Friday, May 28, 2010
We continue to receive numerous inquiries regarding UN international treaties, and their impact on our Second Amendment rights. The latest rumor making its way around the Internet claims that Secretary of State Hillary Clinton actually signed a UN small arms treaty.
Contrary to this widely circulated e-mail, Hillary Clinton has not signed any small arms treaty. She could not have done so, in fact, because no such treaty has yet been negotiated.
As we noted in an update from last November, the UN Arms Trade Treaty will be drafted between now and 2012, and even if signed, would not take effect in the U.S. until it was ratified by the Senate.
Please rest assured that, as we said in November, NRA will be actively involved in this process and will oppose any treaty that would attempt to impose limits on our Second Amendment rights. In the meantime, we urge gun owners to follow this issue in NRA's magazines and NRA-ILA's Grassroots Alerts. We also urge gun owners not to circulate misinformation on this issue.
Copyright 2010, National Rifle Association of America, Institute for Legislative Action. Reprinted by permission.
Saturday, May 29, 2010
A Fable: Heidi and the Derivatives Markets
Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later
Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in Detroit
By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi's gross sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.
At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into Drinkbonds, Alkibonds and Pukebonds. These securities are then bundled and traded on international security markets.
Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.
One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.
Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.
Overnight, Drinkbonds, Alkibonds and Pukebonds drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.
Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.
Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi's bar.
Now do you understand?
Heidi keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in Detroit
By providing her customers freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi's gross sales volume increases massively.
A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.
At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into Drinkbonds, Alkibonds and Pukebonds. These securities are then bundled and traded on international security markets.
Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.
One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.
Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.
Overnight, Drinkbonds, Alkibonds and Pukebonds drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.
The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.
Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.
Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Heidi's bar.
Now do you understand?
Friday, May 21, 2010
New Philadelphia Airport Master Plan Meeting Raises Questions
Last Wednesday, May 19, 2010, the Public Works Committee of the New Philadelphia City Council held a meeting concerning the relocation of the runway at Clever Field, the city’s airport. Estimates of the number of citizens attending ranged from 120 to 200 depending on who was doing the counting. This is one issue which has citizen attention.
There were a number of misconceptions presented at the meeting, concerning not only the airport, but the Master Plan as well. The Master Plan contains eight alternatives to lengthen the runway, the one most favored, Alternative Four, or Option Four as it was referred to at the meeting.
Remember this about acceptance of the Master Plan. The comment that was made on a number of occasions last Wednesday by the speakers representing the Airport and Administration, that acceptance of the Plan is really accepting only Alternative Four, the other alternatives will not be considered, is a total fabrication.
If City Council accepts the Master Plan, it accepts everything in the master plan without exception. When a piece of legislation is passed by Council and approved by the Mayor, every part, item, comma and period, becomes law. Acceptance of the Master Plan would require the taking of private property under the process of eminent domain. This is a process by which private property is taken by the government, in this case New Philadelphia, no matter what the wishes of the property owner are. The amount of property to be seized will be determined by the City based on what is needed for the project. If the property owner does not wish to relinquish his land, he has no choice. When taken by eminent domain, there is no way to fight it, it is a done deal, like it or not. The only recourse the property owner has is to argue the price being offered in a court of law, but no matter what that outcome is, the property owner will lose his property.
The Master Plan will have an impact on the East Avenue Cemetery. Not only will some of the cemetery land be taken, but Delaware Avenue will be closed, make no mistake about it. Schoenbrunn Village property would be taken, an action which would also seize the access road to the historic site. The closing of Delaware Avenue will cause extreme hardship to the residents in the area. In excess of 36 homes and businesses and 42 acres of land will be taken should Alternative Four be adopted.
