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  • Trying to Understand Airline Executive Compensation [View article]
    I've logged more air miles and flown more carriers than I care to remember. United (UA) used to be my California carrier of choice for my frequent bucket trips between the north and south until the early 90's. Began to notice that the "stews" weren't so affable and the reliability of the carrier wasn't as precise. That perception went deeper throughout the company. Phone clerks to pilots to flight attendants to baggage handlers -- it was pretty apparent that this line was in decline. The rats would have left the ship long before the last ridiculous salary increase after the latest money-losing year had there been any place to go. And that damn pension and seniority system!

    Recently, I decided to use the last of my remaining frequent flyer miles only to find that I was about 7,000 short. No problem. I'll just transfer over a few of my wife's miles. Sure, there would be a transfer fee, but well worth using up the remaining miles. Imagine my shock to learn that miles already earned -- even a transfer between family related accounts -- would need to be "repurchased". That little transaction would be $210 for the miles + a $35 processing fee + a 7.5% excise tax.

    Thank you for being a loyal member of United's Frequent Flyer Program.

    The problem isn't executive compensation. It's the isolation experienced by these executive darlings (probably from spending too much time in an unpressurized, poorly ventilated bucket that they call an airline seat) that makes them think they still set the rules.

    I would gladly flush my remaining miles down the same toilet that United is swirling through right now, but they would probably charge me a "processing fee".
    Nov 24 02:19 PM | 2 Likes Like |Link to Comment
  • What to Do with This Rally? [View article]
    AH. "Smart Traders" ("or they will have to become smart traders").

    This was the author's central point. We have a lot of brilliant converts to "smart investing" digging the grave for buy and hold (I would say annually re-adjust), while plowing the ground with the latest new schemes for "smart investing".

    The authors' drunk analogy is another way to state efficient market theory. As Burton Malkiel clearly illustrated in his time tested book, "A Random Walk Down Wall Street", a variation of the authors' ETF recommendation still rings true. In another world "technical investing" would be put in the same class as witchcraft and these green eye shade monsters would be burned at the stake. As for picking individual stocks, no matter the investing style, it's a fools game no better than Vegas.

    What's a "smart investor" to do with his/her money? Balance a potfolio across broad indexes (yes ETFs are the newest, smartest vehicles) of stocks, bonds, real estate, and even precious metals if you have enough to invest. Rebalance that portfolio at least annually as market fluctuations dictate. Malkiel proves in his writings that this nets an average of 6.5% over any analysis period longer than twenty years over the past 150 years.

    On May 05 08:47 AM manya05 wrote:

    > Agree with Gary Gallo, buy and hold will not work for people that
    > saw their 401(k)s decimated and are a few years to a decade from
    > retirement. Those people are either screwed (and will have to work
    > much longer that they had hoped for), or, they will have to become
    > smart traders and hope for the best. At some point people in the
    > US will have to get to the core of this and realize the complete
    > insanity of privately-funded, market-invested, retirement. call it
    > savings, call it gambling, call it whatever, but it is NOT retirement
    > (just as homes are NOT investments, they are a roof over your head).
    May 6 02:35 PM | 1 Like Like |Link to Comment
  • 'U.S. Banking System Is Effectively Insolvent' - Soros [View article]
    And we have James Baker to thank for orchestrating the takeover of the U.S. electoral process which led to the culmination of Friedmanomics' wacky trickle-down (gimme all your money and I'll decide what to do with it) scheme.

    Why should one listen to someone who led the coup d'etat?

