, or so extravagant that I really couldn't justify it. So I'd probably give it all away.

Mittens made $17M after taxes in each of the last two years. I cannot comprehend the level of greed it takes to see that income as anything other than an opportunity for some serious charitable giving, or something to start businesses/companies with or...something other than personal wealth enrichment and exhibition. I just don't get it.

As a side note, the lady writing at the link shows just how much easier life gets as you get more money: at $1M she manages ~$34k/year, in passive income, but doesn't buy a bunch of things for herself. If she were to double that, she could more than double her income, or she could use some fraction to buy some security, something like establishing her dwelling so that her expenses would be lower (and still have much more income).

Citizens United

I wonder if any of the conservative justices that voted for Citizens United now regret their decision.

Apple Cult is Still Appropriate

It wasn't talking about the entire user base.

The whole Apple Cult thing has to do with a very small subset of their customers who post comments, create blogs, and otherwise worship Apple products. There is pretty much some subset of people like that for most commercial products, but the Apple ones were particularly annoying to most tech geeks, and so received a whole lot of ire.

Things have changed somewhat. The iPhone was for a couple years the best smartphone on the market, and plenty of geeks (who still are likely to see macbooks as a waste of a nice chasis) bought them. But there is still an oddness among many Apple fans that extends to their far more mediocre products, and a reverence for Steve Jobs that is a bit over the top. (I would say that Jobs had a brilliant mind for bringing form and function together, but I don't think there was a single product that didn't have at least one glaring problem, for 90% of their product line it would at the least provide rather poor value.)

Wednesday, January 25, 2012

Capital Gains

Last night David Brooks in all his ridiculous idiocy stated that Obama raising the cap gains tax to 30% would be a disaster because there is much more sensitivity to tax rates in investment than there is in labor. Also yesterday, Atrios commented on Romney's comment on being unemployed. Then clarified a bit.

First off, David Brooks is a moron. Second, I may be misunderstanding something in the tax code, but from what I can tell, if someone has a giant pile of cash, and they invest it and get a 10% rate of return, then after cap gains that goes down to an 8.5% ROI. If capital gains goes up to 30% then it goes down to 7% ROI. But if, in response to higher taxes, that rich person stops investing then their ROI goes to...0%.

Now, zero is worse than 7% by a lot, so people with giant piles of cash are not going to react to higher cap gains taxes by reducing or eliminating their investments. They will bitch, to be sure, but otherwise...they may invest more aggressively to offset the difference. They may not change at all, but lobby congress harder. They may be less willing to take certain risk because the potential rewards have been reduced, and this is, I think, what effect low cap gains rate defenders are talking about.

But this effect is highly uncertain. If some hold off, but others become more aggressive to offset, then the net effect could be anything: more, less, or the same level (and distribution) of investment.

And the other complaint: that the rich worked and earned and now they are being taxed again is bullshit for two reasons. One - they aren't being taxed again, the new income that they get from their wealth is being taxed. Two - many of these wealthy people didn't work and earn their wealth. Some inherited it, most--no matter how capable and hard working--were simply lucky in one way or another (hard work and ingenuity are no match for luck if you seek to get rich). For every Jobs or Gates there are plenty of people every bit as smart and driven, who simply had bad timing or that were born to the wrong people or in the wrong place...and to anyone who says that those people should overcome: fuck you, you callous, thoughtless, heartless, inhuman jerk.

Capital Gains are income and should be taxed as such. The arguments for treating them differently are real, but go both ways. Because of the risk and loss that occurs, taxing them more heavily may dissuade some investment, but because the owner of the giant pile of cash doesn't actually work in any real sense, the gains could just as easily be taxed more heavily. So in the end, I say treat as income. People who have cap gains as their primary income source but who aren't multi-millionaires will be taxed less heavily since their gains will be smaller, and the Romney's of the US will pay the full tax for their income.

Monday, January 23, 2012

Education Tax Credits/Deductions

I believe that there should be free options for college for all Americans. In the absence of that I would like to see many more student loan forgiveness possibilities. In the absence of that I would favor some pretty hefty tax credits/deductions for paying off student loans. But the absence of that too is what we have.

