Archive for July, 2009

It seems the State of Rhode Island is threatening to close businesses for not paying sales taxes and I think those businesses should call their bluff.

PROVIDENCE — State tax officials have put more than 1,200 businesses across the state on notice this week that they are out of business unless they pay their overdue sales taxes immediately.

For most, that action came in the form of a personal visit from the state Division of Taxation, ordering business owners to lock their doors at once.

I believe we have crossed the proverbial tipping point and any threats by government agencies, banks or other financial institutions to cut off credit or shut down businesses will lead to anarchy, non-compliance, and general mayhem. There are articles coming out daily whereby citizens are simply giving up such as this one from the New York Times.

Like many who default, Ms. Birks first asked her credit card company to lower her 19 percent interest rate. No dice, Bank of America responded. After she tried to get the bank’s attention by skipping a payment, it immediately raised her rate to 25 percent. As Ms. Birks’ debt swelled, so did a sense of injustice mingled with helplessness.

Ms. Birks asked Bank of America about a settlement this spring. Since her account was up to date, she was told she didn’t qualify. She stopped paying, the bank started calling.

When Bank of America finally got her on the phone, it agreed for the first time to drastically reduce her interest rate. She did not take the deal, but considered it progress.

The State of Arizona wants to sell its Capitol Building and the State of California has solved its budget crisis by taking money from cities and continues to issue IOUs.   I say call their bluff.

Last Christmas, I received an AeroGarden as a gift and initially I loved it but lately it’s become a huge money pit.   Perhaps I’ve just had a bad streak of luck but the bulbs keep going out in my AeroGarden.  I’ve already replaced them TWICE and at $20 for a pair, that’s $40 spent on light bulbs.    There is no ROI calculation that will justify spending $40 on bulbs to produce a small amount of veggies even if they are “home grown” veggies.

If there is anything Aerogarden can do to keep me as a customer, it is to reduce the cost of the bulbs to no more than $10 per pair.   Right now, the Aerogarden has been sitting idle in a corner doing nothing.   If it sits there for a few more months, it’s going to find its way to the curbside during the next heavy trash cycle or perhaps I’ll take it to the city recycling center since it appears to contain some electronics.

I’ve been wondering if Aerogarden’s economic model is similar to that of inkjet printers: Give away the printer and make money by overcharging for ink.   Right now, I feel as though I’m being taken to the cleaners by paying such a huge amount for bulbs and from what I can tell, these bulbs are proprietary and can’t be bought at your corner Home Depot or Lowes.  The seeds aren’t cheap either when you compare regular seeds to that of the Aerogarden you’re paying over a 150% premium for seeds.

The Aerogarden is fun and does produce plants as advertised but it’s also a huge money pit.  Caveat emptor.

This is weird.  I went to a Chase Bank branch to close an account and upon arriving I had to “sign in” to see a rep.  I took the clipboard and took a gander to see the list of people before me and what they were there for and about half were there to close accounts.   The other half were there to access their safe deposit boxes and as I sat and waited, more and more people were coming into the bank to see reps.   It looked like the classic scene from It’s A Wonderful Life except people weren’t going to see the teller.

It may be related to the fact that WAMU accounts have officially converted over to Chase banks and people were there to do what I did, close excess duplicate accounts but I don’t get the safe deposit box deal.   I must also state that about 90% of the people in the branch were Asian so maybe they got word from China that something big is going down?   Or maybe that’s the only branch that has Chinese/Vietnamese speaking reps, I don’t know…..

Oddly enough, when I left, people were waiting for my parking spot as the lot was full.  If you’ll recall this story, it’s the same bank branch that wasn’t giving out any loans so I don’t think people were there to borrow money unless they’ve suddenly changed their loan requirements.  It’s very odd indeed.

Although perhaps a bit late for the summer, I wanted to write a post about a product I’ve been unable to live without this summer. During the past few months, I’ve taken the kids to lakes, beaches, pools, water parks, and other outdoor activities and the ONLY sunscreen that has worked consistently is Coppertone’s Water Babies sunscreen, everything else is pure garbage!

I don’t know what the magic secret formula is with Water Babies but the stuff doesn’t wash out in the water and it seems to prevent sunburn almost all the time. I was unfortunate to run out of this sunscreen and forced to use a half dozen other sunscreens and I got sunburn every time I used anything other than Water Babies.

If you’re heading out for the remainder of the summer and don’t want to get sun burn, try Water Babies!

