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  • A House committee approves a bill that will put employees of Fannie Mae and Freddie Mac on a federal pay scale and will suspend controversial compensation packages for top executives. Rep. Spencer Bachus - chairman of the House panel that led discussion on the issue - counters spirited defense of the lavish compensation policies approved by FHFA Director Edward DeMarco and key Senators by saying the bonuses are "unreasonable and unjust to taxpayers."  [View news story]
    This sounds like a solution for TBTF banks.

    You will get bailouts - and since your job only exists because of the government backstop, you get paid like a government employee.

    Why hasn't this happened at AIG?
    Nov 15 05:16 PM | 1 Like Like |Link to Comment
  • U.S. lawmakers should scrap income tax in favor of a tax on household spending in order to move the ailing economy, Robert Frank tells CNBC. The tax would be steeply progressive and would stimulate spending now rather than later, he says. Revenue also could be supplemented by taxing “harmful activities," such as driving in congested city centers.  [View news story]
    Any flat VAT is going to be strongly retrogressive, not progressive. That is econ 101 stuff.

    I wouldn't mind a federal luxury tax, though.

    Or even an alternative minimum income tax designed as a way to eliminate the tax evasion tactics of the wealthy and corporations.
    Nov 8 10:34 AM | 1 Like Like |Link to Comment
  • Solyndra’s failure was caused by technological success: the price of solar panels is falling, and Solyndra couldn’t keep up, Paul Krugman writes: "If the downward trend continues... we’re just a few years from the point at which electricity from solar panels becomes cheaper than electricity generated by burning coal" - unless the GOP, deeply wedded to fossil fuels, stops it.  [View news story]
    The price of solar will always be higher than it's value, even if the price goes to zero.

    The market value of solar energy is the value of carbon fuel not consumed minus the cost of increasing running reserves or adding transmission to make up for the uncontrollable output of solar.

    In many energy markets, this market value for solar (and wind) is negative.

    That is why solar and wind only get built to meet mandates and collect subsidies.
    Nov 7 06:02 PM | 2 Likes Like |Link to Comment
  • Warren Buffett isn’t the only rich guy who wants higher taxes on the rich. A new survey finds 68% of millionaires support raising taxes on those with $1M or more in income. The result surprises Spectrem Group's George Walper: "I thought that among this group there would be a feeling of 'why doesn’t he keep his nose out of it'... The reality is maybe it has to be done."  [View news story]
    All we need is a real income tax - no exceptions, no deductions for church or politics, no credits for R&D or battery powered cars, no trusts to sell assets to then rent them back, no special assets, no exemptions for inherited income or municipal bond income, no accelerated depreciation.

    Take your income, multiply it by your tax rate,pay it.

    What we have now is politics distorting markets.
    Oct 27 12:06 PM | 4 Likes Like |Link to Comment
  • Home soda machine maker Sodastream (SODA -6.3%) is selling off on strong volume. Herb Greenberg claims the decline is due to Primo Water's (PRMW +2.2%) introduction of a rival product - no PR has been issued, but a website for Primo's soda machine is up.  [View news story]
    who buys fad stocks?

    this thing has CROX written all over it.
    Oct 26 11:45 AM | Likes Like |Link to Comment
  • Germany shows it's serious about developing alternative energy sources with a program set to invest a staggering $137B in renewable energy projects over the next five years. With its strong financial commitment and nuclear power firmly in the rear-view mirror, analysts see the nation positioned to work out the dilemmas and problems that will undoubtedly crop up: "Germany is in a very promising position to be the first industrialized country to rely entirely on renewable energy."  [View news story]
    Long solar, long Germany today. Deficit spending always boosts the economy short term.

    Short solar, short Germany in 5 years.

    It should be noted that 137B is a comically small amount of money to replace 17 nuclear power plants.

    It'll buy them about 41GW of nameplate capacity. At 30% capacity factor, this is good for about 12 GW of intermittent power. The nuclear plants being taken offline are about 15GW of firm power.

    To firm up the solar power will require another 5GW or so of gas plants.

    Long independant power producers.

    Long gas producers.
    Oct 20 04:19 PM | 2 Likes Like |Link to Comment
  • Geithner finds Wall Street’s anger toward Pres. Obama “inexplicable... They react to what [are] pretty modest, common sense observations... I don’t understand why they are so sensitive." Maybe it has to do with remarks like this: "You don’t have some inherent right just to, you know, get a certain amount of profit.”  [View news story]
    Utilities have a right to a set profit. Banks don't want to be regulated as utilities. They want the freedom to do every idiotic thing they can imagine, privatize the gains and socialize the losses.

