Author: Matthew G. Saroff

Yet Another Artifact of the Bush Tax Cuts

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If some rich guy dies in the next few days, it could get very ugly for his wife:

Spouses of those wealthy who die this year might find themselves with nothing if the family will isn’t revised—a major wrinkle that could follow Friday’s repeal of the federal estate tax.

As started on Jan. 1, estate taxes will be repealed for 2010 only. That means unless Congress acts otherwise, there is no limit to the wealth that can be passed on to heirs without incurring federal estate taxes through the end of the year.

But wills have often been written on the expectation that estate taxes were a fact of life for years to come, estate planners say. As a result, wills typically direct assets not subject to the tax be passed on to children—for 2009, up to $3.5 million—with the rest directed to the spouse.

“You could be in a situation now where everything would go into a trust downstream to the kids and nothing is left to the spouse,” …………

So, in addition to giving heirs a motive to bump you off, you could leave your spouse without anything when you die, and if the taxes go back into effect, which is a highly likely scenario, you have lawsuits to claw it back.

It ain’t just the Supreme Court where the misdeeds of Bush and His Evil Minions™ will be felt for years.

How Quaint

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The 9th Court of Appeals has ruled that the police do not have the right to torture citizens they find inconvenient with Tasers:

A federal appeals court on Monday issued one of the most comprehensive rulings yet limiting police use of Tasers against low-level offenders who seem to pose little threat and may be mentally ill.

In a case out of San Diego County, the 9th U.S. Circuit Court of Appeals criticized an officer who, without warning, shot an emotionally troubled man with a Taser when he was unarmed, yards away, and neither fleeing nor advancing on the officer.

(emphasis mine)

I’m sure that some will find this an outrage. After all, aren’t police supposed to use potentially lethal force on people who don’t comply immediately, like the kid who did not obey orders to get up because he had a broken back?

Hoocoodanode?

Needless to say, this cop still has his job, because, after all, law enforcement investigates itself in such instances.

Economics: Year End Data Points

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H/t The Big Picture

The stock market is up significantly for the year, but note that the picture is for the Dow Jones Industrial Average, which is at best an imperfect gauge.

Also note that rents fell 3.5% in 2009, once you factor in things like months of free rent and flat screen TVs (!) for signing a lease.

That means that home prices need to fall an additional 3.5% to hit historical rent-own ratios.

But if the real estate news presages deflation, then the fact that commodities posted their biggest annual gain since 1971, which indicates that once a real recovery starts, prices may go up significantly.

Since, I actually favor inflation as a way to get out of this mess, people repay loans in devalued currency, and hence are better able to pay off those loans, I’m hoping for significant (6-10%) inflation in the near future.

The State Department Cover-Up of Blackwater Succeeds

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Basically, the State Department used the Oliver North option, so by immunizing and debriefing them, they made a trial almost impossible, and the judge, U.S. District Judge Ricardo Urbina, was forced to dismiss the case.

Obviously, part of the problem is that the prosecution screwed up, though they can refile, but the real crux of the matter here is that the Bushies in the State Department intended this result. They wanted to protect Bush supporter Eric Prince and his company, now called Xe.

Republican Congressmen did this at the Iran-Contra hearings, because they feared that North would rat out Reagan if he actually ended up in prison.

Economics Update (For the Week)

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Yes, it does appear that the seasonal adjustment for the week after Christmas is whack

The lede for the week is obviously that first time unemployment claims fell to the lowest level in 17 months, down 22K to 432K, though, as Brad Delong notes, this is likely because of problems with the seasonal adjustment for this week. (See graph pr0n).

Continuing claims, as well as the 4 week average fell too, but emergency claims, for people (like me shortly) who exhausted their regular benefits (i.e. out of work more than 6 months), rose sharply, by 199 thousand to 4.82 million, a 4.1% jump in one week. (!)