    On Apr 08 02:15 PM dcb wrote:

    > How Washington can prevent 'zombie banks'
    > By James Baker
    > Published: March 2 2009 02:00 | Last updated: March 2 2009 02:00
    > Beginning in 1990, Japan suffered a collapse in real estate and stock
    > market prices that pushed major banks into insolvency. Rather than
    > follow America's tough recommendation - and close or recapitalise
    > these banks - Japan took an easier approach. It kept banks marginally
    > functional through explicit or implicit guarantees and piecemeal
    > government bail-outs. The resulting "zombie banks" - neither alive
    > nor dead - could not support economic growth.
    > A period of feeble economic performance called Japan's "lost decade"
    > resulted.
    > Unfortunately, the US may be repeating Japan's mistake by viewing
    > our current banking crisis as one of liquidity and not solvency.
    > Most proposals advanced thus far assume that, once confidence in
    > financial markets is restored, banks will recover.
    > But if their assumption is wrong, we risk perpetuating US zombie
    > banks and suffering a lost American decade.
    > Evidence - a mountain of toxic assets, housing market declines, a
    > sharp economic recession, rising unemployment and increasing taxpayer
    > exposure through guarantees, loans, and infusion of capital - strongly
    > suggests that some American banks face a solvency problem and not
    > merely a liquidity one.
    > We should act decisively. First, we need to understand the scope
    > of the problem. The Treasury department - working with the Federal
    > Reserve - must swiftly analyse the solvency of big US banks. Treasury
    > secretary Timothy Geithner's proposed "stress tests" may work. Any
    > analyses, however, should include worst-case scenarios. We can hope
    > for the best but should be prepared for the worst.
    > Next, we should divide the banks into three groups: the healthy,
    > the hopeless and the needy. Leave the healthy alone and quickly close
    > the hopeless. The needy should be reorganised and recapitalised,
    > preferably through private investment or debt-to-equity swaps but,
    > if necessary, through public funds. It is time for triage.
    > To prevent a bank run, all depositors of recapitalised banks should
    > be fully guaranteed, even if their deposit exceeds the Federal Deposit
    > Insurance Corporation maximum of $250,000 (€197,000, £175,000). But
    > bank boards of directors and senior management should be replaced
    > and, unfortunately, shareholders will lose their investment. Optimally,
    > bondholders would be wiped out, too. But the risk of a crash in the
    > bond market means that bondholders may receive only a haircut. All
    > of this is harsh, but required if we are ultimately to return market
    > discipline to our financial sector.
    > This is not a call for nationalisation but rather for a temporary
    > injection of public funds to clean up problem banks and return them
    > to private ownership as soon as possible. As president Ronald Reagan's
    > secretary of the Treasury, I abhor the idea of government ownership
    > - either partial or full - even if only temporary. Unfortunately,
    > we may have no choice. But we must be very careful. The government
    > should hold equity no longer than necessary to restructure the banks,
    > resume normal lending and recoup at least a portion of taxpayer investment.
    > After replacing bank management with new private managers, the government
    > should have no say in banks' day-to-day operations.
    > The FDIC can assist. Just this year, it has placed over a dozen American
    > banks - admittedly all small - into receivership. We might also consider
    > setting up something akin to the Resolution Trust Corporation, created
    > in 1989 to liquidate the assets of failed savings and loans. The
    > RTC eventually disposed of nearly $400bn in assets of more than 700
    > insolvent thrifts.
    > To avoid bank runs and contain market disruption, the Treasury should
    > announce its decisions at one time. Washington will also need to
    > co-ordinate its actions with other major capitals, especially in
    > western Europe and east Asia. At best, this will encourage other
    > countries to take similar steps with their own banking systems. At
    > a minimum, other governments can prepare for the financial turmoil
    > associated with the announcement.
    > This approach is not pretty or easy. It will cost a lot of money,
    > with the lion's share coming from US taxpayers, at least in the short
    > to medium term. But the alternative - a piecemeal pumping of more
    > public money into insolvent banks in the vague hope that things will
    > improve down the road - could truly be historic folly.
    > Eventually our banks and economy will start to recover. When they
    > do, we would be wise to avoid another Japanese mistake - raising
    > taxes. To counter mounting debt created by government stimulus packages,
    > Japan increased taxes in 1997. Consumption dropped and the country's
    > economy collapsed.
    > Our ad hoc approach to the banking crisis has helped financial institutions
    > conceal losses, favoured shareholders over taxpayers, and protected
    > senior bank managers from the consequences of their mistakes. Worst
    > of all, it has crippled our credit system just at a time when the
    > US and the world need to see it healthy.
    > Many are to blame for the current situation. But we have no time
    > for finger-pointing or partisan posturing. This crisis demands a
    > pragmatic, comprehensive plan. We simply cannot continue to muddle
    > through it with a Band-Aid approach.
    > During the 1990s, American officials routinely urged their Japanese
    > counterparts to kill their zombie banks before they could do more
    > damage to Japan's economy. Today, it would be irresponsible if we
    > did not heed our own advice.
    > James A. Baker III was chief of staff and Treasury secretary for
    > President Ronald Reagan and secretary of State for President George
    > H.W. Bush
    > Copyright The Financial Times Limited 2009
    Apr 8 07:49 PM | 3 Likes Like |Link to Comment
  • Krugman vs. Sachs on PPIP Loopholes [View article]
    If all of these gaming-the-system options are true, then why don't we just do away with the private banking system and run the Bank of the United States of America? If the balance sheets demonstrate under a stress test that the most egregeous of the lot are fundamentally insolvent, then receivership (and I would argue) without re-organization is the only viable option.

