Newsweek -Final print edition is December 31, 2012

Newsweek to cease print edition after 80 years

I don’t remember precisely when I started reading Newsweek but I do have the July 28, 1969 edition with a transmitted photo of the walk on the Moon. I considered the magazine the alternate to the too conservative Time. The magazine has provided worthwhile insight to the world’s problems.

Just a few years ago a commentator in BusinessWeek forecasted the end of much of the print media. That was just before McGraw-Hill sold that money losing weekly to Bloomberg. So none of this is a surprise.

I myself have been evaluating the myriad of tablet computers this past week.

Goodbye old friend!!

No Real change in the Unemployment Rate

Try Crunching these numbers!

President Obama received some good news last night. The unemployment rate has dropped to 7.8%. As Chris Mathews and others have said repeatedly, no president has been re-elected when the rate was over 8% since FDR. Market Watch has questioned whether the books have been cooked. I prefer to believe the data is accurate. After all, the government could have provided false data over the past year and apparently did not. How could the unemployment rate decline? More people stopped looking for jobs than those obtaining new jobs.

The problem is the focus of the data. The BLS trumpets the unemployment rate rather than the number of unemployed. It’s only after extensive reading did I learn about another piece of data that tells the real story. Table A-15 (Alternative measures of labor underutilization) of the BLS monthly report on Line U-6 provides a more accurate reflection of the true unemployment situation. That line provides “Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.”

That number is 14.7% for this past month. At its peak in December 2010 the percentage had reached 16.6%.

The president is silent on his plans and Mitt Romney has said he will create 12 million jobs in four years. There are no details on the plans. No wonder! No one employs more help without demand. Lower taxes are wonderful for the pocket book but will that make a difference in hiring?

I don’t think so!

The Real Mitt Romney

Wow!

Mother Jones magazine obtained this video clip. It tells what Mitt Romney thinks about 47% of us.

Responding to a question from a donor about how he could triumph in November, Romney replied:

There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.

Romney went on: “[M]y job is is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”

How stupid can this man be?

As reported by the Associated Press;

According to the TaxPolicyCenter study, 38 million — half of those who owe no federal income taxes — escape owing money to the IRS because their income is too low. For them, merely using the standard deduction, personal exemptions and other basic parts of the tax code allow them to avoid income taxes.

Overall, 93 percent of those who owe no federal income taxes earn $50,000 annually or less. But 5 percent of them earn $50,000 to $100,000 and the rest — around 430,000 nonpayers — earn more than $100,000 annually. That includes 4,000 households earning more than $1 million a year, thanks largely to tax exempt interest, reduced rates on capital gains and dividends and other deductions.

This entire event is not going to derail the Romney campaign. Obama made his remarks about some people clinging to their guns in 2008 and it made little impact on his win – but we all know what he really believes and that comment will have an impact on this election.

The question is: what does Romney stand for and what would he do as president? Unless he can provide convincing answers his chances to win the election are considerably diminished.

Romney Didn’t Make the Sale

Larry Kudlow, Finance guru and TV host on CNBC, says so!

You have probably seen Larry Kudlow on television. He is a well educated and well spoken finance expert that is hard to ignore. He is the opposite of Jim Cramer. Mr. Kudlow provides his own opinion along with interviews with many really smart guests. Kudlow’s doubts are my doubts.

In summary here is the gist of his post on townhall.com.

Did Mitt Romney make the economic sale at the Republican National Convention? Did he convince people who are living at the margin or unemployed and discouraged that he has the answers to the economy? Frankly, I don’t think so.

he (Mitt Romney) did not talk about his 20 percent across-the-board personal tax cut plan that would help the middle class enormously. He never mentioned it, and he went into no detail on the business tax cut plan.

He talked about a jobs tour. I frankly have no idea what a “jobs tour” is.

I didn’t hear anything new. I didn’t hear anything specific, and it troubles me.

ON BIG BUSINESS: I think he needs to be more specific. It’s not about big business — it’s really about small business.

Special Income Tax Rates for the Very Wealthy

Everyone should be taxed at the same rate. There should be no deductions or allowances for any thing!