Student loans are tuition/fees/education expenses paid in the past, but are no longer deductible, so poorer students/families are penalized, while wealthy parents who can foot their children's bills get a tax break. The poorer individiuals get the benefit of the much smaller student loan interest deduction: only up to ~$2500, and not at all if AGI is >$75k. So M.D.'s with $125k in loans, but $150k in income get no breaks. (I think they can afford it, but that's another issue).

Since the first two just won't ever happen (as far as I can tell), the third issue is the only one with a chance to get real traction...

It is an incentive to pay off early. It allows lower income individuals to recoup tax breaks that the wealthy in this country get anyway. It would provide a pretty sizable stimulus to people most likely to spend extra money. In providing an incentive to pay off student loans it also could lower the default rate...particularly for higher income individuals like MD's. Since the US guarantees those returns (to private companies no less) then a lower default rate means some savings (no, not nearly offsetting, but some).

On the minus side, it would be pricey, and could encourage education expenses to accelerate (I would restrict to US backed/insured loans, which helps here). Better offsets, like by elimination or reduction of the mortgage interest tax deduction, are less likely than worse ones, like a increase in taxes on the wealthy, or simply none.

Friday, January 20, 2012

Wrong Again, Matt.

This type of thing still pisses me off. Yes, it's true that if I buy a house for $200k and live in it and then 10 years later it is worth $350k, and I sell it I wouldn't really have built wealth in one sense, because I then have to find somewhere else to live...but that's still short sighted. If I live in my house for 15 years, then my "rent" is fixed for that time, and my payments are effectively savings to purchase anew if I then sell and move. This is true even if every house appreciates at the same rate and from the same starting point:

Buy house A for $200k when house B is worth $200k have mortgage ($200k) plus everything... of $1500/mo.

Live there 10 years. Maintenance and taxes go up a bit, but much less than rent would have so maybe paying $1600/mo.

Sell house A for $300k (use ~$160k to pay off outstanding mortgage), have $140k left.

Buy house B for $300k using $140k down leaving a mortgage of...$160k! Depending on terms the "rent" here will be ~the same.

Meanwhile someone who rented at the same average rate over 10 years (rent control or started lower, but went higher) would have ~$0 extra to put into the purchase of house B and would have a subsequently higher rent. Wealth lost.

Aside from rent control and forced savings issues, once a mortgage is paid off suddenly lots of extra $ is available to...build wealth. Not having to pay as high a rent in the future is an excellent wealth building strategy.

Soda Machine Bans

Apparently don't make for slimmer students. I wonder if another tactic would work better: put them all on the school roof, on the far side from the roof entrance with no elevator access. Students wanting soda would have to climb stairs and get to the far side of the roof to get one. They may have to do so quickly to get done with lunch or back to class in time.

An added benefit would be the nurturing of entrepreneurial spirit: quick kids could buy extras and sell them at a profit to those too lazy/slow to make it.

Thursday, January 19, 2012

Buy Long Sell Short

I think that one of the issues markets have is the inability to sell long. This popped into mind with respect to housing and now with gold. If it were easy for people to sell gold today at current prices and hold that sale for a few years to buy back, then I would bet the price of gold would drop very quickly.

Housing a few years back had a similar issue, and The Big Short shows a bit of that. But the book also makes clear the problem: while anyone can buy today and sell whenever, it is only a very small subset that can do the opposite. This produces an imbalance that makes it much easier for prices to rise than fall, so bubbles are much easier to inflate than burst. And when bubbles do burst since so few are shorting, there is no one to assist the subsequent crash that takes place.

On that last note: if I want to short sell, and I chose the peak to initially sell, then I may buy back when the market has come down by 2%, buying maybe from another short seller who will then buy back when it falls another 2% and so on. This way the market remains more active, with more people (short sellers) willing to buy at still too high prices because they sold at even higher ones.


What Atrios said. I wouldn't mind a slightly larger house for when I have company and the like, but my house is in the neighborhood of 1200 square feet. Other than renting out rooms or entire floors of your house I really can't imagine what you can do with 4000 sq ft...and really, excepting very large families, even 2400 sq ft more than covers what a family would have much practical use for.

