ERICOPOLY

Here is what I don't get about the idea that fixing a bridge pays for itself: The GDP (movement of goods and services) that the replacement/fixed bridge helps facilitate is likely exactly what it was before the repairs/replacement happened. I see more debt but no additional utility. So I don't know how it pays for itself. I can see how it is necessary... but I don't see it paying for itself. It's the same throughput it produced for the past 50 years. Still better than pissing money away without any lasting benefit -- yes I see that. However I don't see the debt being paid off by the virtue of paying expensive maintenance on a bridge that is already carrying traffic. Instead, what I see is a deficit that is far worse than it looks on paper because we are delaying capital expenditures. Meeting that deficit head-on is something that needs to happen eventually, but paying for itself? If we can't pay for things (running deficits) using the bridge that is still working thus far, how will having yet more debt expense with the exact same bridge throughput pay for itself? I agree, the bridge has to be fixed or things go down the toilet quickly. But how does it pay for itself? I would think you get more value by stretching that bridge right down to the very last pound of traffic it can support before tearing it down and rebuilding. Obviously you run the risk of the bridge falling down and costing lots of throughput, but in theory if you could time it precisely I would think delaying as long as possible is the best approach. Not a realistic approach, but you'd be getting the most mileage out of the bridge per dollar already spent the last time it was built/repaired.

How do you like Australia's riots in the streets so far? Oh, they don't have them because they follow a wise path. The rich have it better over there than the rich here: 1) No gift taxes 2) No estate taxes 3) No property tax on primary residence no matter how extravagant 4) No taxes on dividends from Australian corporations if already taxed at corporate level I mean, that's pretty much the dream wish that would make any Republican sit up and take notice in Washington DC In return the rich gave up: $15 minimum wage lots of social benefits Take care of the little guys and they'll leave your fortune alone.

Found an interesting blog from Steve Keen discussing what might happen to the Australian banks: Since real estate loans are worth roughly 7 times bank Tier 1 capital—up from only 2 times in 1990—it wouldn’t take much of an increase in non-performing housing loans to push Australian banks to the level of impairment experienced by American banks in 2007 and 2008. http://www.debtdeflation.com/blogs/2011/04/11/this-time-had-better-be-different-house-prices-and-the-banks-part-2/

There is an interesting document here that adjusts the historical tax rates for CPI inflation: http://www.taxfoundation.org/publications/show/151.html I know people keep saying that these high end tax brackets we have today are unfairly low, but historically speaking it isn't just the high end that is historically low, now is it? In 1981 it looked like this for married filing jointly (and CPI adjusted, so these are today's dollars): over $8,393 14% over $13,576 16% over $18,760 18% over $29,374 21% over $39,495 24% over $49,862 28% over $60,723 32% over $73,806 37% over $86,888 43% over $113,054 49% over $148,105 54% over $211,297 59% over $270,045 64% over $400,872 68% over $531,698 70% Now, who wants to bring these tax rates back? To be fair I think I cherry picked the most frightening tax brackets we've ever had -- unless you go back to the 1950s where it looks possibly even worse for the lower income earners. Years of high inflation brought the lower income earners into tax brackets designed for higher income earners. I wonder to what degree this played a role in the depressed corporate earnings of the period -- real consumer spending power was crushed by the shift into higher tax brackets. How would the outcome have looked if the tax brackets had been indexed to the CPI?

Found an article that suggests pretty much only the wealthiest 20% of taxpayer take part in IRAs/401ks, and they were going to be saving the most already anyhow (they have both the means and the discipline). It just basically amounts to a tax cut that doesn't help the 80% that need it most. One would think that the costs of such retirement savings contribution plan tax deductions and consequent income spreading could instead have been used to bolster Social Security. These plans first lower the taxable income for the highest earners, and then we argue that we can't afford Social Security and must cut it back instead! How did the conversation lead to this? Why aren't we instead arguing that we can't afford the IRA and 401k plans that mostly the wealthy participate in? http://www.cbpp.org/cms/?fa=view&id=290 Households in the top 10 percent of the income spectrum hold more than half of all assets in 401(k)s and IRAs. Those in the bottom 40 percent of the income spectrum hold only about 5 percent of these assets. Existing tax incentives for pension saving are “upside down”: they are worth the most to people at very high income levels — who are the most likely to save on their own anyway — and worth the least to lower income individuals, who most need to save more for retirement.[9] Tax Policy Center analyses show that under current law, the top 20 percent of households receives 70 percent of the tax breaks associated with 401(k)s and IRAs. In contrast, the bottom 60 percent of households receives only 11 percent of these retirement tax subsidies. Moreover, nearly all — 95 percent — of those who did not contribute to retirement accounts in 1997 had incomes of less than $80,000.[10]