It was said also that if the Master Plan is not accepted the FAA will downgrade the ability of the airport to handle aircraft currently using it. It was stated that the FAA will require a shortening of the runway as it does not meet the requirements of aircraft landing there. This is not true. According to a contact in the FAA, there are no plans to downgrade the rating of Harry Clever Field. While upgrading the rating of the airport to handle larger aircraft will not be possible without increasing the runway length, there is no penalty to keep it the same. While there are concerns about the airport configuration, they are not sufficient to warrant a shutdown. Other airports have similar problems, Midway Airport in Chicago, for example, where approach paths are all over residential areas, and the runway safety areas are more critical than those in New Philadelphia. The problem at Midway is similar to the concern in New Philadelphia, in that the runway safety area is insufficient. The problem at Midway was resolved without the seizure of private property.
Among things not discussed last Wednesday night was why lengthening the runway is of such high importance. Reasons given failed to make an overwhelming argument.
One was that a longer runway would bring more business to New Philadelphia. In like fashion, an industrial park should bring more business to New Philadelphia. Obviously, this is not the case. The city alone put over a million two hundred thousand dollars into the High Tech Park, and it is still lacking meaningful growth.
Another was that to get to air transportation one must travel to Akron. So what? The trip to Akron/Canton Airport is 35 minutes from New Philadelphia. The trip in Chicago to O’Hare from downtown is thirty to forty-five minutes on a good day and nobody complains. In the Cleveland area the travel time is about the same.
Kent State wants an airport here, so said the Mayor, because it wants to teach programs connected to aviation. They have one up at Kent and it would be nice to have one here, at the expense of New Philadelphia, of course. To make this work here we need a longer runway. Our runway is 3,950 feet long, 100 feet wide, apparently not big enough. The runway at the Kent Airport is 4,000 feet long, 60 feet wide. Well, I guess our is shorter, but we are wider. Somehow, Kent Airport survives. Perhaps the Mayor and Airport Commission should consult with them.
So what is the need for a longer runway? None were mentioned. But of the corporations who use Clever Field, five, I believe, only one has voiced a desire for a longer runway to the Airport Commission or City Council. That desire was not because of a current problem, rather the corporation’s desire to purchase a larger, more powerful jet.
Citizen concerns were many, and ranged from property to be taken by eminent domain, closure of roads, decrease in property values, increased noise, destruction of Schoenbrunn Village properties, and the loss of family homes, some of which have been in families for a hundred years or more.
The price of this project? Who knows. Ten to twenty million dollars is a possibility, which puts the city’s share between $500,000 and a million. That’s a lot of money for the city to commit to for a project which is utilized by less than one half of one percent of the population.
The meeting is best summed up by a question from one of the audience who asked, “What’s this going to do for the people of New Philadelphia”. There was no answer.
Monday, May 17, 2010
Political Nonsense
A lot of things have changed since I was a kid. Life was easier then, especially when it came to speaking English. Political correctness, whatever that means, has so messed up the language that it is difficult to understand what is being said. I have some problems getting straight in my mind what the rules are, what the words mean, and what the logic of what is said really says.
For example on the radio last week the gal giving the news of the day made the announcement, in a very cherry voice, that the economy was improving. This was a sure thing as the number of foreclosures last month were down two percent from the previous month. This is a good sign? What it means is that instead of a hundred homes being lost only ninety-eight were foreclosed on because the mortgages weren't being paid. Wow! That is really a good sign that the depression is on the wane?
There was an article in the paper about that time that of the 21 practical nursing students at Buckeye this year, ten of them failed to pass their examinations. The students, who couldn't pass the test, have complained to the school administration that it was unfair that they failed and something should be done about it. What do they want done? They failed. That's the school's fault? Eleven students passed. What does that tell you? Maybe the reason they failed was because they didn't study. Maybe the reason they are complaining is because our society accepts failure as the norm. I mean, after all, if they are too lazy to study or educationally challenged, in my day we used to call it stupid, to understand what is being taught, why should they get a second chance to pass the test? How would you like being treated by a person who couldn't pass a test on matters which affect your health and well-being? Kinda' like being in an airplane with a pilot who only crashes on landing thirty-percent of the time.