Wednesday, January 18, 2012

75% Correct, So Pretty Good

Andrew Sullivan's latest, and very good, article seems odd to me. I agree with him almost completely, e.g. where he talks about Republican/conservative response to Obama, he points out that they are factually wrong, and [borderline] delusional. But then he gets to the left complaints...

To be fair, there is a lot of complaining from the left that doesn't make a whole lot of sense, but a lot of the reason that Andrew Sullivan is happy with Obama, is the same as the reason that the left is angry: Obama has been an excellent moderate-conservative president. Sullivan is moderately conservative himself so win. Or maybe not.

The fact that Obama has been a moderate conservative and has adopted lots of GOP ideas/policy positions, has, among other things, forced the GOP into the insane land that they currently occupy. The only way to attack Obama from the right is to adopt the beliefs of the lunatic fringe, because any sensible republican view would be that Obama was one of them!

On the other hand, where Sullivan tries to point out "liberal" successes he fails miserably.
A depression was averted. The bail-out of the auto industry was—amazingly—successful. Even the bank bailouts have been repaid to a great extent by a recovering banking sector. The Iraq War—the issue that made Obama the nominee—has been ended on time and, vitally, with no troops left behind. Defense is being cut steadily, even as Obama has moved his own party away from a Pelosi-style reflexive defense of all federal entitlements. Under Obama, support for marriage equality and marijuana legalization has crested to record levels. Under Obama, a crucial state, New York, made marriage equality for gays an irreversible fact of American life. Gays now openly serve in the military, and the Defense of Marriage Act is dying in the courts, undefended by the Obama Justice Department. Vast government money has been poured into noncarbon energy investments, via the stimulus. Fuel-emission standards have been drastically increased. Torture was ended. Two moderately liberal women replaced men on the Supreme Court. Oh, yes, and the liberal holy grail that eluded Johnson and Carter and Clinton, nearly universal health care, has been set into law.
So much wrong...
  • Depression was averted but we are not on a path to recovery, and current politics are geared to making things worse--Obama is in no small part to blame for that.
  • Auto/bank bailouts - meh. Neither liberal nor conservative, doesn't fit.
  • Iraq - he carried out the Bush plan, which is probably to be commended, but he is still fucking up in Afghanistan so not much of a victory for the peace loving crowd.
  • Defense cuts - first decent pro-liberal point (though where does Ron Paul fit here?). Oh, and he is moving the party toward more conservative position on entitlements is a liberal win how?!?
  • Support for gay/marriage equality and marijuana legalization have been increasing trends for more than a decade now, nothing to do with the man in the Oval Office. (And if Andrew wants to talk NY's law on marriage equality as an Obama thing, then so too are AZ and AL anti-immigrant laws, very bad argument here.)
  • Non-carbon energy and the stimulus - good but nowhere near what it needs to be. Climate change and energy are the two biggest issues facing a growing and developing planet and we are positioning ourselves behind Europe, SE Asia, China, S. Africa...not really a strong position.
  • Fuel emission (CAFE) standards don't work, so again, meh. A gas tax increase would score as good. A large gas tax increase would score very good. (I know, legislation, but if he wants liberal wins, those are they, not CAFE).
  • Torture was ended...because Obama said so. No investigation, no prosecutions, no anything to actually guarantee that the next president who wants to torture won't be able to, or would at least think twice. Oh, also: gitmo, indefinite detention, and Bradley Manning. Obama's record here is so appalling that it's offensive that Sullivan even went there.
  • The Supreme Court is more conservative now than when Obama entered office. It is more female, which is very good, but Sotamayor didn't really shift the court but Kagan is more conservative than Stevens so the court is now more conservative. How is that a liberal win?
  • Near-universal health care is now law...though it is a GOP plan. Half credit at best here. It was as good as we could probably hope since Lieberman is a douche, but hardly a major liberal win. More like a "Good job, now let's try and fix it up."

Because of the highly dysfunctional Senate occupied by obstinate Republicans and rather passive Democrats, I don't think that Obama could have hoped for a lot more legislatively than he ended up getting. But he didn't really try either, and that is one frustration. Another is that where he has executive authority (recess appointments, granting trials to Gitmo detainees, looking into torture) he has been quite bad.