Steve Rattner, President Barack Obama’s former car czar, appeared on Fareed Zakaria’s GPS a few week ago. (Steven Rattner is Chairman of Willett Advisors LLC, the investment arm for New York Mayor Michael R. Bloomberg’s personal and philanthropic assets.) Mr. Rattner said that one of the reasons Mitt Romney won’t release his income tax returns is his legal but highly unusual asset protection.

Romney has a $100 million IRA and off shore accounts that avoid US income tax. Rattner pointed out that many rich people pay income tax at the 35% rate while there is a group that pay at the much lower rates. Rattner said he didn’t think the American people would be too happy with this situation. I certainly am not happy!

There is always going to be a very rich part of this society. I don’t know the reason but it was confirmed by Vilfredo Pareto (15 July 1848 – 19 August 1923). He made several important contributions to economics, particularly in the study of income distribution and in the analysis of individuals’ choices. The Pareto principle was named after him and built on observations of his such as that 80% of the land in Italy was owned by 20% of the population. Today in the USA 85% of America’s wealth is owned by 20% of the population (quite close to Pareto’s 80-20 theory).

What I do not accept is the idea that the wealthiest among us pay 15% in income taxes.

This is nothing about Jealously. This is about fairness.

There is no question that rich people spend more money on stuff. The question is: Should rich people whose earnings are the result of investments be taxed on their income at 15% (or less if Paul Ryan has his way) than people whose earnings are based upon a salary?

Personally I believe everyone should pay income taxes at the same graduated rate no matter what the source of the income. No one should be given any allowances or deductions for ANYTHING. You want a wife, more kids – go for it – just don’t expect any help from the government.

Investment Scandal is Standard Operating Procedure

You Can’t Trust Banks or Brokers

The Madoff scandal seems like many years ago but it was December 2008. Then there was the Allen Stanford February 2009 scandal that the SEC called a “massive ongoing fraud” involving $7 billion. We had to wait to December 2011 for the MF Global bankruptcy. Jamie Dimon of JP Morgan Chase announced in May of this year that the bank lost $2 Billion but as things turned out the amount may be closer to $7.5 Billion. A mere $15 Million is missing in the accounts of an Iowa futures brokerage named Peregrine – the 64 year old founder is suspected of falsifying customer accounts for at least two years (sounds like the Madoff affair). He tried to commit suicide – we should have let him – It would have saved the government the cost of his imprisonment.

Not to be outdone, the banks that set the Libor (London Interbank Offered Rate) has been rigging the rates and Barclays has been fined $450 Million. Some American banks may be involved. Many American consumer and home mortgage loans are based upon this rate.

Mere mortals, such as myself, are at the mercy of the wheeler dealers.

If there was another failure of any of our large banks the United States would come to their rescue even though politicians say they won’t. Why? Because just four of the conglomerates have assets totaling 51% of our annual national economy.

The list:

Bank of America
JP Morgan Chase
Citi Group
Wells Fargo

Their assets total $7.7 Trillion. The national GDP $15.1 Trillion.

Do You Own an Offshore Bank Account?

I know that few of you do. One person that does is the Republican candidate for president, Mitt Romney. Just Google the above question and you will obtain quite a few responses. Google, “Romney’s secret offshore bank accounts.” You will see articles posted by Vanity Fair, Huffington Post, and the NY Daily News. I know what you are thinking. Those are all Liberal news companies. You would be wrong. The NY Daily News is owned by one wealthy businessman, Mort Zuckerman. The same Mort Zuckerman who also owns U.S. News & World Report. The same Mort Zuckerman who has been appearing as a guest on many political talk shows and slamming Barack Obama.

This is the New York Daily News report.

Mitt Romney’s massive fortune – estimated to be as high as $250 million – is held in a complex and opaque network of offshore havens that are impossible to penetrate, according to a report in Vanity Fair.

By Kristen A. Lee / NEW YORK DAILY NEWS

Mitt Romney’s massive fortune – estimated to be as high as $250 million – is held in a complex and opaque network of offshore havens that are impossible to penetrate, according to a report in Vanity Fair.

