ironist15

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

While I understand the passion of commenters, most of them are missing where the real problem lies. After 10 years of Federal employment, I will retire with the not-so-magnificent sum of 10% of my high-three salary; if I'd worked 30 years for the Feds, I'd have gotten 30%. This pales in comparison to state, county and city retirement packages, where emergency workers can retire with 90% of their salary after only 20 years of work, while non-emergency workers get out after 25 to 30 years of service with this level of benefit. There have been recent articles on California state employees retiring with pensions of $150,00 and more; nothing remotely this high is possible in Federal civil service jobs. Oh, BTW, for my over 25 years of private employment, I get no pension whatsoever.

A Stellar Year for MLPs So Far

I hope your worries are unfounded, Avi. My thinking is: The pipeline MLPs' revenue comes from the carriage of natural gas and petroleum products. While production and delivery may be down at the margins by 2-3%, this will have only a small effect on revenues. In particular, MLPs are NOT exposed to price swings of the underlying commodities. Unless they are over-levered, and cannot renew their financing, it seems likely that MLPs will be able to weather almost any economic downturn. Since natural gas and oil have inelastic demand curves due to their central role in a modern economy, it is difficult to see usage falling enough to damage the MLPs. Since I'm sheltering much of my IRA money in the MLP space, I can only hope my analysis is correct.

Obama's First Economics Lesson

Don't worry, Vitaly. Socialism provides the answer to the doctor shortage and all other shortages. Obama can just order people to become doctors and then order them to practice public health medicine. Of course, he may have to restrict emigration . . .

The High Dividend Stock Investor's Collapsing Dollar Survival Guide, Part 2

Great article! You noted that the Atlantic Power CFO had a good explanation for the high payout ratio. Could you share what it was? I've been an ATP owner for about two years, and it seems like a good port in this economic storm.

I.O.U.S.A.: Documentary Worth a Peek

I agree heartily with Gramps2, with one exception - both he and Jim misunderstand the Laffer curve. Laffer said that income tax receipts will be zero at two tax rates - 0% and 100%. [I hope I don't have to explain why a 100% tax rate will yield no revenue!] In between those rates, there is a convex curve, and there exists a point on this curve where tax receipts will be maximized. The only interesting question is what tax rate will yield the maximum tax receipts. Saying that Reagan "believed" in the Laffer curve is equivalent to saying that he believed in gravity. What Reagan believed was that the top tax rates, which were between 70% and 90% at the time, were counter-productive in the sense that they depressed economic activity and yielded less tax money to the government.

Finally, Milton Friedman pointed out that tax rates were not the correct measure of the burden of government - the total amount of government spending represents the burden, and it doesn't matter whether the spending is financed by taxes or debt. To keep the ship from sinking, the US has to reduce government spending as a percentage of GDP, period. That means that Social Security and Medicare/Medicaid cannot be taken as givens - we simply cannot afford these blank-check programs anymore.

Delusions of Debt

Bbzz24, I suggest you read Friedrich von Hayek, who proved convincingly that socialism cannot work, even in theory. The idea that the problem is that we have "dumb" politicians and that everything would be OK if we only had "smart" politicians is ridiculous. The problem is allowing politicians to continually expand their power over the economy. That is what the author is showing by graphing the value of the dollar since the Fed was created. What government does will always be done badly. Ron Paul is right: starve government, don't feed it.

Inflation: Tears in Your Coffee

Looks like you reversed the March and June price headings. Good post though.

Gas Lines Coming This Fall

To comment only on one part of your article, I think that gas lines can only occur as a result of government intervention in the form of price controls; otherwise, market pricing will be orderly. To put it another way, if there is a gas shortage, prices may need to go to $10 per gallon to reduce demand to the point where lines do not occur. Those with the greatest need, and ability to pay, will get the gas they need, and everyone will get the message to conserve.

Low Water: Barging Into American Commercial Lines

Thanks, Thomas, I always find your posts interesting. The news about Sam Zell's stake was a plus, too.

Bad News on Housing: Investors Beware

The Senate has trouble passing another bailout bill? Excellent! If we could only pay them to stay home for the next ten years, the country would prosper greatly.

Foreclosures Increase Homelessness [Housing Tracker]

From homeowner to homeless shelter resident? If you can't make your $2,500/mo mortgage payment, you can't afford $700 a month for an apartment either? I don't believe it. Sounds like "activist" lies from the same people who invented the statistics in the 90's about "millions" of homeless in the US.

How Much Will Drilling in ANWR Affect Oil Prices?

I always enjoy your thoughtful analysis. In this case, I notice that you fall into the "too small to make a difference" camp, and I have a few comments. First, the North Slope produced a lot more oil than it was predicted to so we can't be too confident that ANWR will not do the same. Second, if ANWR alone isn't impressive enough, what about adding production off all coasts? Third, even if oil prices aren't reduced at all, it doesn't mean that producing our own oil is in vain. Drilling here means that the dollars stay at home, creating jobs here, and not further enriching dictatorships abroad; it also means a strengthening dollar and lower inflation since our trade balance will be improved. Finally, what is the risk of drilling? Oil leaks are much less likely than they were 40 years ago (the Santa Barbara spill). The caribou haven't died off on the North Slope, for example, and even the hurricane that sank New Orleans couldn't produce an oil leak in the Gulf. Let's ignore the hysterics and drill.

Energy MLPs and Royalty Trusts Analysts Love

Check with your accountants, but my understanding is that LPs and MLPs should not be held in IRAs because they generate unrelated business taxable income (UBTI) which can't be tax-deferred or sheltered. Non-qualified dividends are taxed as ordinary income, but most MLPs (unlike REITs) offer qualified dividends as far as I know - you should check their websites for guidance on that.

Economics of Nuclear Energy

The author has it just right. Baseload power is what's most important, and nuclear energy has tremendous appeal. As a health physicist, I can tell you that the nuclear waste storage problem is 99% political and 1% technical. By considering wacky scenarios involving illiterate farmers growing all their food in the desert on top of the waste dump a hundred thousand years from now, "activists" have sought to make spent fuel storage look hazardous. In fact, nuclear waste can easily be stored for many thousands of years in perfect safety. Like the author, I notice that the anti-technology "activists" are quite willing to fly all around the world to act out their morality plays, and then return home to their air-conditioned upper east side condos. Listening to the rhetoric of the "environmentalists" would condemn billions to continuing poverty.

The White Elephant That Could Destroy Your Portfolio - Part II

There's another reason the Feds can't admit they've lied about inflation: that means that Social Security annuitants have been systematically underpaid for the last decade. Big political problem!