    BTW, to the smart cookies who posted these various options: Don't you see how these thoughts are a good illustration of why private-capitalism is a failed model? What? Did most of you recently get laid off from the financial sector?
    Apr 7 08:04 PM | Likes Like |Link to Comment
  • Buy and Hold is Dead [View article]
    Thanks for the clarification, but as other posters have pointed out, "buy and hold" is a slippery term (1 minute, and hour, a lifetime?)

    I don't think that you missed the point of my post. There's a difference between those who think that they are bright enough to pick individual stocks (trading or investing) and Malkiel's point that no individual can ever have sufficient information (how bad is that airplane engine anyway?) to correctly predict the movement of individual companies.

    I'm sure as an investment professional that you understand the historical evidence presented by Malkiel. His and my point is that the safest route for anyone is to invest in broad index portfolios (the Wilshire 5000 ), bonds, real estate if possible, and, yes, to balance these portfolios over time.

    Even Malkiel recognized that his advice runs counter to human nature, so he allows for those who wish to use real dollars as "play money"; at least don't fall into the technical analysis trap. Use due dillegence and fundamental analysis if you must.

    On Apr 06 04:01 PM wrote:

    > II am sorry Media, but you need to go deeper than that! You do
    > not fly on a plane that has been experiencing some engine problems
    > just because there is a low probability of any plane crashing!
    > But as long as you are balanced and re-balancing you are not buying
    > and holding!
    Apr 6 06:51 PM | 1 Like Like |Link to Comment
  • An Open Letter to John Galt [View article]
    Thank you Jeffrey Small.

    Trying to shorten the trail that led to Rand's pseudo-intellectual ramblings is a challenge in a brief post.

    At least your obsession with Rand is well-thought. Though you see the connection between Plato and Objectivism and thereby, Objectivism to Rand, there is none. To explain the schism, Plato recognized that inherently man embodies truth as a priori knowledge (though he never called it that). The allegory of the cave was to illustrate that truth is the opposite of the shadows on the cave wall that we perceive as real, when all that we need to do to to turn around (go inside oneself to seek truth).

    To the contrary, Hobbes and Locke were rationalists and empiricists who rejected anything that one could not "see" using the five senses. They recognized that social existence without order and structure leads to chaos. Hobbes, and Locke especially, since both greatly influenced the social contract we call the United States Constitution, would have never recognized the idealized, solitary man (whether you call him Superman or ordinary man makes no difference) as a viable construct.

    In fact, Hegel continued this semi-rationalist/objec... tradition. And Nietsche was so influenced by Hegel's thought, the two are virtually indistinguishable, except for Nietsche's "uberman". The direct rip-off of that "realized being" emblemized by Galt is merely disguised by Rand recognizing the connection and attempting a weak effort to distinguish her Galts from the overlord.