Romney had a Swiss bank account and has interests in tax havens like Bermuda and the Cayman Islands. The Romney campaign has insisted he does not use the havens to avoid paying U.S. taxes, but Vanity Fair wrote it is impossible to confirm that he is not seeing a savings.

The Republican candidate paid a 14 percent tax rate on $21.7 million in income in 2010 – far lower than the rate paid by many Americans because his earnings comes from investments rather than wages.

Vanity Fair noted that Romney has continued to receive large payments from Bain Capital since leaving the private equity firm in 1999.

Romney has personal interests in at least a dozen of the 138 or more funds organized by Bain in the Cayman Islands. Vanity Fair said the Romney-related funds are worth as much as $30 million and hidden behind confidentiality disclaimers.

The report also raised questions about Romney’s blind trusts, which are used by politicians to remove conflicts of interests by turning investment control over to an independent trustee.

Romney’s financial disclosure form lists 25 such investments in an open-ended category labeled “over $1 million,” Vanity Fair reported. Many of them are set up in tax havens like the Cayman Islands.

Meanwhile, the Romney campaign is distancing itself from the CEO of Barclays, who stepped down from the British bank Tuesday amid an interest-rate fixing scandal.

Robert Diamond will no longer co-host a London fundraiser scheduled for July 27 when Romney will be in town for the Olympics.

“Mr. Diamond decided to step aside as a co-host for the upcoming London reception to focus all his attention on Barclays,” Romney spokeswoman Andrea Saul told The Financial Times. “We respect his decision.” The fundraiser will go on without the former CEO.

Barclays was fined $453 million last week by U.S. and British regulators for submitting false reports on interbank borrowing rates between 2005 and 2009.

Can Anyone Fix This Economy?

Read Mitt’s plan then read Barack’s plan. If it’s “the economy stupid” then where is the plan to set the nation on a course to recovery?

The number of new employees added to the job payrolls has been less than breathtaking. With 5 million long term unemployed is anything other than low pay service sector jobs going to be created in the coming years? The number of new June jobs is 80,000. The unemployment rate remains at 8.2% for a second straight month. That is less than the number required to keep pace with our growing population according to most economists. Perhaps the better question to ask is what are the plans of the two candidates for president?

From Mitt Romney’s campaign web site.

Mitt’s Plan

Mitt Romney sees two important objectives that America can pursue immediately to build on the extraordinary traditional strengths of its workforce. The first is to retrain American workers to ensure that they have the education and skills to match the jobs of today’s economy. The second is to attract the best and the brightest from around the world.

Retraining Workers

Mitt Romney will approach retraining policy with a conservative mindset that recognizes it as an area where the federal government is particularly ill-equipped to succeed. Retraining efforts must be founded upon a partnership that brings together the states and the private sector. The sprawling federal network of redundant bureaucracies should be dismantled and the funds used for better purposes. One particularly promising approach that Romney supports and believes states should be encouraged to pursue is a system of Personal Reemployment Accounts for unemployed individuals. These accounts would facilitate programs that place individuals directly into companies that provide on-the-job training—as governor of Massachusetts, Romney helped create just such a program.

Eliminate redundancy in federal retraining programs by consolidating programs and funding streams, centering as much activity as possible in a single agency
Give states authority to manage retraining programs by block granting federal funds
Facilitate the creation of Personal Reemployment Accounts
Encourage greater private sector involvement in retraining programs

Attracting the Best and the Brightest

To ensure that America continues to lead the world in innovation and economic dynamism, a Romney administration would press for an immigration policy designed to maximize America’s economic potential. The United States needs to attract and retain job creators from wherever they come. Foreign-born residents with advanced degrees start companies, create jobs, and drive innovation at an especially high rate. While lawful immigrants comprise about 8 percent of the population, immigrants start 16 percent of our top-performing, high-technology companies, hold the position of CEO or lead engineer in 25 percent of high-tech firms, and produce over 25 percent of all patent applications filed from the United States.

Raise visa caps for highly skilled workers
Grant permanent residency to eligible graduates with advanced degrees in math, science, and engineering

Barack Obama jobs plan is not posted on his campaign web site. Instead his site points to the growth of jobs and offers these successes and plans.