I don't know if you remember, but originally when we talked about this back in Feb/March I swore that Bush himself had proposed such accounts (nobody agreed that he had). That proposal is where I got the idea from (it was never my idea). Anyhow, I was looking for something else today (I was searching for how much people are actually contributing pre-tax to retirement plans), but instead ran across the following: https://www.cbo.gov/doc.cfm?index=5151&type=0&sequence=3 Pay attention to the description of the LSA proposal: The President's budget includes a proposal that is designed to both consolidate and expand the current system of tax-free savings accounts for retirement and other purposes, such as education. Two new kinds of accounts would be created: retirement savings accounts (RSAs) and lifetime savings accounts (LSAs). The RSA would function in some ways like a Roth individual retirement account (IRA)--that is, taxes would not be deferred on contributions, as they are for contributions to traditional IRAs, but the interest that the accounts earned would accrue tax-free. In contrast to Roth IRAs, however, RSAs would be available to all workers (and their spouses) regardless of income; they would also have higher limits on contributions and allow penalty-free withdrawals at a slightly earlier age. The proposal would eliminate further tax deferrals for IRA contributions. Like the RSAs, the proposed lifetime savings accounts would face tax treatment similar to that governing Roth IRAs. However, unlike Roth IRAs or RSAs, LSAs would be open to everyone, regardless of age, income, or employment status, and participants could withdraw funds at any time for any reason. Taxpayers could also use LSAs to consolidate other savings plans, including Coverdell education savings accounts and qualified state tuition plans.

A few ideas that increase taxes without hurting the present cash flows of the middle and lower class: Eliminate tax deductions on contributions to IRAs/401ks and other such plans in excess of $10k per family Eliminate mortgage interest deductions (for most people it doesn't exceed the standard deduction anyhow given these low interest rates) Eliminate property tax deductions on homes values that exceed X amount in tax assessed value. Eliminate second home deductions Increase licensing fees for private boats/aircraft/third cars I'm sure the list can go on and on. There are so many things that are obviously not going to impact people of lower classes. I think my favorite thing to cut (even before home mortgage deductions) would be to eliminate deductions on contributions to plans like 401ks/IRAs. By definition this is money that is taxable excess and won't hurt household budgets if taxed today vs way out in the future when it is withdrawn. When my wife and I both worked, our federal income tax bill would have doubled (at least) if not allowed to deduct those contributions. We would have merely contributed 25% less. I doubt the lower class contributes anything to these plans.

I do not "greatly misunderstand" it. As an aside, has anyone in history managed to have a civil conversation by first insulting the position of the other? I vastly prefer a welfare system to what we have today, which is actually functionally the same as a welfare system except: 1) the rhetoric is different 2) everyone qualifies for it and the people who had the highest means to save ironically get the most income back from it. I say they are functionally the same because in both cases you have benefits being paid by tax dollars, not from a pension fund. Tweak the eligibility (only people who need it) and change the rhetoric but keep the taxes. What does that do for the finances of the country? Yet it still functions as a safety net. I'd say that's a success when you can greatly reduce the cost without undermining the most important aspect -- keeping the safety net. How can people complain after allowing the government (voted in) to run the finances this way for so long? A generation of people (the baby boomers) that enjoyed the booming years of the middle class is now expecting a struggling and smaller generation to support them directly through tax transfers, EVEN IF THEY DON'T NEED THE MONEY. I just think that something is basically wrong with this.