    It was Rousseau that recognized the original purpose of Plato's writings and the inherent interdependence of man as each strived to realize his/her true self.

    This is the key point of the earlier post. In fact, there are tremendous similarities between Rousseau and Rand up to a point. Each recognized the importance of freedom and choice, but Rousseau also recognized that without social order, man would eventually either live on separate islands ( a la your desire to choose your own world and invite those in that wish to join you) or devolve into tribalism. The absurd reduction that Rand never fully explains is how these Galts actually live in the real world.

    I'll ask you:

    Do you use the road system?
    Do you ever buy gasoline?
    Do you own a home with a mortgage...?

    None of these nor many other social niceties would be possible without social order and contracts. A true Galtian would never participate in such "slavery". Do you?

    Thanks again for adding an interesting voice to this otherwise intellectually dismal site.

    On Apr 06 04:42 AM Jeffery Small wrote:

    > mediapro:
    > It all sounds very sophisticated, but I honestly haven't got a clue
    > as to what you are saying. However, I do agree completely that the
    > tribalist view or society you describe does rest squarely upon the
    > philosophical shoulders of Plato, Hobbes, Locke and Rousseau. However,
    > by placing Rand in the tradition of Nietzsche, you demonstrate that
    > you really do not understand her philosophical position at all.
    > Rand's Objectivism is Aristotelian in its roots and stands in direct
    > counterpoint to the lineage you describe. Objectivism rejects Nietzsche's
    > master-slave morality and see the proper relationship between men
    > as one of voluntary traders interacting without force. The Atlases
    > of Objectivism are not supermen; they are simply men who have realized
    > their full potential.
    > But let's just forget all the pseudo-intellectual mumbo-jumbo and
    > get grounded back in practical reality. There is one phrase in your
    > statement that stands out as significant, that being:
    > "Plato's call for a democracy ruled by philosopher kings may never
    > be attainable, but our present circumstances offer an opportunity."
    > Here is where the rubber meets the road. You seek to be ruled.
    > Call it what you will; a "philosopher king" is as good a tittle as
    > another. Well help yourself to whatever sort of subservient role
    > you wish to place yourself in in relation to your master. I will
    > not stand in your way, nor will I stop others from following you
    > on that path. But leave me and other self-reliant, independent individuals
    > out of your grand plan. We seek neither to be ruled nor to rule
    > others. Can you agree to our autonomy? Somehow, I don't believe
    > that you and your "king", Obama, would be willing to leave those
    > of us who choose independence and freedom, to our own devices. I
    > suspect that ruling us is exactly what is desired, with the rest
    > of the talk merely a diversion from the true agenda.
    > You can ridicule us all you like. But don't believe for a moment
    > that that ridicule has any effect. And more importantly, don't believe
    > that we are going to quietly be led to slaughter as sacrificial lambs.
    > Take a look around. There is a rebellion brewing between Aristotle
    > and Plato. It appears that we have each selected our sides in that
    > battle.
    > Regards,
    > --
    > Jeffery Small
    Apr 6 06:29 PM | Likes Like |Link to Comment
  • An Open Letter to John Galt [View article]
    "WTP" sums up the essence of sensible reaction to an escapist utopia founded on ME suggested by Rand. It might be helpful to other readers to understand the basis of Rand's reductio ad absurdum.

    The progression of Platonic and Socratic teachings reached the great schism with the abandoment of Plato's great observation about the basic nature of man as possessing truth corrupted by society. The British philosophers Hobbes and Locke agreed with the corrupted part of Platonic thought and described the only workable social contract as one built upon the recognition that the fundamental nature of man as being selfish.

    There was another view of man's nature, however, best expressed by Plato in his allegory of the cave and man's eventual recognition of his true nature, later expounded by Rousseau.

