This post establishes the unreality of the blogging system; it's one I didn't post last month.
The correct title should be "A Late Snowfall"; that's what happened last week. Three days in a row in the 70's, though, has allowed me to move my ice melt and snowshovels to the back of the shed.
Thursday, February 26, 2009
Friday, February 06, 2009
Carbon Tax
I've been thinking about the Big C.T. lately, as opposed to the cap-and-trade, or C&T, that Obama and others have proposed.
One statement that really struck me came from Al Gore, I believe. It was that Big CT could generate enough tax revenue to allow us to eliminate the payroll tax (Soc. Security and Medicare), and that change would generate millions of new jobs.
The last part--the new jobs that could come out of the economy's rally if payroll taxes for workers and employers were eliminated or cut sharply--sounds right to me, and an extremely relevant prescription for the current Great Crater, towards the bottom of which we are currently rolling at top speed.
I also think that Big CT could be a lot simpler to implement than C&T, which promises to be a grim vertical turf war for cap room through loopholes and other Mickey Mouse (think of NBA trades and the contortions taken on in order for teams to bid on LeBron in '10).
I've got two problems with Big CT, before I endorse it fully:
1) All this theoretical stuff sounds fine, but I've got to think we're talking about estimated carbon usage as the basis for both the Big CT and C&T systems. The weak link in this chain seems to be measurement of actual carbon usage. Consider, as a close analogy, the difference between "Estimated EPA mpg" and "what one gets". If the little gizmos that measure the carbon usage aren't in place, aren't sufficiently accurate or are somehow tricked, we let the cheaters take the advantage, with a possible cascade toward defeating the environmental objective. (possible investment tip--find the gizmo makers and buy them?)
2) If we eliminated the payroll tax and then--heaven forbid!--we succeed in reducing our carbon usage, then how are we going to pay for Social Security and Medicare? Better not eliminate the mechanism, ever. It would still be significant to cut the rates (!) by 20-25%, phasing in Big CT sooner rather than later, but keeping Big CT rates relatively low in the initial stages to control inflation. I actually like this approach better than the tax rate cuts proposed in the stimulus plan, though I know those are pretty close to a core Obama position.
One statement that really struck me came from Al Gore, I believe. It was that Big CT could generate enough tax revenue to allow us to eliminate the payroll tax (Soc. Security and Medicare), and that change would generate millions of new jobs.
The last part--the new jobs that could come out of the economy's rally if payroll taxes for workers and employers were eliminated or cut sharply--sounds right to me, and an extremely relevant prescription for the current Great Crater, towards the bottom of which we are currently rolling at top speed.
I also think that Big CT could be a lot simpler to implement than C&T, which promises to be a grim vertical turf war for cap room through loopholes and other Mickey Mouse (think of NBA trades and the contortions taken on in order for teams to bid on LeBron in '10).
I've got two problems with Big CT, before I endorse it fully:
1) All this theoretical stuff sounds fine, but I've got to think we're talking about estimated carbon usage as the basis for both the Big CT and C&T systems. The weak link in this chain seems to be measurement of actual carbon usage. Consider, as a close analogy, the difference between "Estimated EPA mpg" and "what one gets". If the little gizmos that measure the carbon usage aren't in place, aren't sufficiently accurate or are somehow tricked, we let the cheaters take the advantage, with a possible cascade toward defeating the environmental objective. (possible investment tip--find the gizmo makers and buy them?)
2) If we eliminated the payroll tax and then--heaven forbid!--we succeed in reducing our carbon usage, then how are we going to pay for Social Security and Medicare? Better not eliminate the mechanism, ever. It would still be significant to cut the rates (!) by 20-25%, phasing in Big CT sooner rather than later, but keeping Big CT rates relatively low in the initial stages to control inflation. I actually like this approach better than the tax rate cuts proposed in the stimulus plan, though I know those are pretty close to a core Obama position.
Wednesday, February 04, 2009
Good Sports
If you watched the Australian Open men's finals, you saw a great match: Nadal vs. Federer, first time ever matched up Down Under. A battle all the way, until Nadal broke Roger's serve midway through the final set.
