ERICOPOLY

It has nothing to do with Nicaragua, not really sure why you would bring it up. (I didn't mention the Federal Government) Regarding the property taxes... does the NJ Supreme Court also prevent him from pushing for a tax credit on the state income tax return? A tax credit in recognition of property taxes paid. This would still leave some people out (those who pay less income tax than the value of the credit), but it would be relatively more evenly distributed.

Well, he chose to cut the income tax instead of the property tax. I'm not sure it's motivated by keeping money in the hands of the productive. Unless lower income people are legitimately less productive.

I wonder how much that "balanced" category is allocated to equities.

Let humidity be a metaphor for interest rate. Does ninety-five degrees in Las Vegas feel the same as it does in Florida? These charts comparing the absolute level of consumer debts across decades are not adjusted for the cost of debt service. Similar to the weather report not having a "feels like" component.

Is this true? This is the scenario I'm envisioning: Person has mortgage at an initial rate, let's say 6% and pays that rate for 3 years, leaving 27 years left. Then, the rate is decreased to 4% with a new 30 year mortgage. So now he pays a lower rate, but for 30 years (3 more years than would have been on the original mortgage)--it seems like the principle repayment would not be faster in that case, e.g., since the refinance results in a new amortization schedule and presumably lower payments. Perhaps you are talking about a different type of situation? Yes, I'm right. It's true that low interest rates imply a higher principle payment. In your example, 6% loan with 27 years left, the next monthly principle payment is $185.98. At 4% on 30 year schedule, the initial monthly principle payment is $216.12 for a 150k loan. So not only is the refinanced payment increasing the savings level (debt repayment being a form of savings), the household also has a lower absolute mortgage payment due to the interest savings. So they can spend more at the same time as saving more. Absolutely!

JPMorgan actually stated that the largest component of the decrease is due to mortgage refinancing at low rates (of course maybe he declines to mention this because it contradicts his view that low rates are wrong policy?): Annual debt servicing cost has declined by about $200 billion but a large portion of this contraction is a function of mortgage foreclosure and the ceasing of debt repayments. But what about the debt service relief from refinance? And isn't the higher pace of principle repayment (forced by the amortization schedule) on a refinanced loan a form of savings? Isn't getting the interest payments down a topic at least worthy of mention in his letter given that consumer debt is at such a record level? I mean, he talks only about the lost income -- not the lost interest service payments. The Fed’s zero interest rate policy (ZIRP), which I consider to be so egregious and deleterious to savers in this country, has retarded a recovery in gross personal income by an estimated $400 to $600 billion annually Except for the 1970s-1980s period, right? Exhibit 7 shows that the S&P 500’s P/E ratio, the yellow line, has declined over the past 12 years to a level not seen since the mid-1950s

Yes, I was just blowing off steam. I woke up this morning and bought common shares. I like the new position more , so it's all for the better. Seriously, the pressure was just building and now I feel relieved having "done something". All psychology.

Looks like the price started to dive about 30 minutes after I had posted this. Spidey senses. PS: Hopefully the joke is apparent about a 3.7% pullback (pretty small). Just funny timing. And I'm already cruising the options pages of MBI and others to see where I can write puts to pay for the BAC $7 calls. Any kind of volatility increase will be most helpful.

Eric, Can you give an example on how do you 'move up'? or is there any pointers on the net that gives examples on how to change/swap options? I'm a newbie on options. thanks. I had a lot of $3,$4,$5 strike in RothIRA that I sold and replaced with $7 strike. Then in taxable account I bought $7 strike calls and hedged existing positions by writing $2 strike calls.

Eric, What considerations if you don't mind us asking? Any new considerations that you didn't have this past fall when the stock was being crushed down to $5 or less? Or is it that you just want to be more careful given that you have so much of your money in BAC? Thanks. Losing my confidence that we won't get a recession. In the case of a recession, there will be cheap stocks all over the place. So just increasing flexibility. That's the primary consideration.

I moved up the strikes on my in-the-money calls in light of a few considerations. Now there's still 100% notional upside but a lot less on the downside.

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In arguing for the same medicine, is he stating the economy has the same disease? Not just an intersection of symptoms, but the same disease.