Then there's Berkeley, California. Seems the high school didn't have enough space in the science labs for all the students to do the experiments. In an effort to allow students access to the labs, the science teachers went in early, stayed late, so the students could get their experiments and lab work completed. Didn't cost anybody anything except time. The administration took a look and found that the majority of the students taking advantage of the extended classes were white. Oh, oh. Discrimination. Why? Because colored students didn't go to the before and after hours labs. Nothing restricted them, they just didn't go. The school board's decision to rectify the problem? Forbid the off hour lab sessions because more white students participated in the after hours program than did colored students and that was discriminatory. Unbelievable.
Worked on a couple of Indian reservations when we volunteered with the National Park Service a few years back. Bureaucracy and the political correctness bunch have a field day with Indians. Oops. Can't say Indians, have to say Native Americans. I don't know why that is. Neither do the Indians. They like the terminology Indian. They prefer being called by their tribal names, Sioux, Ojibwa, Apache, but that doesn't seem to make a lot of difference. I mean, what do they know? They're only Indians. Got into a discussion with a couple of tribal leaders in Minnesota about that. I got told that they were Indians. I guess that I could agree with that. I'm a Native American. I was born here, didn't immigrate, disn't sneak across the border, or wade the Rio Grande. That qualifies me as a Native American. Government doesn't agree. I don't understand why they don't. The Indians did.
Had an interesting experience in Arizona. Went to an Indian rodeo with a friend of mine. He rode bucking' broncos and was pretty good at it. Wanted to give it a try at this rodeo and was turned down. Wasn't discriminated against. Just wasn't an Indian. Go figure.
When I was young, people of the age I have obtained used to be called old. That isn't good anymore. Now we're seniors. When we named my son the same as me, I became a senior. I wasn't even thirty then but figured if there was a senior discount I deserved it, being a senior and all. Didn't work. I'm way over 55 now and think I should get a senior senior discount, but that won't fly.
Sure gets confusing.
For example on the radio last week the gal giving the news of the day made the announcement, in a very cherry voice, that the economy was improving. This was a sure thing as the number of foreclosures last month were down two percent from the previous month. This is a good sign? What it means is that instead of a hundred homes being lost only ninety-eight were foreclosed on because the mortgages weren't being paid. Wow! That is really a good sign that the depression is on the wane?
There was an article in the paper about that time that of the 21 practical nursing students at Buckeye this year, ten of them failed to pass their examinations. The students, who couldn't pass the test, have complained to the school administration that it was unfair that they failed and something should be done about it. What do they want done? They failed. That's the school's fault? Eleven students passed. What does that tell you? Maybe the reason they failed was because they didn't study. Maybe the reason they are complaining is because our society accepts failure as the norm. I mean, after all, if they are too lazy to study or educationally challenged, in my day we used to call it stupid, to understand what is being taught, why should they get a second chance to pass the test? How would you like being treated by a person who couldn't pass a test on matters which affect your health and well-being? Kinda' like being in an airplane with a pilot who only crashes on landing thirty-percent of the time.
Then there's Berkeley, California. Seems the high school didn't have enough space in the science labs for all the students to do the experiments. In an effort to allow students access to the labs, the science teachers went in early, stayed late, so the students could get their experiments and lab work completed. Didn't cost anybody anything except time. The administration took a look and found that the majority of the students taking advantage of the extended classes were white. Oh, oh. Discrimination. Why? Because colored students didn't go to the before and after hours labs. Nothing restricted them, they just didn't go. The school board's decision to rectify the problem? Forbid the off hour lab sessions because more white students participated in the after hours program than did colored students and that was discriminatory. Unbelievable.
Worked on a couple of Indian reservations when we volunteered with the National Park Service a few years back. Bureaucracy and the political correctness bunch have a field day with Indians. Oops. Can't say Indians, have to say Native Americans. I don't know why that is. Neither do the Indians. They like the terminology Indian. They prefer being called by their tribal names, Sioux, Ojibwa, Apache, but that doesn't seem to make a lot of difference. I mean, what do they know? They're only Indians. Got into a discussion with a couple of tribal leaders in Minnesota about that. I got told that they were Indians. I guess that I could agree with that. I'm a Native American. I was born here, didn't immigrate, disn't sneak across the border, or wade the Rio Grande. That qualifies me as a Native American. Government doesn't agree. I don't understand why they don't. The Indians did.