Earlier this week, the Institute for Supply Management released its Chicago index, aka the Purchasing Managers’ Index (PMI), and it unexpectedly jumped to 60 in December from 56.1 in November………Only they just revised it, and oops, it the PMI was only 58.7, largely on a downward revision on employment…………Happy, happy, joy, joy.

That’s not to say that the numbers aren’t better, they are better, much like the ATA Truck Tonnage Index November numbers, and the ShopperTrak year over year retail sales for last week, though the latter saw a drop in traffic.

In real estate, the 30-year fixed mortgage rate rose to a 4 month high, 5.14%, which is still at a level which is historically low, and the recent uptick in housing prices seems to have petered out, with the Case-Shiller index showing flat prices in October, following 4 straight months of price increases.

This is unsurprising, as home price subsidy new home buyer tax credit was supposed to end in November, and homes needed to close by November 30, which meant that there were a lot of sellers who knew that they had to move their houses quickly, or not at all.

Houses are still well above trend, both in terms of rent to own price to income ratio, though you still have claims that housing affordability is better than the historical numbers, because the mortgage rates are still incredibly (see above) low.

If rates return to their historical levels, about 9% for the 30-year fixed, we have a downward pressure on house prices of roughly 1/3, because people buy houses on monthly payment, not price.

We do have some good international news, with South Korean exports rising rapidly, and Chinese manufacturing growing at a 20-month high, though I wonder how much of the latter is the result of provincial bureaucrats goosing the numbers, or encouraging local industries to over produce, in order to score brownie points with Beijing.

10……9……8……7……6……5………

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Happy new year.

I actually posted it some hours before, and set this to post just before midnight, as I am by this point 3 sheets to the wind courtesy of the products of Rudolph Jelníek, specifically Slivovitz.

It’s highly unlikely that I will be hungover tomorrow, as I have a trick that prevents this: my genetics.

Something about my Eastern European Jewish heritage prevents this.

I’ve never been hung over.

Completely F%$#ing Delusional

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Part of a trend, not a result of selling out American workers

Rahm Emanuel believes that by voting against the Democratic base, you improve the electoral prospects of the Democrats:

White House Chief of Staff Rahm Emanuel has been telling Democrats a win on the health issue will reverse the slide in public opinion, just as passage of another controversial proposal, the North American Free Trade Agreement, lifted President Bill Clinton in the polls.

Let’s be clear: Clinton’s popularity did rise after the passage of NAFTA.

It was a part of a trend (see pic). When people finally noticed the passage, a few months later, his ratings fell through the floor, and the Dems lost both houses of Congress.

To be fair, a part of this might have been the collapse of healthcare reform, but NAFTA demoralized labor, and pretty much the entire Democratic base.

A bad bill is worse than no bill, and immeasurably worse than one that passes through reconciliation.

The real problem with Rahm is not that he’s determined to offer succor to right wingers because he believes that it will somehow benefit Democrats, but that he’s wrong, and incompetent.

H/t A Tiny Revolution

Limbaugh Hospitalized With Chest Pains

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In Hawaii, though the interesting bit are the reports of what he said to hospital workers:

Limbaugh, 58, suffered from chest pains, sources said. Limbaugh was sitting in a chair in his ninth-floor hotel room at the Kahala when emergency crews arrived, sources said. He told medical crews that he was taking medication for a back problem, sources said.

(emphasis mine)

Sounds like everyone’s favorite junkie is taking opiates again…………Whether or not this is a legitimate need or a relapse, I have no clue.

Economic Quote of the Day

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On the subject of raising marginal rates for rich people:

Here’s why: in 2007, there were 495,000 tax returns filed for millionaires. That means a significant fraction were corporate CEOs, CFOs, finance people, and professional athletes/best-selling textbook authors/TV celebs.