This is a strange comment for the cost of living, given that you don't earn or spend US dollars in Australia: "The cost of a loaf of bread in Sydney has almost doubled in the past decade in US dollar terms, while petrol prices have risen threefold and rice prices have almost quadrupled," Mr Copestake said. Perhaps they really mean "cost of tourism for Americans"? In US dollar terms, median household incomes for Australians are much higher than they are for Americans. They don't point this out. In fact, I think you'd find that Australian incomes have doubled in US dollar terms in the past 10 years. So I suppose I could write an article about how the cost of living has plummeted in the US the past 10 years, in Australian dollar terms.

I guess it's a subtle point but I think America needs more of a "meritocratic" message than what he presents with those boys.

Well, the Clinton/Monica thing was also perfectly legal. Eric, You have made many insightful and brilliant posts, but this is not one of them. Despite his spin doctors relentless attempts to make it "all about sex", Clinton lied to a grand jury in a sexual harassment lawsuit brought on by a private citizen. Not legal. He was subsequently disbarred for having done so. Yes, true about that aspect of it. I meant simply the infidelity aspect of it. Legality of infidelity doesn't make it something I'd overlook in a leader. In terms of Romney, he makes money by leveraging up companies -- legal yes. I still don't like it and don't think that type of expertise is what is needed to fix an over-leveraged country. It's just sort of cracks me up that we're in a period of delevering and he emerges in front of the pack. The moral message is that if you're getting rich then you're doing something right -- money as the measure of success. I don't want that message projected from the White House.

Well, the Clinton/Monica thing was also perfectly legal. Different people have different values. Some of us find the Romney thing repugnant. Some don't. For me, it's a "family values" issue of sorts with regards to the $20 millionaire sons who had it handed to them -- the leader of America should be running a meritocracy in his home IMO.

No I don't think that. But my father was really big on this idea of not giving me anything more than an education. He thinks it would improve our relationship to one another as adults -- enable me to emotionally mature and relate to him man to man, rather than always as patriarch to boy.

The reason why I ask is that I'm suspecting there is at least one benefit we'd get from lifting the estate tax ceiling -- we'd get rid of a lot of these trustafarians which are an unfortunate unintended consequence of the estate tax. But I know you don't have a trust set up -- I'm thinking of other families that I know of.

Would you do anything differently if there were no gift tax limits and no estate taxes in this country? Is this in part motivated by your hatred for Obama taking your money when you die and giving it to the "needy"? The fact that you are giving "the maximum" makes me think you are trying to whittle down your estate.

They are the warning. I think MisterStockwell has avoided this scenario by the sounds of it. Their father was an estate tax attorney -- specialized in helping families avoid estate tax. So this annual gifting became an income that the boys have arranged their lives around. One has a mortgage he can't afford by his own means. So they are still suckling on the tit and the mother thinks she can't wean them at this late stage. The father died in the late 90s and the finances haven't gone according to plan the past 15 years. For one thing, yields plunged.

My wife's two brothers are still getting an allowance from Mommy, and they are in their 40s. Last summer there was a family meeting over at our house (my wife and her 3 siblings) to discuss long term options for her mother who is 81. The topic came up that she might not have enough money left to fund her long term care. She asked her brothers if they would be willing to pay their own way and they got really defensive. It's very emasculating for them.

Too right. My parents paid for my college education and gave me a meager allowance so that I could study and not work. Pretty cushy. I graduated. I was no longer a child. The allowance stopped cold. I was maybe born on second base.

They won't ever know the feeling of making it on their own. They are good in sports -- do you give them points to help them win? The Republican's like to point out that welfare creates a social problem where people stop working or lose initiative. Family welfare is different? That is ridiculous and offensive. You assume they are sloths who don't know how to work and are spoonfed. You couldn't be more wrong. They are driven. Some people have a work ethic, some don't. My son will work till exhaustion for my projects with never a complaint, and he doesn't get paid directly. He just does it. That's they way he is. If you want to call it "family welfare", so be it, but it's not taking from the rich and giving to the poor just because they are poor, with no effort on the part of the poor(other than to put out their hands). That's the Obama way. That's not my way. I don't assume they are sloths, I take your word for it that they are hard working and able to earn their own rewards. Not yours, but theirs. We have different viewpoints on the relationship between the parent and the adult child.

They won't ever know the feeling of making it on their own. They are good in sports -- do you give them points to help them win? The Republican's like to point out that welfare creates a social problem where people stop working or lose initiative. Family welfare is different?