I don't really disagree with Andrew overall, but while arguments against Obama from the right are grounded in fantastical lunacy, arguments from the left have a pretty solid foothold in reality. It doesn't mean things would be or could be better. But his shortcomings are real, and four more years of this isn't likely to make for a better country.

Capital Gains Taxation

So Mittens has sparked a renewed debate in the capital gains tax rate, and David Frum lies to make a rather bland to bad point sound like a good one.

Capital gains is not a tax on the transfer of capital goods, but on the profits made from that transfer, for which another word might be "income". Since you can adjust for things like improvements made and inflation and if you use the proceeds to purchase something effectively identical, then this tax is a pretty low barrier anyway. House flippers pay capital gains, and that is their fucking income!

If I buy stock for $1000 and sell it ten years later for $1000, I would [should] get to take a loss!

There is one good reason to have a low capital gains tax: retirement. Many retirees live off a combination of social security, savings and capital gains. Of course, for most retirees the capital gains fraction is pretty damned small. Still that is the only good reason, and even that is a non-issue if cap gains are taxed at the same rate as all other income. Wealthy retirees can afford higher taxes just like wealthy not-yet-retired people.

All the encouraging investment crap is just that: crap. If some billionaire is so stupid as to not invest those billions in something because of the cap gains tax then there isn't much to be done (and, frankly, unless it was inherited it is an unlikely scenario). A cap gains rate of 50% would cut a 1 year 15% ROI to maybe 7%, not to -42%. If an investment is worthwhile, it is worthwhile, and except for extreme tax rates (probably including that 50% number) increasing cap gains to match income taxes doesn't do a damned thing to change the math.

Economics Wonks...

Some of the Krugman posts I like most are the ones where he explains some aspect of economics (generally macro). They tend to generate some back and forth among other economic bloggers and, when I can tease out the conversation, Krugman ends up being right. The latest back and forth (see Krugman's post) has been harder to figure.

Nearest I can tell, his main detractor on this is right on the identity but then is using a single local project to justify the whole of macro behavior, which is, as far as I can tell, wrong. A lot of macro doesn't jibe with case studies specifically because it is counter intuitive. What works well for one company just doesn't work for the entire economy of a country, and what works well for one country's economy doesn't scale up to the global economy.

Wages and trade deficit/surplus are places where this becomes rather obvious. WalMart can gain lots of advantages by paying workers poorly, not letting them unionize and not giving them benefits like health care or retirement plans, but if every company in the US did that we would be a much poorer nation. Germany can be a net exporter and have a strong economy as a result, but until we find an extraterrestrial planet to trade with, any net exporter on Earth must be balanced by a net importer elsewhere.

The S=I seems to be a similar thing. While my saving extra money (whether in a credit union account, a fund of some sort or by paying off debt) may be a good thing for me personally, if everyone did the same, then something would have to happen to offset, and the result, from Krugman's graph is that GDP falls. How? I don't know, but maybe a reduction in spending means lots of companies have excess inventory and have to lay a whole mess of people off, so they can no longer save as they want because they have to spend every bit they can manage to get by, so higher desired savings means higher unemployment and lower economy wide savings (and investment).

I didn't finish this earlier, and I now see Krugman has a post saying essentially the same thing. It makes me feel a bit smarter.

Tuesday, January 17, 2012

More Venting About The 1%

The NY Times has a nice fluff piece on the 1% here which includes lots of completely irrelevant and rather stupid bits of information. The worst offender is the note that being in the local 1% is different in different places. No shit, because people with shit-tons of wealth tend to live in wealthy places just like poor people tend to live in poor places. Because where we live is a reflection of our wealth/income/status not the other fucking way around!

Someone living in Nassau can't cry about being poor because they only make $400k and then proceed to bitch that it doesn't go far because the cheap houses in Nassau are $500k, and private schools are expensive, and...STFU! Where you live has zero effect on whether you are rich or not, because--and this seems really hard for lots of the 1% to grasp--you can fucking move! You can even move and live in the same area. There are plenty of New York City residents that make way under $100k/year, so it's possible. It isn't even that fucking hard.