If you saw the post-match ceremony, Roger cracked up and cried. Quite a lot, actually. One could excuse it as being the emotion of the moment, but I think there was something really for him to mourn. I think that match finally convinced him that he was really #2. Not that #1 ranking is gone for good, necessarily, but that it is not a fluke and Rafael is really ahead of him for now. Nadal was gracious and kind to Federer, who has always been a champion of the first order.
As for the Super Bowl, it wasn't quite as Stupor Bowl as usual. XLIII was one of only about VIII that were really contested (something like XV-XX PC).
The finish was dramatic, after the record-setting comeback of the Cardinals highlighted by Fitzgerald's brilliant catch and run for the lead. What surprised me most was that the incredible play in which LB Harrison of the Steelers ran back an interception 100 yards just at halftime, falling into the endzone as time ran out, did not settle--could not be argued to have settled--the game's outcome. Normally, a big break like that, worth at least 10 points in a tight game, would push the Super Bowl Teeter-Totter of Destiny over to one side for good.
Salutes to both QB in particular. Roethlisberger and Kurt Warner should both be destined for football's HOF, even though Roethl. may have a short career, and Warner's is checkered. Football is a little more forgiving than baseball of those who didn't rack up huge career stats and recognizing of brilliance over a period of, say, a dozen years.
If you saw the post-match ceremony, Roger cracked up and cried. Quite a lot, actually. One could excuse it as being the emotion of the moment, but I think there was something really for him to mourn. I think that match finally convinced him that he was really #2. Not that #1 ranking is gone for good, necessarily, but that it is not a fluke and Rafael is really ahead of him for now. Nadal was gracious and kind to Federer, who has always been a champion of the first order.
As for the Super Bowl, it wasn't quite as Stupor Bowl as usual. XLIII was one of only about VIII that were really contested (something like XV-XX PC).
The finish was dramatic, after the record-setting comeback of the Cardinals highlighted by Fitzgerald's brilliant catch and run for the lead. What surprised me most was that the incredible play in which LB Harrison of the Steelers ran back an interception 100 yards just at halftime, falling into the endzone as time ran out, did not settle--could not be argued to have settled--the game's outcome. Normally, a big break like that, worth at least 10 points in a tight game, would push the Super Bowl Teeter-Totter of Destiny over to one side for good.
Salutes to both QB in particular. Roethlisberger and Kurt Warner should both be destined for football's HOF, even though Roethl. may have a short career, and Warner's is checkered. Football is a little more forgiving than baseball of those who didn't rack up huge career stats and recognizing of brilliance over a period of, say, a dozen years.
Sunday, February 01, 2009
Whatsa Matter with this Crisis, Already?
The proposed stimulus bill and the financial industry interventions are remarkable commitments toward recovery, but the feeling out here remains that there is still more new pain to be felt.
At the heart of that uneasy feeling* is the continuing uncertainty about the devaluations of mortgage- and mortgage-related assets--there has been a substantial writedown, but is it enough? We still hear people saying, "no one has any idea how big this may be".
We also hear people saying, "the problem of transparency is that it would reveal just how large the hole is, and we can't fill it". This statement is almost certainly wrong, though knowing the exact location of all the skeletons would modify the cemetery's size for many a deserving institution. The fact that "no one knows", though, means that people can say that sort of thing without being contradicted, which prolongs the lives of such Unconventional Unwisdom.
It's time to plumb that hole and find out how deep is the bottomless pit, and I'm considering offering to do so for the U.S. Treasury. Time to put myself back in the cave, to see if I can find the light so I can show it to them all.
The Learning Process Has Begun, Though
I explain the bad feeling to the simple requirement of time to adjust to a new reality in America. If anyone were ever asked, we would say that the natural trend of property values, virtually anywhere in this country where there's a market to speak of, is upward. And it would've been true. You didn't even have to think about it.