My father (74) has the ability to pay for his own health care and all other costs, yet the US government pays him social security and health benefits. The system is foolish. The first thing I'd do as dictator is bring in an old age pension scheme that one qualifies for after age 67 only if that person does not have a means to support himself. This pension does not vary in amount from person to person based on how high their taxable earned income was during their working lives. It is the same amount for each person. Once you become dependent on others, you are lucky to be getting any help at all. You can't sit there and complain that you deserve a pension twice as large as the next guy simply because you had a higher paying job and he had a low paying job. Those days are gone, you didn't save enough, you are lucky to be getting assistance. You are no better than the next deserving person and aren't going to get more than him. The system isn't designed to show that you are somehow superior to the other recipient, it's just designed to keep you clothed and fed. It boggles my mind that we pay more to some people and less to others. And why pay people at all if they don't need it? Time to scrap social security and bring in something that makes more sense to this dictator. It's a social net right? Just make it a net to catch the fallen. You know, even Warren Buffett gets a social security payment. It's fu**ing absurd considering the system is broke. So basically, just rethink what a "safety net" actually is. It's to catch the fallen. Duh. Why do we run things like we currently do?

Grantham bought into it saying he just couldn't stand to watch it go up any more. Perhaps that's the kind of situation that marks a top. However, it really would be my guess that people are just selling to meet redemptions and margin calls just like 2008.

When gold goes up, it's because everyone is increasingly realizing that it's the only true money. When gold goes down, it's because everyone is increasingly realizing that dollars are the only true money. There, I explained it for you.

I agree, ambitious people head to the USA. My father did. I think there is more sense of cooperation, civility, and community in Australia. But then perhaps I am biased. I think the USA is more dog eat dog and every man for himself. Free market and fu** the people at the bottom (which is becoming increasingly crowded). Here is a little bit of info about how Australian workers are compensated: http://www.expatfocus.com/expatriate-australia-salaries Australia has a minimum wage structure which offers different pay scales to different types of work. These are known as ‘awards’ and a person cannot be paid less than the minimum wage which has been set for that type of work. These awards are reviewed each year by the organisation known as ‘Fair Work Australia’ on an annual basis and new rates will come into effect after 1st July every year. As part of the review the modern awards are assessed and the national minimum wage which is for all workers not covered by one of the modern awards. Reviews will take into consideration such factors as inflation and price rises of essential goods. And a few examples of what people can earn: Construction workers: $67,500 Teachers: $70,000 Technical and scientific: $80,000 Now, before you think they are communists, they have no property tax on principle residence, no gift tax, no inheritance tax, and don't tax your dividends if they are from Australian companies that have already paid the corporate earnings tax. So you can actually retire and not worry about being able to afford your property taxes and lose your home. Here in America we just give old people the boot when they can't pay their taxes after land values skyrocket -- really nice society we have here. Those are our parents we do that to! They worked, they paid their income taxes, they paid their mortgage off. Then we're like... deadbeats, hit the road! So I'm biased. I just think they are more civil to one another as a society. And I think that makes them more pleasant people. I notice it when I'm there. Maybe it's all in my head.

[amazonsearch]The Coldest Winter: America and the Korean War[/amazonsearch] This book really helped me with psychology during the early months of 2009. I recommend picking it up and reading it while your stocks melt away in price. Puts things in perspective, this isn't stressful... be lucky this is all we have to deal with.

My mother in law is the only thing keeping her here. She is 80 yrs old and in rapid decline physically and mentally. There are three other siblings here locally to check in on her and she is now getting a full time caregiver in the home. The past 5 years since she had her major cancer surgery my wife has been that full time caregiver. But she now concedes it's time to think about what's best for the kids. The quality time with her mother is fading fast -- she loses the plot in conversation these days. I don't think she'll be with us any more in a year or two, at least mentally. She really doesn't take care of herself (overweight, eats poorly, drinks, etc...). Now she has bone spurs in her back that is making it very painful to stand -- so she sits a lot and this only accellerates the physical decline. Well, how morbid. Glad this is anonymous. Taking her to Sydney for a month every year the past 5 years has been a very sound investment for me. Now she sees how lovely it is there for raising children. And I have all this extended family there to help with resettlement planning (two of my cousins are teachers in Sydney). As for my parents and seeing the grandchhildren -- they spend a few months in Sydney every year anyhow. And we live 1,000 miles apart here in the US. So really, it's almost the same. But I already have my Australian citizenship so all we need to do is get on a plane and go. The kids will get theirs 3 years later. Then we can always come back. But it will be such a fun excursion.