So, no, $500k, $400k, even the paltry sum of $250k is not poor, or middle class. So while a just starting out MD with $100k in loan debt making $150k/year can't afford to take a helicopter to work, or to spend a week on a private island, or to own a 40' yacht (at least not yet), they don't have any financial hardship that should merit any sympathy from anyone else on the planet.

Moreover, and this is another gripe, but it isn't even that they don't deserve or didn't earn the money (though for lots of the top 0.1% that may be true, especially when it comes to wealth not income), it's that they aren't some put-upon, downtrodden, schlemiel trying to make ends meet.

Rich people, particularly the hardworking, well educated variety, are not hated in this country. Not even close. The inequality (of opportunity) is. If you are born to poor, uneducated parents today, you're kind of screwed. Very, very few work their way up from that, and many of those that have did so more than 20 years ago when the playing field was more even than today. The past 10 years has seen such dramatic shift in government encouraged inequality that no one who really pulled his/herself up by the bootstraps can really speak to what that means unless they are under 40, and even then it's iffy. This country is that much different.

Pretty much all Americans dream of being rich someday. A majority of Americans consider that to be ~$150k/year. That's a lot of money, even in New York.

Monday, January 16, 2012

Drug Violence

There's an easy solution of course. Lots of people know what it is and would support it. But because a handful of puritanical twits get their panties in a bunch (and because some people profit--namely drug cartels and police) legalization isn't considered a serious possibility. Hell, some folks around Philly went ape shit when the Chief of police (iirc) decided not to prosecute possession of small quantities of marijuana.

Friday, January 13, 2012

Greece Should Default

Or at least threaten to. The part on this CNBC article where they say that Greek default would be worse than a deal for both the banks and Greece, is dubious at best and probably wrong. Greece defaulting would be bad, but it would be far better than a bad deal. For the banks (and for that matter the various countries that would have to bail them out as well), on the other hand, Greek default is a disaster, and even getting pennies on the euro is preferable (actually, there may be a higher threshold at which it doesn't matter, but that's impossible to know without knowing the banks' actual financial statuses).

The fact is that in the case of default, no matter how bad it may be for Greece, it would be worse for their creditors (banks, countries, citizens of those countries with money in those banks *cough* Germany *cough*). Austerity is destroying that country and its economy right now, so it's hard to imagine that default would actually be worse.

Tuesday, January 10, 2012

How To Be Wrong...

A philly.com commenter says:
I think this needs to be expanded. Let's look at all assets of food stamp and welfare moochers. Have a social worker show up unannounced and count, the cell phones, LCD televisions, X-Boxes, Designer Clothing, rims, tinting and sound systems on the exempt cars, earrings and chains to come up with the asset test. In addition to drug testing, they should be forced on to birth control.

Our safety net is now a hammock for the welfare class. Our government has enabled people to be lazy. You have to ask why should these people getting benefits go out and work? Currently with all of the state and federal benefits you can get:

Free Healthcare (Medicade)
Free Housing (Section 8)
Free Food (Food Stamps)
Free Education (Public Schools or Grants)
Free Cash (Welfare Payments)
Free Cellphones (Assurant Wireless)
Free Utilities (LIHEAP)
Free Birthcontrol (Thanks Obama!)
Free School Meals (Federal School Lunch Program)

Not too shabby!! The funny part is people like me an by [sic] wife who are in the evil 1% pay for this stuff. And I am really getting tired of it!
This is an interesting post. Paragraph one hits all the stereotypes for welfare recipients, including plenty of dog whistle ones...perhaps so that poor whites on welfare know this poster doesn't mean them. Also, note that he wants forced birth control then later bitches that they get birth control for free.

Paragraph two makes a rather outlandish, though false claim (it's a wonder that anyone not on welfare believes those who are have such a cushy life). Then he asks a rather serious question: why should a poor person work?

This is the real issue, and a real problem. If you are poor, there is actually very little financial incentive to work. There is a self esteem reason to work, but the second that you have, say, a medical emergency even that would go out the window. These programs going away at certain income levels corresponds to an infinite marginal tax rate at that income point.