Had an interesting experience in Arizona. Went to an Indian rodeo with a friend of mine. He rode bucking' broncos and was pretty good at it. Wanted to give it a try at this rodeo and was turned down. Wasn't discriminated against. Just wasn't an Indian. Go figure.
When I was young, people of the age I have obtained used to be called old. That isn't good anymore. Now we're seniors. When we named my son the same as me, I became a senior. I wasn't even thirty then but figured if there was a senior discount I deserved it, being a senior and all. Didn't work. I'm way over 55 now and think I should get a senior senior discount, but that won't fly.
Sure gets confusing.
Wednesday, May 12, 2010
Council Discusses Widening West High
One of the things discussed at last Monday’s New Philadelphia Council Meeting was the widening of West High. Under consideration is adding a third lane from the railroad tracks to Five Points. In general, not a bad idea. The argument is a turning lane will decrease traffic accidents in that area. While any decrease in accidents would be welcome, there is a greater concern with this project than fender benders. The project has to be paid for.
Information provided by the Mayor puts the City’s share of this project at around $600,000, the rest being paid from federal and state grants. Well, maybe. The actual figure, based the anticipated value of the dollar in 2013, the proposed start of the project, is $524,180. A pretty accurate figure for three years down the line. Too bad the City can’t come up with similar accuracy for future expenses when requesting money to get the water bills printed and mailed. In any event, in a couple of years, should this project be taken on, the City is going to need the money. The question is, will the money be there?
We do not live in an independent financial city. New Philadelphia’s economic stability is dependent upon the financial status of not only New Philadelphia, but of Ohio, the United States, and now, as it turns out, the economic stability of Europe.
The European Union (EU) has committed to a trillion-dollar bailout of Greece. And the New York Times reported that the final decision of the EU to do this came after some arm twisting by, your guessed it, Obama. Their plan is based on the recovery plan designed by Obama, Pelosi, Reid, and the rest of the crowd in Washington. French President Sarkozy helped in the arm twisting, saying at the time, that “we have decided to give the Euro Zone a veritable economic government.” The end result is that the EU, like the United States, has ignored it’s constitution, and has taken control of the economy of its 27 member countries, with no input from the 450 million people who live there. Sounds familiar, doesn’t it?
The European Central Bank, similar to the Federal Reserve Bank, has tossed fiscal responsibility to the winds. It is now purchasing bad debt from member nations with no collateral. Sounds like they haven’t read about Fannie Mae and Freddy Mac. The plan sounds like a European TARP program, and why not? TARP was the model for this fiasco.
This year the US approved $100 billion dollars for the International Monetary Fund (IMF) which will be used to bailout EU countries from financial distress. In addition the Federal Reserve Bank has allotted an undisclosed amount of money for loans to the EU at what has been described as “very low interest rates.”
Greece has received $145 billion dollars already. Spain and Portugal are in dire financial straits. Italy is on shaky economic ground. Should more countries in the EU require bailout money, the effect on the United States could be catastrophic. The US economy is on the edge of faltering now, and the added burden of additional financial collapse in Europe could bring our economy down as well. The end result will be an increase in taxes, increasing interest rates, and a collapse of business growth here at home.
The economic future for New Philadelphia is not clear. The country is in serious debt, the Obama government is plunging ahead with its “income redistribution”, and government in general does not admit, nor recognize, that we are in a serious depression.
The City Council and the Administration must be reminded that the money tree has all but died. To make plans for projects without out the money actually in hand is poor financial strategy. The widening of West High could be a good project, but when West High was discussed at Monday’s meeting there was much left unsaid.
What is the plan for the city, if there even is one? Where will the money come from to widen West High? Will there be sufficient funds to carry out other projects such as the widening of University Drive, the paving of Fourth Street, the cost of expanding the runway length at Clever Field, and how much money is being put aside by the City in the event of a financial collapse of Federal and state economies?
It is time that the Mayor presents to City Council, and the people of New Philadelphia, a comprehensive plan for the future which defines not only the projects he requests but how they are to be financed. It is not the job of City Council to determine financing. City Council’s job is to approve the Administration’s plans, and if they do not, it is up to the Administration to revise them to meet the concerns of Council.