It seems public support for elderly suicide is growing in the United Kingdom and I suspect that is has a great deal to do with money. At some point in time, countries are going to have to make hard decisions about how to deal with a burgeoning aging population. This has become a frequent topic of conversation when I get together with my family.

Many of my baby boomer aunts and uncles are terrified of ending up in a nursing home like my grandfather and they all loathe sending him there but he simply requires too much care to be taken care of in anyone’s home. It takes a team of about 5 or 6 people to take care of him and he’s just one person. Americans want to believe that socialized medicine will bring rationing but the reality is that there isn’t going to be enough money, people, or resources to handle 78 million retiring and aging people under any private or public plans.

As part of their plan to take care of each other, most of my aunts and uncles on my grandfather’s side have all moved to homes near each other in a small town community in the hopes of living and taking care of each other during their elderly years. This is one approach while those that have little or no family seem to face the prospect of suicide.

From the article,

Six out of ten people also want friends and relatives to be able to help their dying loved ones to commit suicide without fear of prosecution.

Changing the law has always been opposed strongly by doctors, with two out of three against legalisation. But yesterday saw the first sign of change in the medical establishment.

The Royal College of Nursing dropped its opposition to assisted suicide and adopted a “neutral” position after a three-month consultation with members. Nurses will receive new guidance on how patients can deal with terminal illness. Many nurses are being asked by desperate patients about travelling abroad to clinics such as Dignitas, in Zurich, to end their lives and are unsure what they can say.

Remember, getting old is a terminal illness so don’t let the definition make you think that it’s only about people who have cancer.

With the stock market down you’d think it would be the perfect time to invest in the stock market but many companies are cutting their 401k match, changing plan options to save money and in some instances, eliminating the hassle altogether.    Many people are also taking pay cuts so in order to make up the difference in take home pay, many will cut back or eliminate the 401k plan contributions.  Isn’t a buy and hold strategy predicated on continuously buying into the market?  How’s that happening now?  Let me guess, companies will re-instate matches when the Dow soars past 14,000 right?

My thesis has been that as soon as the market pops to say 11,000 there’ll be a huge sell off as baby boomers opt to eject from the market to preserve whatever is left of their wealth before they retire and I’ll standby that thesis until I see anything different.

Given the tumultuous returns of the stock market the past 15 years and the mediocre performance of the 401k, I’m going to go ahead and call the 401k terminally ill and near death.   If you want to look at one alternative, take a look at www.ETFCoveredCalls.com because it’s almost time to get back in the market.

As some of you know, I may be going to back to school to get an MBA this fall and I’ve been researching the Lifetime Learning Tax credit and the Hope Tax Credit to see if I would be able to take advantage of the credits on my taxes next year and something struck me during my research. The tax credits were originally available in 1998 and were listed as a max of 20% of $5000 for qualified expenses for the Lifetime Learning Credit and $1,500 for the first two years of the Hope Tax credit.

Doing the math, and if adjusted for inflation at 3% for 11 years, the $1,500 Hope Tax Credit should now be “worth” $2,085.59. The Lifetime Learning Credit should now be worth $1,390 in inflation adjusted dollars. The Hope Tax credit and Lifetime Learning Credits have “lost” 39% of the value” they once had over the course of the last eleven years.

When you factor in the fact that many colleges are raising tuition way above the level of inflation, the tax credit become actually worth much much less!

Illinois State University plans to ask its board of trustees to increase tuition and fees 7.6 percent for new students this fall.

Students at public universities in Ohio may soon feel the effects of the state’s new budget.

Governor Ted Strickland cut the tuition freeze from the budget he signed Friday.

Under the tuition freeze, the state gave schools money to cover what they would have made from raising tuition.

Now since universities will no longer get that money, they will be permitted to raise tuition 3.5% each of the next two years.

Washington State Community College officials say they will not raise tuition for the fall quarter but are considering it for the winter quarter.

If you wonder why the quality of life is deteriorating for many people and families across the country, all you have to consider is the math of inflation. While I believe we are still in a deflationary spiral, that doesn’t mean that inflation still doesn’t exist in many sectors of the economy and this adds just one more reason why the Federal Reserve needs to be audited and better managed by Congress.

So after watching those enticing TV commercials for Applebees two for $20 dinner specials we decided to go to the restaurant for dinner.   The special includes an appetizer and two entrees so we had the spinach artichoke dip, tequilla time entree and burger entree.     Boy what a disappointment, it seems the way Applebees is getting stuff so cheap is by purchasing the cheapest food products and slapping them on a George Foreman Grill and serving that out.