    We are experiencing the fruits now of this schism because we have lost hope in another path. But out of crisis comes opportunity.

    While most of the posters extolling Galt here express that hopelessness in the form of rather silly revolutionary, reactionary language found in Rand's utopian nothingness, there are a growing number I believe that see the only solution to the greed-is-good view of human nature as a fundamental shift in what constitutes true value.

    No, I don't expect the Walmart shopper to suddenly change into that idealized man. Yet, if we relegate the nature of man to the surface conclusions of Hobbes and Locke, then we all deserve the circumstances in which we find ourselves now.

    Plato's call for a democracy ruled by philosopher kings may never be attainable, but our present circumstances offer an opportunity. I'm not saying that he was talking about Obama, but we have in Obama a unique opportunity to merge the role of politics with the possibilities of man.

    It doesn't take all the monkeys agreeing to change that direction -- only the thousandth monkey to crystalize that change.

    Standing in the land of Atlas envisioned by Nietsche and re-visioned by Rand never was and never will be a real world. It's for the lost souls that model their lives after Galt that will be doomed to their own, miserable, selfish world, ultimately silent and alone.
    Apr 6 01:08 AM | Likes Like |Link to Comment
  • G20 Summary: Goodbye Tax Havens? [View article]
    This is good news, and none too soon.

    It took a world financial crisis to expose the fabulously wealthy tax cheats, but one step in the right direction.

    And "fireball's" privacy justification is just a smokescreen for a long-overdue lifting of the veil that has allowed Bush's "base" to escape from shared responsibility.
    Apr 5 10:26 PM | 1 Like Like |Link to Comment
  • Is Monsanto a Template for Agribusiness? [View article]
    I was wondering when someone would point out the risks of introducing GMO seeds into the environment.

    What "Sober Realist" left out for those that praise Monsanto and other GMO'ers is the very real risk of massive lawsuits for releasing these Frankenseeds into the environment. Active multi-billion dollar efforts are already underway in Canada and India.

    Canadian organic farmers are targeting Monsanto for promoting GMO soybean and other seed stock to non-organic farmers with a dusty roadway as the only barrier preventing contamination. Same for promoting these to lower tier countries, such as India.

    The programs tagged in the post from "Sober Realist" are really only the tip of the iceberg, and I wouldn't be dismissive of the potential that this company could go the way of "Bhopal".

    On Apr 04 11:35 AM Sober Realist wrote:

    > Monsanto = Corporate control of our food source. I didn't realize
    > how evil this company was until I saw this documentary last night
    > (first time aired on TV in America:
    > March 23, 2009
    > Link TV to air The Future of Food this week
    > By Rady Ananda
    > Joining the growing conversation about genetically modified foods
    > and the tactics of transnational corporations, Link TV will air The
    > Future of Food this week. Click here for air times:
    > Deborah Koons Garcia's groundbreaking film from 2004 can also be
    > found at Google video:
    > This is Link TV's intro:
    > Is there anything more important than knowing where our food comes
    > from, and who controls what we eat? The documentary The Future of
    > Food has the disturbing answers. Today's food chain is far more complicated
    > than the traditional farmer to table model - it has become a vertically
    > integrated industrial complex. And with government looking the other
    > way, genetically modified seeds have found their way into our food
    > supply. The time has come to take back our food.
    > This Link TV special, hosted by celebrated environmental journalist
    > Mark Hertsgaard, investigates the corporate dominance of our world's
    > food systems. We are joined in the studio by the filmmaker of The
    > Future of Food, Deborah Koons Garcia, as well as University of California
    > biologist Ignacio Chapela, founder of The Mycological Facility in
    > Oaxaca, Mexico, a facility dealing with questions of natural resources
    > and indigenous rights. Koons Garcia's documentary The Future of Food
    > offers an in-depth investigation into the disturbing truth behind
    > the unlabeled, patented, genetically engineered foods that have quietly
    > filled U.S. grocery store shelves for the past decade.
    > From the prairies of Saskatchewan, Canada to the fields of Oaxaca,
    > Mexico, this film gives a voice to farmers whose lives and livelihoods
    > have been negatively impacted by this new technology. The health
    > implications, government policies and push towards globalization
    > are all part of the reason why many people are alarmed by the introduction
    > of genetically altered crops into our food supply. The film also
    > explores alternatives to large-scale industrial agriculture, placing
    > organic and sustainable agriculture as real solutions to the farm
    > crisis today.
    > Link TV's Food issue webpage
    > The Future of Food official site
    > Ignacio Chapela at UC Berkeley
    > www.seedsofdeception.c...
    Apr 4 11:30 PM | Likes Like |Link to Comment
  • Buy and Hold is Dead [View article]
    I guess that it's the fun of the game motivating stock pickers with the latest "system".