Information provided by the Mayor puts the City’s share of this project at around $600,000, the rest being paid from federal and state grants. Well, maybe. The actual figure, based the anticipated value of the dollar in 2013, the proposed start of the project, is $524,180. A pretty accurate figure for three years down the line. Too bad the City can’t come up with similar accuracy for future expenses when requesting money to get the water bills printed and mailed. In any event, in a couple of years, should this project be taken on, the City is going to need the money. The question is, will the money be there?
We do not live in an independent financial city. New Philadelphia’s economic stability is dependent upon the financial status of not only New Philadelphia, but of Ohio, the United States, and now, as it turns out, the economic stability of Europe.
The European Union (EU) has committed to a trillion-dollar bailout of Greece. And the New York Times reported that the final decision of the EU to do this came after some arm twisting by, your guessed it, Obama. Their plan is based on the recovery plan designed by Obama, Pelosi, Reid, and the rest of the crowd in Washington. French President Sarkozy helped in the arm twisting, saying at the time, that “we have decided to give the Euro Zone a veritable economic government.” The end result is that the EU, like the United States, has ignored it’s constitution, and has taken control of the economy of its 27 member countries, with no input from the 450 million people who live there. Sounds familiar, doesn’t it?
The European Central Bank, similar to the Federal Reserve Bank, has tossed fiscal responsibility to the winds. It is now purchasing bad debt from member nations with no collateral. Sounds like they haven’t read about Fannie Mae and Freddy Mac. The plan sounds like a European TARP program, and why not? TARP was the model for this fiasco.
This year the US approved $100 billion dollars for the International Monetary Fund (IMF) which will be used to bailout EU countries from financial distress. In addition the Federal Reserve Bank has allotted an undisclosed amount of money for loans to the EU at what has been described as “very low interest rates.”
Greece has received $145 billion dollars already. Spain and Portugal are in dire financial straits. Italy is on shaky economic ground. Should more countries in the EU require bailout money, the effect on the United States could be catastrophic. The US economy is on the edge of faltering now, and the added burden of additional financial collapse in Europe could bring our economy down as well. The end result will be an increase in taxes, increasing interest rates, and a collapse of business growth here at home.
The economic future for New Philadelphia is not clear. The country is in serious debt, the Obama government is plunging ahead with its “income redistribution”, and government in general does not admit, nor recognize, that we are in a serious depression.
The City Council and the Administration must be reminded that the money tree has all but died. To make plans for projects without out the money actually in hand is poor financial strategy. The widening of West High could be a good project, but when West High was discussed at Monday’s meeting there was much left unsaid.
What is the plan for the city, if there even is one? Where will the money come from to widen West High? Will there be sufficient funds to carry out other projects such as the widening of University Drive, the paving of Fourth Street, the cost of expanding the runway length at Clever Field, and how much money is being put aside by the City in the event of a financial collapse of Federal and state economies?
It is time that the Mayor presents to City Council, and the people of New Philadelphia, a comprehensive plan for the future which defines not only the projects he requests but how they are to be financed. It is not the job of City Council to determine financing. City Council’s job is to approve the Administration’s plans, and if they do not, it is up to the Administration to revise them to meet the concerns of Council.
Monday, May 10, 2010
Tax On Dividend Income To Hit 44 Percent
Here we go again. Obama can’t get his story straight. Remember he ran on not sticking it to the middle class, only the evil rich, when it came to taxes. Well, think about this one. We know that taxes are going up, but because of Obama’s tax plans, investment dividends very likely will decrease.
According to a Wall Street Journal editorial, the tax rate on dividends will increase by almost three hundred percent. Seems like the Senate budget Committee raised the tax on dividends from its current 15% to almost 40% for the 2011 fiscal year. That’s a 164 percent increase, a far shot from the 20 percent increase he promised in 2008. But then, that was 2008, this is 2010. If you add the Health Care surcharge of 3.8 percent on investment dividends, that puts the total tax rate on dividends at about 44 percent. Let’s see. Add to that the 35 percent tax on profits businesses are already paying, and the tax comes to around sixty cents on each dollar of dividends received by stockholders.