Barack’s Plan

 489,000: Jobs added in the manufacturing sector since January 2010

 233,000: Jobs added in the auto industry since June 2009—the most growth in a decade

 100%: The percent of investment in plants and equipment that businesses could expense under a tax cut extension President Obama proposed, which would spur investment in the United States

 18%: Tax deduction President Obama has proposed for domestic advanced manufacturing technologies—which would double the current 9 percent deduction

 20%: Income tax credit the President has proposed providing to companies on expenses related to moving operations back to the United States

Neither candidate offers any idea to re-employ those middle class wage earners that have faced a devastatingly long unemployment period. As matter of fact no one has offered one sensible plan. If Mitt Romney believes that the independent voters will elect him to office by just saying Obama has failed to re-invigorate the economy he is not likely to gain my support. He should not gain your support either. Vague references to re-training programs when the there are no growing industries are not enough.

If my choice is between just another face and no plan then I will vote for Obama. At least he has the experience that no other job in the world can provide. Then again why should I vote for a leader who has not been able to change our course?

Obama Care is the Wrong Plan

No doubt, health care for all Americans is a wonderful idea.

I oppose this law for one single reason. There are no controls or limits on the cost of insurance. The explanations I have read say that insurance companies can make reasonable rate increases to cover their costs. What is “reasonable?” It appears that costs will increase for three reasons.

1) 10 to 15 million people will be added to insurance company rolls without adequate payments to cover their enrollment.

2) Those excluded from insurance because of pre-existing conditions will be now be added to the plans.

3) Insurance companies will be permitted to earn 20% of the fees they charge.

Without a plan to control medical costs no plan can survive.

Just today I received a plea from change.org to sign a petition addressed to Blue Cross of Idaho. The insurance company refuses to pay the bill for the chemotherapy drug, Avastin. It may prolong the life of a victim of stage four colon cancer for an additional three months. According to the New York Times the cost will be about $8,300 per month. It seems to be OK, in the minds of many people, for insurance companies to make these decisions but many people object to a government committee making the decisions. Why? What is the difference?

A better solution to this would have been a single payer system like Medicare. The plan that has been adopted (Patient Protection and Affordable Care Act) is one that was proposed many years ago by Republicans. It is the Massachusetts plan that was implemented by Mitt Romney.

Canada and most European nations seem to have addressed the issue of health care. Care is available for everyone. I am certain there are situations that their health care plans do not cover. Considering America is listed as the 41st in child mortality with the highest health care cost of any nation on Earth says we are doing a lousy job. Quite shocking when we consider that the USA is the wealthiest nation on earth.

Banks are Too Big To Fail! Is it true?

“SAN FRANCISCO(MarketWatch) — Moody’s Investors Service downgraded the ratings late Thursday of 15 financial firms with global capital-markets operations from one to three notches.” The list included Bank of America Corp. BAC, Citigroup Inc. C, HSBC Holdings PLC. These three are on the list of America’s largest banks.

Largest banks and thrifts in US by total deposits

Company City, State Deposits in Billions of Dollars

JPMorgan Chase & Co. New York, NY 1,127.8

Bank of America Corp. Charlotte, NC 1,033.0

Citigroup Inc. New York, NY 865.9

Wells Fargo & Co. San Francisco, CA 920.1

U.S. Bancorp Minneapolis, MN 230.9

Capital One Financial Corp. McLean, VA 211.2

Bank of New York Mellon Corp. New York, NY 219.1

PNC Financial Services Group Inc. Pittsburgh, PA 209.2

HSBC North America Holdings Inc. New York, NY 122.6

State Street Corp. Boston, MA 157.3

This identical data was printed in Forbes and The WSJ.

Yes, you read it correctly, JPMorgan Chase & Co. has deposits of One Trillion, onehundred twenty eight Billion point eight dollars.

Moody’s says “All the banks affected by these rating actions have significant exposure to the volatility and risks inherent in the capital markets business, which have led many to fail or avoid it only through the receipt of support from a third party.” We can all conclude that the third party is a government or government sponsored entity.

Banks receive aid but the aid to small business and home owners is minimal. If it isn’t called welfare, what do you call government support for banks?