The service was great and I have no complaints about the staff but the restaurant was a bit smelly with the scent of tobacco.  Clearly the restaurant hadn’t been refurnished since the smoking ban went in years ago!

Overall we won’t be going back to Applebees any time soon.  There are too many restaurants with better food choices but I will say that the restaurant was pretty full for dinner and I thought that was very interesting.

Bank in March, I wrote this post criticizing the bookstore oligopoly of their vast ineptness of being able to carry any decent books and five months later, the book stores still don’t have a clue. I’m actually reminded of the big 3 auto firms when I think of bookstores as they appear to have the same clueless management and rely on business models from their grandfathers day.

I visited three, yes THREE, bookstores (B&N, Borders, and Book-A-Million) to find a variety of books in a wide range of areas: Risk Management, Project Management, M&A, Advanced Statistics and not one single book store had ANY of the books I wanted. Sure, I could search online and order the book online but if that’s the case, why bother with a bookstore?

Curious about my observation, I ran a stock chart on all the major book stores courtesy of yahoo.com. Here’s what the chart looks like:

Books

It doesn’t surprise me one bit that Amazon is climbing up while the other book stores languish and head toward the abyss. Amazon is doing everything right to move the book business forward into the future. The Amazon Kindle serves up books electronically (much like iTunes) and this is in large part, the future of books. Right now, there is an 8 week wait on a couple of books I want…why? Why is there an eight week delay on books that were printed a couple of years ago? The book has already been written, most likely on a computer, so why can’t I just get the electronic version sent to me asap?

The only criticism I have of Amazon is their ridiculous shipping costs, sure if you can wait 2 weeks for a book, shipping is free but if you want the books sooner the cost of the book doubles because of shipping. Electronic format books eliminate this cost altogether and improves delivery time 10000 x fold

Here’s some advice for the fat lazy executives at the big three bookstores:

1. Every major city in the United States has what are called “colleges” and college students buy things called “books.” You should get off your fat lazy ass and go visit one of the cities and colleges. Find out what classes those young rascals really like and STOCK THE FREAKING BOOKS that they need/want to buy.

2. Every major city has a industrial specialty: New York is the capital of stock trading & fashion/design, Chicago is the capital of futures, Houston is the capital of oil & gas, Hollywood is the capital of movie making, etc. See the pattern? Here’s a crazy idea, why not stock and sell books for the professionals that work in these industries!

3. Almost every major city has what are called “professionals” and these guys usually make a lot of money (i.e. disposable income) to buy the books you sell. How about SURVEYING what they want; How about TRENDING what they want; How about doing anything other than stocking the “fad” garbage you stock at your bookstore?

Borders keeps sending me coupons for 20% to 50% off any books, the latest was buy 4 books get the 5th one free. Too bad there wasn’t a SINGLE book I could buy Borders that I needed. My kids generally find books at Borders but that just reinforces my “fad” garbage theory.

I give these bookstores about 24 months before they head into the permanent abyss unless they make some revolutionary changes starting with getting rid of their horrible management.

Back in January, I along with a few coworkers, were all laid off.   A few weeks later I got a call from one of those co-workers.  He was BEGGING me to find him some leads to get work.  Evidently, his wife got laid off the following few days after he did so they were BOTH unemployed.    I ended up helping this guy find a job going so far as to give him a glowing recommendation to the potential employer.

He ended up getting the job and through a quirk of consolidation, he ended getting a promotion a couple of months after that and I hadn’t heard from him for a while until some mutual acquaintances informed me that he had gone out and purchased a new Mercedes vehicle.   I don’t know the make or model of the car but I just shrugged my head.   Just a few months ago this guy was begging for work, he got lucky and landed a good position but he’s acting like the economy isn’t in shambles.

This guy has young kids that he still (presumably) needs to put through college and was very nervous about being unemployed so I know he doesn’t have a huge volume of cash lying around to buy cars.  I just don’t get it, this guy had spoken to me about a year ago about how he JUST HAD TO HAVE a luxury car and I advised him to wait until the economy stabilized (this was back in Fall of 2008) before he made any moves like this but he must feel its stabilized enough for him to take the plunge and buy the car.

Oddly enough, my wife knows people at his new company and they’ve been laying off people!  When I asked him about the layoffs he said they were “low level” people that they didn’t need.   Lol!   He may end up becoming “unneeded” soon enough because his new company’s success is predicated largely on that “infrastructure” money that doesn’t seem to be moving anywhere out of Washington D.C.

Well if he loses his job, I’m going to recommend he go work for a Mercedes dealership so he can meet other dolts just like him.