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From Greg Mankiw (http://gregmankiw.blogspot.com/):


Saturday, March 20, 2010

A Warning about CBO Scoring


There has been a lot of talk lately about the CBO scoring of the health bill. Here is one thing people should understand about their numbers: When they estimate the budget impact of a bill like this, they assume the path of GDP is unchanged.

Recall that the bill raises taxes substantially. Some of these tax hikes are the explicit tax increases on capital income to pay for the insurance subsidies. Some of these tax hikes are the implicit marginal rate increases from the phase-out of the insurance subsidies as a person's income rises. Both of these would be expected to reduce GDP growth.

Indeed, to be very wonkish about it, these tax changes could have especially large GDP effects. Some people like to argue that taxes have small GDP effects because income and substitution effects offset each other. But if you give someone a subsidy and then phase it out, both the income and substitution effects work in the direction of reducing work effort.
 
"For many years now, you and I have been shushed like children and told there are no simple answers to the complex problems which are beyond our comprehension. Well, the truth is, there are simple answers, they just are not easy ones. The time has come for us to decide whether collectively we can afford everything and anything we think of simply because we think of it. The time has come to run a check to see if all the services government provides were in answer to demands or were just goodies dreamed up for our supposed betterment. The time has come to match outgo to income, instead of always doing it the other way around." --Ronald Reagan
 
For those that don't know about history .. Here is a condensed version:

Humans originally existed as members of small bands of nomadic hunters/gatherers. They lived on deer in the mountains during the summer and would go to the coast and live on fish and lobster in the winter.

The two most important events in all of history were the invention of beer and the invention of the wheel. The wheel was invented to get man to the beer. These were the foundation of modern civilization and together were the catalyst for the splitting of humanity into two distinct subgroups:

1 . Liberals, and

2. Conservatives.

Once beer was discovered, it required grain and that was the beginning of agriculture. Neither the glass bottle nor aluminum can were invented yet, so while our early humans were sitting around waiting for them to be invented, they just stayed close to the brewery. That's how villages were formed.

Some men spent their days tracking and killing animals to B-B-Q at night while they were drinking beer. This was the beginning of what is known as the Conservative movement..

Other men who were weaker and less skilled at hunting learned to live off the conservatives by showing up for the nightly B-B-Q's and doing the sewing, fetching, and hair dressing. This was the beginning of the Liberal movement.

Some of these liberal men eventually evolved into women. Those became known as girlie-men. Some noteworthy liberal achievements include the domestication of cats, the invention of group therapy, group hugs, and the concept of Democratic voting to decide how to divide the meat and beer that conservatives provided.

Over the years conservatives came to be symbolized by the largest, most powerful land animal on earth, the elephant. Liberals are symbolized by the jackass.

Modern liberals like imported beer (with lime added), but most prefer white wine or imported bottled water. They eat raw fish but like their beef well done. Sushi, tofu, and French food are standard liberal fare. Another interesting evolutionary side note: most of their women have higher testosterone levels than their men. Most social workers, personal injury attorneys, journalists, dreamers in Hollywood and group therapists are liberals. Liberals invented the designated hitter rule because it wasn't fair to make the pitcher also bat.

Conservatives drink domestic beer, mostly Bud or Miller. They eat red meat and still provide for their women. Conservatives are big game hunters, rodeo cowboys, lumberjacks, construction workers, firemen, medical doctors, police officers, engineers, corporate executives, athletes, members of the military, airline pilots and generally anyone who works productively. Conservatives who own companies hire other conservatives who want to work for a living.

Liberals produce little or nothing. They like to govern the producers and decide what to do with the production. Liberals believe Europeans are more enlightened than Americans. That is why most of the liberals remained in Europe when conservatives were coming to America . They crept in after the Wild West was tamed and created a business of trying to get more for nothing.
 
TAX FAIRNESS REACHES A TIPPING POINT
Investor's Business Daily
March 16, 2010


Fiscal Policy: The latest data show a record number of people with no tax obligation.....

.....About 51.6 million returns, or 36.3%, were filed by those whose deductions, exemptions and tax credits wiped out any federal income-tax obligation.

These aren't people who have overpaid their taxes or had so much withheld from their paychecks that they'll get refunds. Those people owe taxes and merely provided the government with a zero interest loan until accounts are settled. These are people who pay no taxes at all.

There's been a 59% increase in the number of nonpayers since 2000, growing from 32.6 million in 2000 to 51.6 million in 2008. In the same period, the total tax filers grew by only 10%.

Not only are fewer people paying any taxes, but also the income levels for these nonpayers have steadily risen. A family of four earning more than $50,000 can have no income tax liability after taking the standard deduction and the child tax credit.

The government has continually expanded the value of benefits such as the earned income tax credit to the point where you get a check from Uncle Sam even if you paid no taxes during the year. That's what made it so laughable when the administration claimed it was cutting taxes for most Americans when nearly 40% pay no taxes to start with. These are in essence welfare checks.

The tax code was originally intended to raise sufficient revenues to pay for the essential functions of government. It has morphed into a tool for social engineering, to incentivize or even punish certain behavior, and even to redistribute wealth. That's why we call it a "progressive" tax code.....


....."Nonpaying status used to be a sure sign of poverty," says Tax Foundation President Scott Hodge. "But thanks to increased use of the tax code to deliver social benefits, incentivize behaviors and funnel money to targeted groups, middle-class families have now been pulled into the growing pool of nonpayers. We're now in a situation where a record number of tax filers are completely disconnected from the cost of government."