    The audacity of the human mind to assume that there is a foolproof, part-time, or any other system to time entrance in and out of stocks can easily be proved wrong with just a bit of effort through historical analysis.

    I still keep Burton Malkiel's words in my head. "A Random Walk Down Wall Street" doesn't guess at how the market works. It demonstrates the futility of trying to read squiggly lines, heads and shoulders, or any other green eye shade mumbo-jumbo. Technical analysis is as laughable as the Laffer Curve.

    It demonstrates the only investment strategy that has a long-term chance in a market so unfathomable that even the smartest cookies throughout history eventually got crushed --- a balanced portfolio, dollar-cost averaging, and a risk spread across various investment vehicles.

    Keep ignoring the dependability and sustainability of a balanced portfolio filled with broad (ETF or Mutual) indexes of stocks, laddered bonds, real estate, and maybe even a little precious metal at your own peril.

    I know that this advice won't resonate on a site fueled by financial testosterone-laden geniouses, but it doesn't hurt to remind the occassional reader who might actually be fooled into thinking that someone like this author and his ditto-heads has something new to offer.
    Apr 4 11:17 PM | 4 Likes Like |Link to Comment
  • Pres. Obama: Counterfeiter-in-Chief? [View article]
    This will be tough for you to understand, but sending money down the rathole in Iraq and Afghanistan is the least of our worries.

    Check true or false to the following. Maybe you'll at least think about the consequences of war:

    1. More than 4000 mostly young American lives were lost in a war we have yet to define.

    2. An untold number of Iraqi lives have been lost from relentless shelling of an urban population.

    3. By year three of this war even the most fervent war supporter saw the coalition of the willing dwindle to a precious few.

    4. For the next two generations we will be paying the bills as grateful Americans to the more than 100,000 war veterans who were damaged by this war.

    Since you pegged the reason for going to war as the last one that Bush could dreamup -- unseating Saddam -- I'll ask you:

    Were the Khmer Rouge terrorists? Was Idi Amin a madman? Pick your dictator and let the wars rage. If you really want to know the source for Hussein's weaponry and WMD, go back to the 1980-1984 period of U.S. support for Iraq against Iran and you will find numerous reports of extensive weapons sales, chemical stockpiles and even photos of Donald Rumsfeld making nice-nice with this hated dictator who killed his own people.

    If you can't learn the lessons from recent history, you my friend will repeat them.

    On Mar 26 01:05 PM milkchaser wrote:

    > The cost of the war in Iraq and the cost of the "stimulus package"
    > are comparable. But the stimulus package will be spent in less time.
    > The war in Iraq arguably enhanced national security. The stimulus
    > package was predominately a payoff to various Democratic constituencies.
    > I doubt that either the war or excessive Federal gov't spending will
    > result in economic growth, but at least the war accomplished something:
    > it's hard to argue that the world would be safer if Saddam were still
    > above ground and breathing.
    > Besides which, Bush is gone. It's all on Obama now.
    Mar 27 01:54 AM | 3 Likes Like |Link to Comment
  • Congress' Handling of AIG Bonuses Is Shameful [View article]
    Gentle author and posters.