I have made good use of this site. Will let you guys know how it works out. I leave on Sat.......... I will be 1 - 3 years right behind you. My wife has thrown in the towel and now she is pushing to go! She wants our kids to get citizenship there, and the requirement is that we are residents for 3 years before they turn 18. But it's better to go sooner than later when on that path. Sounds great to me :)

You just need to get out now before they shut the door on the coming flood of refugees: http://www.immi.gov.au/living-in-australia/settle-in-australia/

Damn, I guess we younger guys that have seen two 50% declines in 10 years and a sideways market are just spoiled. Those older guys were battle hardened by the bull market, of which we have yet to see!

You need to watch the share count to calculate the real dividend. Yes sir! I read your full post four times and contemplated it. Maybe that's one of the reasons? It's more difficult to grasp than if they were doing less stock buy back and just declaring they are doubling the dividend or something. That should get some attention. Then again, it took me four readings of your post and farther pondering so perhaps I should not be thinking about it :) Reading about all the years that MSFT has gone nowhere, the last thing shareholders need is a tax on something that can be had tax-free (for the people who bought in this price range). Fortunately the dividend tax is still relatively low. Should Obama (or his successor) succeed in the "Buffett tax", I hope companies stop paying dividends altogether and just buy shares back. Then I'll have the last laugh, because it really will be a tax... on Buffett!!! He would pay 35% capital gains tax if he wants his laundered-dividend instead of the 5% - 10.5% dividend tax he pays on cash dividend distributions (most of his money sits in Berkshire). I have a very strong suspicion that this is the real reason why he has been so vocal over the years about companies only buying shares back when severely undervalued. For his own tax reasons (or acting as a fiduciary for Berkshire shareholders). Mathematically he shouldn't care all that much otherwise.

You need to watch the share count to calculate the real dividend. Over the 12 months period June 2010 to June 2011, they reduced the share count enough where you can sell 3.75% of your holdings to bring it back in line with your % ownership at the start of that 12 month period. That was pretty typical of most years since 2005, with the exception of 6/2009-6/2010. Add in the 2.5% dividend to your 3.75% share-buyback-laundered-dividend and you have an income of 6.25%. That's the same dividend you would have received if they had paid cash dividend instead of a buyback, but the buyback gives you tax advantages (unless you are Buffett who loses on corporate tax rules). Over the following 12 months (with new dividend increase) it will now be 6.875% income if they keep up the share count reduction. That's like getting a 10% raise. It's not that bad. And if you aren't sitting on a capital gain, then the 3.75% dividend from the share buyback is entirely tax free! Better, you might even get a tax deduction if you are below cost basis! Put that in your pipe and smoke it Obama! Bill Gates Says Tax The Rich! (The buybacks are probably Ballmer's idea, as he opposes the rich tax) http://www.businessinsider.com/bill-gates-state-income-tax-2010-9

I'm on Morningstar looking at the Tilson Focus Fund. It has a bunch of call options in things like JC Penny, Goldman Sachs, Berkshire Hathaway, Microsoft, and JPMorgan warrants. I figure that's magnifying the decline. Now, if the market goes all the way to zero he'll beat the market as those call strikes will protect him. It's -14.85% vs S&P500 as of Aug 31. However a lot of those names I would think will do very well going forward (vs the S&P500).

I think the theme here is that the only investors that survived to be rich and famous did so with margin only if it was non-callable (like with Davis and Munger).

$10 million is that magical point where you could just hang it in things like JNJ, collect $1,000 per day in dividend, and watch your $1,000 per day payout grow faster than inflation. Just ignore the advice about diversifying into bonds at that point. Depending on how cheap your thrills are, you can get by with a lot less without needing any fancy returns. $1m is certainly too tight, definitely need some skills or luck.

Well, truth is Tilson probably (certainly) would school me in terms of business knowledge. But I'd rather invest with Parsad before putting money with Tilson, even though the media has never heard of Parsad (doesn't promote himself as Tilson does).

I've never met him, but his media image reminds me of the realtors in my area who work their butts off to promote their name -- which brings in business, and make them money, so good on them.

I live 10 minutes from Clearwater Casino Resort, but I've never gambled there. I prefer the CBOE.