    Obama hasn't gone nearly far enough. If the banks were smart, they'd STFU so everyone can forget they exist until they cause the next crisis.
    Oct 5 05:48 PM | 2 Likes Like |Link to Comment
  • A coalition of companies including Boeing (BA), FedEx (FDX) and Disney (DIS) organize an umbrella group to lobby Congress for lower corporate tax rates. The group also sent a letter to Pres. Obama saying the firms' execs would be willing to support closing tax breaks as a compromise for a reduced corporate tax rate from its highest level of 35%.  [View news story]
    Their second suggestion actually makes sense. If you lower the rate while eliminating the loopholes, you could probably increase tax revenues and business efficiency by reducing perverse incentives.
    Sep 20 04:40 PM | 2 Likes Like |Link to Comment
  • FHFA acting director Edward DeMarco says the agency will be offloading mortgage default risk from taxpayers by "expanded use of mortgage insurance and securities structures that allow for private sector risk sharing." (.pdf) One option on the table: Increasing the level of homeowner equity required to avoid paying PMI even higher than 20%.  [View news story]

    These guys are fighting the last war.

    In a climate of falling property prices, increasing PMI just makes loans more expensive, further reducing demand. Buyers today are buying for stability and/or rental income.

    In this case, the only important metrics are to make sure the buyer can afford the loan and that the appraisal is worth the paper it was printed on.
    Sep 19 02:00 PM | 1 Like Like |Link to Comment
  • Mortgage rates are said to be at 50-year lows, but good look in getting those rates. Lenders aren't really offering them because, well, they don't have to. The mortgage market is not the cutthroat business of years past, and there's still plenty of demand given that rates are still historically low. Lenders are perfectly happy to make loans that, while still cheap, are more profitable.  [View news story]
    In addition to being low, the rates are irrelevant. Mortgage insurance has gone up enough to more than make up for lower rates unless you put 20% down.
    Sep 6 05:43 PM | Likes Like |Link to Comment
  • Eurozone officials are attempting to rescue the Greek rescue as other countries want the same sort of security for their piece of the bailout, as Finland has arranged. Currently on the table is "non-cash" collateral, where Greece would put up either real estate or shares in state-owned enterprises.  [View news story]

    Sure, accept non-cash collateral. Here, have a power company. Nevermind the fact that we'll put a freeze on rates to drive it's value to zero so we can buy it back for nothing if the deal goes sour.

    Have all the non-cash collateral you want. If it is bolted down in a sovereign nation, it is worthless as collateral.
    Aug 25 12:56 PM | 1 Like Like |Link to Comment
  • Low appraisals are an increasing headwind for a housing market already suffering from plunging prices, high unemployment and tight credit. Blame the swinging pendulum: The industry "has gotten as outrageously conservative now as they were outrageously aggressive a few years ago," RealtyTrac's Rick Sharga says.
     [View news story]
    many people look for loans because they don't have cash to buy a place outright.
    Aug 24 02:01 PM | Likes Like |Link to Comment
  • Low appraisals are an increasing headwind for a housing market already suffering from plunging prices, high unemployment and tight credit. Blame the swinging pendulum: The industry "has gotten as outrageously conservative now as they were outrageously aggressive a few years ago," RealtyTrac's Rick Sharga says.
     [View news story]
    Now that appraisals are done through an independent third party, sellers may as well get an appraisal done before putting the house on the market.

    If the appraisal process is of high enough quality, it could be a much more efficient pricing and negotiation system.
    Aug 24 01:48 PM | Likes Like |Link to Comment
  • The iPad (AAPL) continues its relatively un-hyped march into the business world: United Continental (UAL) announces it will distribute 11,000 iPads to pilots, with the goal of replacing paper flight manuals and navigation charts. UAL expects the move to save 16M sheets of paper and 326K gallons of jet fuel per year.  [View news story]
    until one of them fails midflight and the FAA bans them.
    Aug 23 04:56 PM | Likes Like |Link to Comment
  • Noting how equity valuations have historically correlated with demographic trends, a paper from the San Francisco Fed argues U.S. stock values could stay depressed for the next two decades, as Baby Boomers sell stocks to finance their retirements. Interestingly, this forecast resembles a prediction by Harry "Dow 36,000" Dent.  [View news story]
    Don't forget that more baby boomers have pension plans, too. They are also going to switch to a selling mode to make payouts.

    Technically, the boomers and their pension funds should have switched to mostly bonds and t-bills over the last decade or so to avoid exposure to this kind of volatility. I think it is reasonable to assume that very few did.
    Aug 22 02:39 PM | Likes Like |Link to Comment