I think the possibility has dawned that this may not be true anymore. At least, somewhere between many and most people would say that they have their doubts. Not that real estate prices should be descending on an ongoing basis, either; more like, it's possible that the total value of real estate is about what it should be. Some places will go up, some down.
Recall the real estate meltdown in Japan, probably the closest model to what is happening in the USA (and spreading outward). The steady increase on to infinity doesn't really seem like a sustainable model.
*Credits to Matt Johnson and The The for use of that song title.
At the heart of that uneasy feeling* is the continuing uncertainty about the devaluations of mortgage- and mortgage-related assets--there has been a substantial writedown, but is it enough? We still hear people saying, "no one has any idea how big this may be".
We also hear people saying, "the problem of transparency is that it would reveal just how large the hole is, and we can't fill it". This statement is almost certainly wrong, though knowing the exact location of all the skeletons would modify the cemetery's size for many a deserving institution. The fact that "no one knows", though, means that people can say that sort of thing without being contradicted, which prolongs the lives of such Unconventional Unwisdom.
It's time to plumb that hole and find out how deep is the bottomless pit, and I'm considering offering to do so for the U.S. Treasury. Time to put myself back in the cave, to see if I can find the light so I can show it to them all.
The Learning Process Has Begun, Though
I explain the bad feeling to the simple requirement of time to adjust to a new reality in America. If anyone were ever asked, we would say that the natural trend of property values, virtually anywhere in this country where there's a market to speak of, is upward. And it would've been true. You didn't even have to think about it.
I think the possibility has dawned that this may not be true anymore. At least, somewhere between many and most people would say that they have their doubts. Not that real estate prices should be descending on an ongoing basis, either; more like, it's possible that the total value of real estate is about what it should be. Some places will go up, some down.
Recall the real estate meltdown in Japan, probably the closest model to what is happening in the USA (and spreading outward). The steady increase on to infinity doesn't really seem like a sustainable model.
*Credits to Matt Johnson and The The for use of that song title.
Great Letter to Editor
Toward a More Secure Retirement
(Published: January 31, 2009)
The writer is president and chief executive of TIAA-CREF, which manages retirement savings on behalf of 3.6 million individuals and 15,000 institutions, and a former vice chairman of the Federal Reserve. He is a member of President Obama’s Transition Economic Advisory Board.--NYT
I am particularly interested by the comment about annuities, which would probably need some Federal support to be viable. On the one hand, I wish I had converted some of my assets into annuities when I went into semi-retirement (I investigated them but was discouraged by very high fees). On the other, one has to wonder how well annuity structures might've survived the recent financial holocaust. Still, the author expresses an important point, one that will become central to future economic planning discussions.
(Published: January 31, 2009)
Re “From Here to Retirement” (editorial, Jan. 26):
The financial crisis and the decision by some companies to cut matching contributions to their 401(k) plans highlight the need to think anew about how Americans achieve lifetime financial security and the mechanisms in place to help them do so. The 401(k) plans upon which most workers now rely were never conceived as a holistic retirement system.
What is needed is a retirement system that combines the best of portable, individually owned accounts with guarantees to help make sure that individuals do not outlive their savings. The system would automatically enroll workers, tie savings increases to raises, include provisions for health care needs, offer objective investment advice to help them plan, and assure a lifelong income base by automatically converting some of their savings to a low-cost annuity at retirement.
Such protections, while not shielding individuals from investment risk, would significantly bolster Americans’ economic security.
Roger W. Ferguson Jr.
New York, Jan. 26, 2009
The writer is president and chief executive of TIAA-CREF, which manages retirement savings on behalf of 3.6 million individuals and 15,000 institutions, and a former vice chairman of the Federal Reserve. He is a member of President Obama’s Transition Economic Advisory Board.--NYT
I am particularly interested by the comment about annuities, which would probably need some Federal support to be viable. On the one hand, I wish I had converted some of my assets into annuities when I went into semi-retirement (I investigated them but was discouraged by very high fees). On the other, one has to wonder how well annuity structures might've survived the recent financial holocaust. Still, the author expresses an important point, one that will become central to future economic planning discussions.
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