This is a dangerous trend. The increase in the number of people who pay no taxes mirrors the increase in those receiving benefits from the federal government. This creates a bias toward more spending and against keeping tax rates low, since that burden is increasingly being borne by those at the high end of the income scale......

http://www.investors.com/NewsAndAnalysis/ArticlePrint.aspx?id=527490
 
A CBS News poll released Wednesday finds that nearly two in three Americans want Republicans in Congress to continue to challenge parts of the health care reform bill.....

.....The poll finds that 62 percent want Congressional Republicans to keep challenging the bill, while 33 percent say they should not do so. Nearly nine in ten Republicans and two in three independents want the GOP to keep challenging. Even 41 percent of Democrats support continued challenges......

.....For the new poll, CBS News re-interviewed 649 adults interviewed just before the House vote in a CBS News poll conducted March 18-21. .....


http://www.cbsnews.com/8301-503544_162-20001117-503544.html
 
Day Traders 2.0: Wired, Angry and Loving It
By DAVID SEGAL

Published: March 26, 2010


REMEMBER the day traders?

They were hard to miss during the tech-stock mania a decade ago, when the Nasdaq seemed like a casino built by morons and a chimp with darts could pick winners. You would hear about these guys — nearly all of them were guys — and wonder: Could anyone make a living this way? And if the answer was yes, why were the rest of us suckers still holding down regular jobs?

No doubt, it’s been a long time since a question like that troubled your imagination. And perhaps you assumed that the twin calamities of the Internet crash and the Great Recession had doomed the day-trader species in the unruly jungle of American capitalism. But some dreams refuse to die, and few, it seems, are more resilient than the dream of beating the market while wearing nothing but tighty-whities.....

.....The company charges aspiring traders $199 a month for a live, real-time view of Mr. Lindloff’s computer screen, along with the running banter, commentary and advice that he and Mr. Gomez provide through the morning. (After lunch, it’s just Mr. Lindloff.) The service is billed as a chance to look over the “virtual shoulder” of two veteran stock traders, but you don’t really see anyone’s shoulder. It’s more like staring at the instrument panel of a jet while eavesdropping on the pilots, plus the ceaseless tap-tap of a keyboard.....

.....Why do a few dozen subscribers pay to watch these quite appealing but hardly world-beating guys at work?

“Eighty percent of it is camaraderie,” says Mr. Lindzon at StockTwits.

“Look, my wife watches cooking shows and I tell her, ‘That’s not going to make you a better cook.’ With these guys, you get a community, you get to hang out with people who love stocks, and if you get a couple great ideas in a month, even better.”.....


http://www.nytimes.com/2010/03/28/business/28trader.html?pagewanted=1&hpw&adxnnlx=1269781908-nkvcXGVjn6JE3THfRubrOw
 
Santelli: $4 Gas, $150 Oil Coming This Summer...


"With summer driving season upon us, it's important to note that there's a traditional jump in gas prices. But will this seasonal adjustment benefit commodities, specifically oil and make the price of gasoline even higher? That could happen if those forms of energy lure investment from what seems to be an over-valued equities market, brought on by what some claim is cheap money....."​




 

According to my tsp.gov online account, my 'Personal Investment Performance' (PIP) for the twelve months ending March 31, 2010, was up 47.16%.

Previous 12 Months Ending:

May 31, 2009 -27.15%
Jun 30, 2009 -21.34%
Jul 30, 2009 -12.23%
Aug 31, 2009 -8.27%
Sep 30, 2009 +4.27%
Oct 31, 2009 +18.69%
Nov 30, 2009 +31.51%
Dec 30, 2009 +29.86%
Jan 31, 2010 +34.15%
Feb 28, 2010 +49.48%
Mar 31, 2010 +47.16%
 
OBGibby said:
According to my tsp.gov online account, my 'Personal Investment Performance' (PIP) for the twelve months ending March 31, 2010, was up 47.16%.

Previous 12 Months Ending:

May 31, 2009 -27.15%
Jun 30, 2009 -21.34%
Jul 30, 2009 -12.23%
Aug 31, 2009 -8.27%
Sep 30, 2009 +4.27%
Oct 31, 2009 +18.69%
Nov 30, 2009 +31.51%
Dec 30, 2009 +29.86%
Jan 31, 2010 +34.15%
Feb 28, 2010 +49.48%
Mar 31, 2010 +47.16%
Click to expand...

That's super...you have done well :)
 
Thanks, Gumby. I'm just throwing as much money as I can down the rabbit hole every other week. DCA - DCA - DCA....
 
This caught my eye in yesterday's edition of The Wall Street Journal. Though we all know it to be true, we probably don't all apply it to ourselves....


More Advisers Weigh In on Health
TWSJ
R11, April 5, 2010

More financial advisers are talking to clients about pounds as well as portfolios.

While some avoid the often touchy subjects of weight loss and exercise because they don't want to offend clients, a growing number of advisers are encouraging clients to take better care of themselves because of the impact health has on insurance rates and retirement planning.

"People's health is just as big a threat to their retirement as a low 401(k) balance," says Steve Vernon, a Los Angeles-based consultant at Mercer LLC who regularly talks to participants in 401(k) plans about the importance of taking care of their health. Mr. Vernon, who shed 25 pounds and now exercises regularly, says he brings up the topic by asking employees whether they have a friend or relative in a nursing facility. People can't avoid all illnesses, but those that take care of themselves typically are able to extend their lives and the period for which they live less expensively on their own, he says.

The subject is important to address before retirement because health can affect the cost of life insurance and the ability to even get long-term-care insurance, says financial adviser Eve Kaplan, based in Berkeley Heights, N.J. She has clients trying to lose weight and improve their chloesterol levels to get better insurance rates.
 
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