    I realize that this site is populated by the fabulously wealthy, but please look at what prompted the arguments from "realty chk", "responsibility" and "leftfield" before standing on the sanctity-of-contracts soapbox.

    What made Tom Brokaw's "Greatest Generation" great was living through the devastation of unprecedented greed and plunder of our national treasure by the robber barons of the late 1800's, the monopolists, and finally an eeirily similar derivatives and leveraging gambit by no other than JP Morgan and Company and declaring through their sweat and WW II sacrifice -- never again.

    Though some decry Social Security, the GI Bill and other depression/WW II era investments in our shared responsibility, it was this shared sacrifice IMHO that created our wealth as a nation.

    What have we come to when one man for his labor makes 300, 400, 600 times the person who actually makes the goods or delivers the services upon which a company depends? The justifiable reaction to a $750,000 retention bonus as reward for having the ability to unwind a highly leveraged, wink-wink scam has an apt methaphor -- obscenity.

    The path that we have traveled since the innocent post-war days should leave any of us ashamed that our country has come so dangerously close to the wastebin of history. The steady, yet persistently rising gap between the haves and have-nots; our ridiculous belief that by re-distributing middle class wealth up to the most priveleged under the Friedman/Laffer economic model; and passing along the risk until it reaches the greatest fool has made fools of us all.

    Standing on the sanctity of contracts, citing the Federalists papers, and pity for the person who can obviously afford to give back $750 K and not feel much pain pales in comparison to the guy one paycheck from poverty. What is understandable is the rage and outrage from the rest of us who might be fortunate to make that amount of money in a productive lifetime.

    Until we have a shared sense of outrage at our lack of concern for these innocents in this latest greed-fueled gambit, we will continue down a road that thankfully few honest, genuine people travel.
    Mar 27 12:23 AM | 2 Likes Like |Link to Comment
  • A More Modest AIG Bonus Proposal [View article]
    Here's the data compiled by Greentech (below), a part of the energy group, though focused on non-polluting alternatives. The title of the article is "Oil Industry Subsidies for Dummies", and it presents a rather unbiased assessment of oil industry subsidies.

    "The American oil and gas industry might receive anywhere between $15 billion and $35 billion a year in subsidies from taxpayers.

    Why such a large margin of error? The exact number is slippery and hard to quantify, given the myriad of programs that can be broadly characterized as subsidies when it comes to fossil fuels. For instance, the U.S. government has generally propped the industry up with:

    * Construction bonds at low interest rates or tax-free
    * Research-and-development programs at low or no cost
    * Assuming the legal risks of exploration and development in a company's stead
    * Below-cost loans with lenient repayment conditions
    * Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire
    * Sales tax breaks - taxes on petroleum products are lower than average sales tax rates for other goods
    * Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth)
    * The U.S. Strategic Petroleum Reserve
    * Construction and protection of the nation's highway system
    * Allowing the industry to pollute - what would oil cost if the industry had to pay to protect its shipments, and clean up its spills? If the environmental impact of burning petroleum were considered a cost? Or if it were held responsible for the particulate matter in people's lungs, in liability similar to that being asserted in the tobacco industry?
    * Relaxing the amount of royalties to be paid"

    One example of how oil companies shortchange the American taxpayer:

    XOM earned $7.6 Billion on domestic production in 2007 and paid $2.7 Billion in U.S. income taxes. Worldwide they earned $45 Billion and paid $23 Billion in foreign taxes. That's a 36% U.S. rate compared with a 52% rate foreign. That source is XOM's 10-K filing.

    Additionally, the U.S. allows

    On Mar 24 12:56 PM WayneS wrote:

    > P.S. There are over 500 oil companies in the US, not three.
    Mar 24 08:21 PM | Likes Like |Link to Comment
  • Did CDS Cause All the World's Ills? Confronting the Crisis Backlash [View article]
    Please write an expanded article applying this metaphor!!!