Peyton Manning makes about $30 million a year — let’s explore his potential behavioral responses to changes in taxes. Let’s raise Peyton’s taxes by 10%. Under the logic of Alan Liard, Greg Mankiw’s student, and under the logic that all economists know to be the truth, people respond to incentives. Peyton Manning is a person, so he responds to this tax hike by working 6% less, and decides now he’s going to sit for the Colts playoff games since he makes less money per game, and he enjoys watching Tom Brady play in the playoffs more than being there himself. Doesn’t really sound likely, does it?

Of course, Peyton Manning is going to play 16 NFL games and the playoffs even if you raise his taxes considerably. The same is true of a wide variety of other professions — corporate execs usually have two choices, they can choose to work or not work — there are no part-time CFO jobs, and it’s probably tough to be a “part-time” hedge-fund manager as well… So, let’s say Greg the textbook publisher or Chuck the hedge-fund manager decides, due to higher taxes, that they are just going to retire. In that case, the government loses 100% of the taxes Chuck or Greg would have paid! The multiplier is -10!!!

Except, according to logic which is totally obvious to a pre-schooler, if Greg the textbook author doesn’t sell textbooks, then Thorstein the textbook publisher will. If Peyton the quarterback doesn’t play in the playoffs or appear in Gatorade commercials, then Tom the quarterback will. If the CEO of Anthem, who routinely makes $40 million, quits due to high taxes, Anthem will pay the next CEO extravagantly. If Chuck the hedgefund manager doesn’t manage Peyton’s money, then Emilio the hedgefund manager will manage Tom’s money…

—Thorstein Veblen

(emphasis mine, and I think that the hedge fund manager managing Tom’s money would be named Ashok, not Emilio, and he work out of Bangalore, not Wall Street, or at least he would in a system that was truly efficient.)

What he does not note is that the massive amounts of money received is not because they will do the “productive” “work” for only that amount of money, but because Peyton, and Tom, feel that they deserve more than the next best guy at their position.

If you engage in policies that discourage extremely high income, for example, expanding the AMT to include all forms of income, and increasing the marginal tax rate for the AMT (Currently 26%, and which has little/no deductions), at $¼ million by 1%, and by an additional 1% at $250K increments, so that a income beyond $1 million is taxed at 29%, and at $5 million it is taxed at 45%, at $10 million it is taxed at 65%, and it maxes out at 85% at $15 million,* then you will find that business will be less inclined to ginormous packages,† and you would see a moderation in this trend.

*Note that these are marginal tax rates, so the 85% is the tax payed on the dollars earned beyond $15 million, the 50 thousandth dollar would still be taxed at around 20%.
†Yes, I know, “ginormous package” sounds dirty, but the executive pay levels are obscene.

Ahead Dork Factor 9*

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Only $2,999.99, but shipping is free!!

I present to you the Star Trek: The Original Series: Classic Captain’s Chair Replica:

Throw away that Lay-Z-Boy. Here’s a life-size throne fit for a captain! With the sci-fi status and geek grandeur of Captain Kirk’s command chair in your collection, you can boldly go where no fan has gone before! This full-size prop replica of the U.S.S. Enterprise’s captain’s chair is designed from detailed drawings supplied by Paramount Studios and is approved by Paramount. It delivers all the accents and details from the historic prop, along with modern lighting, sound effects, and phrases designed to thrill any Star Trek enthusiast. It’s the ultimate prize from the Enterprise! The unbelievable captain’s chair measures 41-inches tall x 42-inches wide x 39-inches deep. It weighs about 215 pounds! The working swivel seat with wooden handles, leather seat cover, and armrest controls make this the perfect addition to any collection, display, home theater, or museum! The chair, seat of the chair, and arms of the chair are made of wood, with the seat covered in leather. For rigidity, it’s mounted on an iron base. Limited edition of 1,701 pieces worldwide. Left-hand arm controls include: Shuttle operation controls Activation of viewscreen Hailing frequencies Right-hand controls include: Red alert Yellow alert Jettison pod Micro tape player Intercom controls With a push of a button, voice clips from the show can be heard: ‘This is Captain James Kirk of the U.S.S. Enterprise.’ ‘Lt. Uhura, open a channel to all decks.’ ‘Security Alert to all decks. Kirk out.’ ‘Kirk to Engineering, Mr. Scott.”