According to the Journal, “You can expect fewer businesses either to offer or increase dividend payouts, which means less dividend revenue for the government…The millions of Americans who receive dividend income – most of them not rich – need to begin adjusting their investment strategy accordingly.”
The effect of these tax increases can be devastating to retired Americans whose retirement income is largely dependent upon investments. Not only will the proposed tax increases directly effect their income because of decreased dividends, but falling stock prices will also decrease the net worth of all investors, including non-retired investors who depend on those dividends for retirement income.
The effect of these tax increases will also devastate business. Without people willing to invest in businesses, large and small, business expansion will slow. The idea of business is to make a profit. To raise the capital necessary to expand existing businesses and create new businesses, investors as well look toward profit. These new tax regulations may well decrease investment capital which will slow down or stop business expansion.
This latest fiasco by the Obama administration is but another step to destroy the economy of the United States. Obama has made changes since his election, but can we survive them? With 48 percent of the population being supported by so-called entitlements, government-speak for on the public dole or welfare, with the public debt approaching 12.9 trillion dollars, can we afford to place greater burdens on business and those who who invest in it?
Wake up, folks. We are losing it all in the uncontrolled rush to Socialism.
According to a Wall Street Journal editorial, the tax rate on dividends will increase by almost three hundred percent. Seems like the Senate budget Committee raised the tax on dividends from its current 15% to almost 40% for the 2011 fiscal year. That’s a 164 percent increase, a far shot from the 20 percent increase he promised in 2008. But then, that was 2008, this is 2010. If you add the Health Care surcharge of 3.8 percent on investment dividends, that puts the total tax rate on dividends at about 44 percent. Let’s see. Add to that the 35 percent tax on profits businesses are already paying, and the tax comes to around sixty cents on each dollar of dividends received by stockholders.
According to the Journal, “You can expect fewer businesses either to offer or increase dividend payouts, which means less dividend revenue for the government…The millions of Americans who receive dividend income – most of them not rich – need to begin adjusting their investment strategy accordingly.”
The effect of these tax increases can be devastating to retired Americans whose retirement income is largely dependent upon investments. Not only will the proposed tax increases directly effect their income because of decreased dividends, but falling stock prices will also decrease the net worth of all investors, including non-retired investors who depend on those dividends for retirement income.
The effect of these tax increases will also devastate business. Without people willing to invest in businesses, large and small, business expansion will slow. The idea of business is to make a profit. To raise the capital necessary to expand existing businesses and create new businesses, investors as well look toward profit. These new tax regulations may well decrease investment capital which will slow down or stop business expansion.
This latest fiasco by the Obama administration is but another step to destroy the economy of the United States. Obama has made changes since his election, but can we survive them? With 48 percent of the population being supported by so-called entitlements, government-speak for on the public dole or welfare, with the public debt approaching 12.9 trillion dollars, can we afford to place greater burdens on business and those who who invest in it?
Wake up, folks. We are losing it all in the uncontrolled rush to Socialism.
Friday, May 7, 2010
May 19 Airport Meeting Location Changed
It was announced by Darrin Lautenschleger, Chairman of the Public Works Committee for New Philadelphia, that the location for the May 19, 2010 public hearing by his committee has been changed from City Hall to the pavilion at Tuscora Park. The meeting will concern itself with the expansion of the runway at the New Philadelphia airport. While no reason was given in the revised meeting notice, it is assumed that increased public interest in the possible taking of personal and business properties as recommended by the Airport Master Plan could be a factor. This meeting is open to the public and citizen attendance is encouraged. The meeting is scheduled to begin at 6:00 p.m.
Of the options proposed by the Master Plan, Option 4 appears to be the plan of choice. Option 4 recommends relocation of the existing runway, a plan which would require residential and business property to be taken, by imminent domain if necessary, to complete the project. According to Option 4, access roads to the cemetery and Schoenbrunn Village would be closed. Part of the existing city cemetery could also be taken as part of the runway expansion plan. Also to be considered is the city's ability to pay its share of the millions of dollars cost of this project.