So this poster clearly understands the problem in how the US handles welfare and it's inherent disencentive to work, so you would think that he would then want to reform welfare programs to fix this, but you would be wrong. He just wants to bitch and moan, and kick anyone he doesn't like off welfare, listing off all the evil money sucking programs that those lucky poor, unemployed people have...Also, free public schools? Really? Because, you know, those are available for everyone, including the children of the 1%. If they aren't good enough for your kids, then maybe you should want to improve them.

This is frustrating because while he clearly understands the problem--other than the school thing--he doesn't actually want to fix it, he just wants to make sure that poor people suffer even more. The thing is that there is a fix, and one that doesn't doom us to a society with a permanent poor class, but it runs counter to just about every bit of conservative orthodoxy out there: expand welfare so that you are not penalized for work/success.

So long as we believe that Americans shouldn't starve, shouldn't be forced to live destitute lives, and shouldn't have to be fortunate enough to be born to not-poor parents to have a chance at a decent life, then we need a welfare system that ensures those things. But if that welfare system is not generous enough to actually help people out, then it will keep them as a permanent welfare class. The only way to get people off welfare is for welfare to be sufficiently generous that that can happen.

The single biggest help to welfare and America would be guaranteed medical coverage for everyone (e.g. single payer). That is the single biggest line item in asshole commenter's bitchy list. Next is to improve education. It is already free through high school--though not very equitably distributed--it should be free through (state) college as well. Most of the rest of his bitchyitems are small potatoes, and are actually pretty well managed and setup compared to the first two. Housing is probably the third thing on the list in terms of dollars, though SNAP is probably higher in terms of priority.

As for his list of things poor people have but shouldn't...
5 year cost of Xbox with a dozen total games plus a 40" lcd to play them on: ~$800
1 year, cost of groceries for a single, relatively thrifty adult: over $1000

Food isn't very expensive, but it costs a lot more to eat than it does to play video games, even on a fancy television. One would think that someone from the 1% would be aware of this...particularly since he probably spends more than $250/month for just his share of the food eaten.

Asset Test for Food Stamps

It's a really bad idea for myriad reasons, but PA is apparently getting on with it. Someone under 60 with at least $2000 in assets gets no food stamps. Even if their income is $15k/year. This is counter productive: it discourages saving, it discourages participation in the economy. It encourages lying and deceit (and probably drug/alcohol use, if that $1000 saved up is going to count against you, why no use it to buy a mess of liquor?).

It is particularly bad as $2000 is not a lot of money. It isn't bad for a month, but even a cheap rent is likely to run $6000/year. Forcing people to spend their meager savings and sell off assets before they are allowed food stamps is just another way of driving more people into greater poverty. Oh, and all the effort it will cost the state to ensure that people aren't committing "fraud" could well cost more than we save. Dumbasses.

Also, too, Philly.com showing that it still has some of the worst excuses for human beings filling up the comments section. I have no love of drug use, but how horrible a person do you have to be before you start to demand drug testing for welfare recipients? Like it's not bad enough that they are impoverished and addicted, these people think making them suffer more will, what exactly? Make them rethink their life choices? Go get cleaned up and start running a business? How disconnected from reality are these people?!?

Japan's Lost Decade

I should post one of the counters to the NYT piece from yesterday. Japan really is in a lost decade, and they do have major problems. But we are headed toward being worse.

Monday, January 09, 2012

Depressing GOPers

I would absolutely love to get a Republican candidate that I could vote for, because I am so upset about the Obama administration that I could breathe fire. Unfortunately, Huntsman has no chance, and the rest of the field is either crazy (pretty much everyone other than Huntsman and Romney) or so untrustworthy that they may as well be (Romney).

Obama has been a mediocre president, but a horrible Democrat. If he called himself a Republican he would be a very good president, and a very good Republican, even with the exact same record. But the thing is, we need a good Democratic party to create a good Republican party, so if we are going to have a conservative president, that person had better be a Republican. Since Obama has been a very conservative president, he needs to go. It's just depressing that the Democratic party (including Obama) have co-opted so many GOP ideas that the Republicans have to be borderline crazy to differentiate themselves.