At 215 pounds, it’s going to be murder getting it down the stairs to your parent’s basement, where the purchaser clearly lives.

I like Star Trek. I saw a few episodes when I was 6. But if you want a captain’s chair, and you can’t search the net for plans, so you spend 3 grand on a chair in which most of the buttons do not work, or even press down, you are really very lame.

*Alas, I cannot take credit for this bon mot. It was from Bladesmith at the by invitation only Stellar Parthenon BBS.

Much Better…..

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I’ve been visiting my Mother-in-Law in New York, we saw the Museum of Natural History yesterday, and the Metropolitan Museum of Art today, and I finally managed to give her my Hanukkah Gift to her.

I offered to upgrade the memory on her machine, a Dell Dimension L800r, from it’s current 128 meg to 512 meg of ram.

When she got it, it had Windoze ME, but she had to upgrade to Win XP, and with 128 meg, less a couple for video memory, it was slow, particularly after a nasty bit of spyware, and the multiple passes of various software to fix it, created a spaghetti registry.

I ordered the memory online, but they were out of stock, so today, before going to the museum, I hit B&H Photo Video in Manhattan, and picked up 2x 256M DIMMs.

Still slow, but not glacially so, and the CPU actually maxes out without the hard drive light indicating massive thrashing.

It’s still slow, but no longer glacial.

Why We Need to Cut the Military Budget by at least 85%

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Because, whether the President is a Democrat or a Republican, having an “invade anywhere anytime” military is like giving a loaded revolver and amphetamines to a toddler:

Sen. Joseph Lieberman, (I-Conn) a renowned hawk and one of the foremost champions of the invasion of Iraq, warned on Sunday that the United States faced “danger” unless it pre-emptively acts to curb the rise of terrorism in Yemen.

“Somebody in our government said to me in Sana’a, the capital of Yemen, Iraq was yesterday’s war. Afghanistan is today’s war. If we don’t act preemptively, Yemen will be tomorrow’s war,” Lieberman said, during an appearance on “Fox News Sunday”. “That’s the danger we face.”

(emphasis mine)

The problem with having a military that is able to invade anywhere, anytime, for any reason, is that there are people, including Joe Lieberman and whoever, “Somebody in our government,” is with small brains, and even smaller penises, who will use military power with all the forethought of the aforementioned child on speed.

If you build the military, they will use it recklessly, to the detriment of both the nation and to the military itself.

The current “seabasing” concept being developed in the Pentagon is just the sort of “invasion in a box” that will make this even easier to do, and hence more likely.

The capabilities that we implement actually increase the military death toll, because they encourage insane strategies by the civilian and senior military leadership.

What’s more, they starve our economy, it will be costing in excess of $1 million a year per soldier in Afghanistan, and they starve the social safety net, killing our own citizens through lack of healthcare, and over the longer term, through a lack of investment in infrastructure and education.

H/t Attackerman.

Poo of Mass Destruction

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So, on another Northwest Flight, a passenger experiencing “gastric distress”, spent an extended amount of time in the aircraft lavatory, and when quizzed about his experience, he was less than forthcoming, so we had yet another security freakout.

Needless to say, al Qaeda is planning to start opening restaurants at airports that serve really strong curry, and they will follow it up with sabotage to disable toilet heating, so we will be threatened with icy BM’s.*

*Icy BM (Bowel Movement)-ICBM, get it?

I Take One Day Off, and Look What Happens……

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So, some yahoo attempts to sew explosives into his underwear on a flight from Amsterdam to Detroit, and, is tackled by passengers when his attempt at setting it off fails.

I call wannabee. Means of securely detonating a bomb without flames or noise have been the purview of one-eyed, one-handed, three-fingered men since 1944.

This was just sloppy.

Then again, my track record on this is almost 100% wrong.