For further information, contact Mr. Lautenschleger or your city councilman.
Of the options proposed by the Master Plan, Option 4 appears to be the plan of choice. Option 4 recommends relocation of the existing runway, a plan which would require residential and business property to be taken, by imminent domain if necessary, to complete the project. According to Option 4, access roads to the cemetery and Schoenbrunn Village would be closed. Part of the existing city cemetery could also be taken as part of the runway expansion plan. Also to be considered is the city's ability to pay its share of the millions of dollars cost of this project.
For further information, contact Mr. Lautenschleger or your city councilman.
Thursday, May 6, 2010
Health Care Revisited
A broker friend of mine sent this to me. It is worth reading as it discusses the Obama Health Care Bill from the standpoint of its potential effect on the stock market as well as its effect on the economy. It is interesting reading.
On Tuesday, March 23, President Obama signed into law a major change to the U.S. health-care policy that will impact every American and affect one-sixth of the economy. The social benefits of these policies I will leave to others to debate, my focus is what this means for the markets.
Within the Health Care sector the impact is mixed. There are three categories of companies affected by the legislation with the Health Care Sector. In general:
1) The Managed Health Care Industry is negatively impacted by extensive new regulation limiting profitability.
2) The Pharmaceuticals, Biotechnology, Health Care Equipment, and Health Care Facilities Industries benefit from broader health care coverage leading to greater volumes, but these positives are offset somewhat by Medicare reimbursement cuts and higher industry excise taxes.
3) The Health Care Services and Health Care Distributors industries benefit from broader health care coverage leading to greater volumes with no direct cuts to pay for them.
Much of the impact has already been priced into the stocks in the sector. In the near-term, Health Care sector investors are likely to be relieved that the period of uncertainty is now over.
A potentially negative longer-term outcome for the broader marker stems from the tax and deficit impacts of the legislation. The legislation imposes a new 3.8% tax on investment income. This lowers the after-tax return on investments. It also adds a 0.9% tax on wages for those earning more than $250,000, set to take place in 2013. The macroeconomic impact that may be most significant is the potential to increase the deficit despite the tax hikes.
Two important facts are necessary to understand the concern evident in the markets over the deficit impact of the legislation:
1) The average cost of a family health insurance policy offered by employers was $13,375 in 2009, according to the Kaiser Family Foundation and the Health Research and Educational Trust. On average, employees pay about 20% of premiums with the employer making up the rest (an average of $10,700 per employee).
2) The legislation establishes new insurance exchanges for the purchase of health insurance by those who do not have insurance offered their employer. Under the exchange, the cost of a policy would be subsidized by the taxpayers for individuals and families with incomes up to 400% of the poverty level;. This means that a family with the national average income of about $70,000 (at 317% of the poverty level of about $22,000) would have their spending capped at 9.5% of their income, which would be $6,650. The other half of the cost of insurance would be picked up by the tax payers.
The Congressional Budget Office, the agency that tabulated the budget impact of the legislation, estimated that about 25 million people would take advantage of the exchange to obtain subsidized health insurance by 2019. However, if employers that currently offer health insurance drop their coverage in order to save $8, 700 per employee ($10,700 less the $2,000 penalty for employers with more than 50 employees that do not provide coverage) and shift that cost to the taxpayer, the number of people getting subsidized health insurance could surge well beyond the budgeted 25 million. After all, there are 127 million people with incomes between 150% and 400% of the federal poverty level. If a large percentage of these 127 million people were shifted to the exchange, with a typical annual subsidy around $5,000-$6,000, the annual cost of the legislation would soar and significantly worsen the budget deficit. While all of the potential effects of the health care legislation are unknown, market participants may focus on the risks.
While the passing of the uncertainty surrounding the health care legislation may be welcomed by many investors, it could contribute to higher interest rates as fears of the rising deficit combine with rebounding economic activity and excess money provided buy the Federal Reserve. We expect Treasury yields to rise this year so we would caution against government bonds.
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