It's also rather depressing that I'd rather 4 years of crazy followed by a good Democrat than 4 more years of Obama.

Debt Increase

I'm a bit curious about the numbers here. If I charge $500/mo. on my credit card, but pay that all off each month, and then, in the run up to Christmas, charge $2000, but still pay it off, does that track as a $1500 increase in my debt despite the fact that it got paid off?

I suppose that, despite paying it off every month, technically, I am indebted to the credit card company for the various amounts that get charged, but it doesn't seem like a very good measure (in this type case).

While it's true that any financially savvy individual with enough income to cover his/her expenses would put whatever possible on a rewards card and pay that off entirely each month, I would still guess that most credit card debt is revolving. I haven't really seen if/how those numbers are dealt with, but would really like to know.

Mall Vacancy Rate Dropps a Bit

Of course, it's still very high. I wonder, though, if this is something that, after a bit of recovery (if the economy undertakes a real recovery) is going to get worse going forward.

Lots of retail is shifting to online. There are still things that people really prefer to go to a store to purchase: groceries and clothing come to mind. And there are service oriented retail spaces that will continue to be in demand, like restaurants and dry cleaners. For a lot of stores however, online just makes more sense. Electronics, cooking utensils, toys, tools and more are all easier to find and almost always cheaper online.

There is a very neat game store walking distance from me, they are likely to get only a very small fraction of my not very large amount of business. Even in the older/second-hand game market where a place like that used to be able to thrive, Ebay and 3rd party Amazon vendors are crowding out.

Even the box stores are going to have difficulties. There will always be a place for a Wal Mart or Target (though probably fewer than we have), but I don't see how a Best Buy can survive long term. They would probably have a better future in smaller retail spaces, where they would have a few things on hand along with a computer connected to their online inventory. Basically serve as a Radio Shack plus a location for large items to be picked up for the many people who can't have a 46" tv mailed to their house.

Sunday, January 08, 2012

Japan's "Lost" Decade

Really wasn't all that bad. Even pre-US housing bubble burst, a person living in Japan had a better past decade and a half than one living in the US. Not that you'll hear much of that on the TV.

Also, too, Bleach.

Friday, January 06, 2012

Rent vs. Buy Redumb

There is certainly some sense in this article and the facts aren't wrong or bad but...
[Robert Shiller] compiled data in 2006 showing that between 1890 and 2004, the return on investing in houses was just 0.4 percent a year—a period when the stock market grew at 9.6 percent annually. And in a paper this June in the journal Real Estate Economics, two researchers calculated that over the past 30 years, most often it would have been better to rent than buy. Renters who invested in stocks and bonds instead of home equity came out ahead 75 percent of the time.
I know I'm rehashing here, but the calculation for rent vs. buy is not hard, and has next to nothing to do with the stock market. I'll deal with the second part first since every time I hear someone compare housing to the stock market I want to beat them with a copy of the Wall Street Journal (a much better use of the Journal than reading it).

If you rent instead of buy, then all of your mortgage payment doesn't suddenly go into the stock market. A decent fraction of that goes to a rent and is lost (-100% ROI!!!), so getting an extra 10% on the remainder doesn't really offset unless the rent is much much less than the mortgage. This should be to keep in mind, but just, so often: FAIL. You must live somewhere. If you are comparing buying to renting then you need to keep track of ROI of buying vs. ROI of RENTING, not the fucking stock market. The stock market only enters in with the extra, and then only if you can guarantee that you will park all the extra in the stock market and not just some of it.

The ROI for buying compared with renting is very dependent on not just the monthly relative payments but also the length of stay, and possibility of selling/renting. If you are going to be someplace for 2 years, buying is likely a very bad option. Between closing costs, very low principle payoff and generally very little appreciation, you are likely to lose money, more so than if you were to rent. The exception here is if you can buy a house/condo that you could then rent out after that, in which case, it may still be the better option.

I'm not going to rehash the rest of the ROI work or rent vs. buy since it is available here and here and here. I really just want to make clear, that, from reading them, any article that talks about renting being better than buying is really just making that case as buying as a substitution for other investment, not as a substitution for renting (no matter how hard they try to do this).