    An outstanding crtitique. BTW, I looked at the "DTCC" table. If that's what transparency means, then I'm opening up an FP unit tomorrow!

    On Mar 24 04:14 AM Mbuna wrote:

    > My impression of reading this- CDS's are a relatively recent drug
    > introduced that has become highly addictive such that many addicts
    > go through great and sophisticated lengths to explain the reason
    > for their addiction. Case in point #1: "Allow banks to get regulatory
    > capital relief on their loan books letting them free up capital."
    > Translation- banks have a loophole on their capital requirements
    > thus allowing them greater leverage and thus greater risk but also
    > the possibility of greater profits. Case in point #2: "Allow banks
    > to more efficiently manage credit risk." Translation- We don't have
    > to be responsible! Let someone else be responsible so we can then
    > get even greater leverage and greater profits!
    > Geez, haven't we seen the result of this already? Why on earth would
    > anyone want to go back there? Addiction perhaps? Banks actually worked
    > before CDS's were around. This is just addict talk on many levels
    > because CDS's are an artificial inducement into the market. Financial
    > engineering of this sort ultimately serves only one purpose, greed,
    > (while generally playing everyone else for a fool at the same time)and
    > ultimately does not benefit the broader economy. And the proof
    > of that statement has already demonstrated itself, in spades. When
    > you can financially engineer a product whose purpose is obviously
    > broad over many sectors of the economy I'll listen. Otherwise this
    > is just a C(rack)DS addict scheming for his next hit using technically
    > sophisticated language about how wonderfully the drug works. Ultimately
    > it is a lie.
    Mar 24 06:50 PM | Likes Like |Link to Comment
  • Regulating Compensation: Where Does It Stop? [View article]
    If I combine the range of comments from many sides of this compensation bubble, let's see if we can agree on a set of principles that might govern the excesses of the few with the money of the many.

    I would invite comment from anyone on why the following is or is not a good idea.

    1. Reinstate Glass-Steagall. None of these shops (Citigroup, B of A, etc.) should have ever been allowed to dally in businesses about which they knew nothing. AIG has (had) 111,000 employees. It's an insurance company. How can it effectively manage its core business while allowing thse AIG FP geniouses to manipulate the financial markets with CDO's and CDS's?

    2. Eliminate bonus structures altogether. Why are salaried employees and small businesses hit time and time again, while big business always seems to 'bend' the rules and still come out on top? Think of it this way, if I’m an average corporation and I pay a qualified employee 100k as their salary, I am required to withhold taxes, insurance and a host of other items – in addition to setting aside money for federal programs. However, if I pay that individual 60k, and a bonus 40k, the situation looks much better. The employee has to handle withholding taxes on the 401k and I am only required to deal with the payroll effects of 60k. If we want to stimulate productivity, then structure compensation the old fashioned way. Provide a salary/commission structure, but don't play games that allow some to escape taxation by fiddling with the code.

    3. If we are stuck with an income tax, level the field and fix the code by eliminating subsidies. Free market preachers always talk about existing in a world without artificial props. Eliminate oil and gas subsidies. While we're at it, eliminate import tariffs that stifle free trade.

    For people who don't count the payroll, FICA, SUI, etc. automatic worker payroll contributions while conveniently ignoring the "bonus structure", offshore accounts, shell businesses, and other manipulative uses of the tax code by those who can afford tax attorneys, let's treat everyone as the workers they are. Those who actually contribute a day's labor for a fair wage vs. the incredible sums paid to those who move money through the system is an obscenity that is finally being recognized through this crisis. Look where that system of rewards has put us.

    4. Finally, would someone please explain to me why there is a ~$106 K cap on wage contributions to Social Security? Then, at the tail end of the SS contribution cycle, these same wealthier individuals garner an elevated SS income based on their historic salaries. If we are to cap SS contributions, then why not put a means test on the back end when those same SS scoflaws come to the trough for their share?
    Mar 24 06:34 PM | Likes Like |Link to Comment