Bailouts, Bankruptcies, and another “B” word I can’t say…

This all to familiar image above is but a taste of things to come.  With cash becoming more and more scarce and banks still dubious to release funds to anyone, it is no wonder more articles are springing up about companies going out of business.

Obviously Circuit City is the most well known company to declare chapter 7 bankruptcy, however, so many other businesses out there are headed in the same direction.  When you see a company declare chapter 11 bankruptcy, expect 2 things: They will either downsize and cut costs and try to come up with a fresh source of financing to aid in the process of rebuilding, or after time passes and little changes, declare chapter 7 bankruptcy.

What I don’t understand is how despite the fact that the government threw $700 billion dollars at financial institutions, banks are still finding it difficult to loan money.  I know that rules and regulations are more stringent than they were in the past, in the past all you needed was a first name and a pulse and you had a loan for anything, even if it was funding your lacadisic tendencies(Which seems to be the case for most), however, their needs to be some type of structure in place in order to make sure the right people are getting the money they need to continue doing business.

I don’t want to get into a discussion about the bailout, as it would lead to  a post about how Bank of America is talking about nationalizing itself and how the government is rewarding failing firms for failing, instead of helping those who are doing well continue to do well in these hard times, but let’s be honest here, where is all this money going?  And why do I hear more about CEOs using golden parachutes and splitting with millions, while the unemployment rate soars above 7.8% soon to be 10% by 2010.

The government isn’t doing anyone any favors.  They aren’t “stimulating” the economy; in reality, they are stimulating themselves.  I saw a clip of the John Stewart show a friend of mine sent me, and I have to say I agree with what he was saying.  His idea was to do a reverse stimulus, which would work its way from the consumer and then lead to the bank.  This makes sense, as most money spent by consumer to either pay bills or make purchases, ends up being deposited into the bank.

I honestly don’t see any of the bailout money being put to good use.  Obama’s stimulus bill, while yes it does look promising, carries a high price tag in that not only does it cost close to $900 billion, more importantly, it allows for more government regulation, something I am opposed to and something that usually borders socialism, depending on the magnitude of the regulation.

There does, however, exist a positive side to all this.  The fact that companies nationwide, specifically retail stores are doing poorly in sales means that consumers are beginning to understand the idea of living within their means, something we as Americans have lost sight of.  Part of this whole problem is people paying debt with debt and digging themselves deeper and deeper into a hole with a shovel they never owned and a lot of land that was never theirs.  

Don’t be dicouraged by the failing companies.  Recession is not always a bad thing.  For some it is an ideal buying opportunity.  Let us not forget too that recessions are a natural part of the economy.  The reason this recession is so painful is as a result of consumer spending with no concern for reality, major companies frivolously wasting money on bad investments and hopeless projects (Yes GM I am talking to you and your truck-line, being produced in a $2-3 a gallon of gas economy), companies amasing large amounts of liabilities, and banks throwing money at anyone with a first and last name.

It is almost like banks want government regulation.  Then again, who wouldn’t want the government to spoon feed them everything, in return for loyalty.  Good thing Bank of America isn’t nationalizi…..err….yeah it isn’t looking good….

Keeping up

Keeping up with this blog is harder than I thought.  Something about wanting the posts to be well written and having little time to do everything makes it so much harder than I expected.  I have plenty to talk about, but so little time with which to work with.  Tomorrow at work I should have some free time to get to blogging, in the mean time, here is a video I found, this should keep you entertained until I find something worth posting on and which I can find the time to invest research into.  On a side note, before you watch the video, consider this piece of advice: You will not always know what it is you are doing, however, it is imperative that in all situations, whether you know what you are doing or not, that you surround yourself with people that do know what they are doing.  Something my dad always taught me.  Dale Carnegie is the man, consider reading his books…

On to the video:

$timulate the Wallet…or the Deficit

Well hello!  After a few days of playing catch up with my studying and career hunt, I finally have a moment to blog and what better subject then that stimulus bill that is hovering over the minds of everyone in this country.

In my last post I was somewhat happy with the idea of the stimulus, and overall, I was pleased with the results it would bring.  However, after further analysis and much deliberation within myself, I now come to realize it isn’t all it’s cracked up to be.  

The bill went from some $815 billion to a nice 900 billion…what?  With a deficit of somewhere around $11.9 trillion, you want to add the $700 billion and this $900 billion?  What happened to cutting government spending?  So then in order to cut government spending, we need to increase it and decrease government revenue (which is what this bill would do)? Huh?

What is worse is that the bill is causing a special blend of racism amongst parties.  A friend of mine put together a well written blog concerning this subject, if you care to read it, feel free.  What I mean by racism is that this bill is doing more splitting than it is uniting.

What happened to that bi-partisan speech Obama gave just a month or two ago?  It seems to me their is a larger split in our house and senate than there was prior to his election.  The stimulus bill itself caused such a political roar that every republican and a few conservative democrats voted against it.  Regardless the bill passed the house due to the majority of democrats in the house, however, isn’t it accomplishing more harm than good?

I agree with most of the credits and tax law changes, but the bill goes beyond that.  Included in it is a huge list of “things to do” that range from communication and transportation to education and miscellaneous jargon.  What’s more is the bill is being sold as a way to create jobs, but given the number of jobs it would produce, the outcome would be a cost of 1.3 million for every job it created, doesn’t sound like the stimulation we all had in mind.

It seems as though we are beginning to hack through the jungle that was Obama’s rhetoric and coming to the realization that he may need a bit more behind his “change” if he expects to do anything about unity and problem solving.  I am not putting the man down, he accomplished a lot through his election, however, the time for glorifying his every footstep because of the color of his skin or the use of the word change must pass, and  I think we as Americans should begin focusing on the real issue at hand, not some media-fabricated issue of discrimination that will always exist regardless of the color of a person’s skin. (Because discrimination goes beyond skin in today’s world) Oh yeah and the horrible choice in his anti-tax administration isn’t helping make his judgment look like the right kind of judgment.

Where would you get the money to support such a bill if you are reducing our revenue and increasing our spending?  You know the answer and so does China, a country that easily owns 40-50% of our countries loans outstanding.  Makes you wonder who it is will be calling the shots in the world economy in the not so distant future.  Won’t be US if we keep this up.

No time, No space

Sorry that my posts have been lacking as of late.  I happen to be in the middle of two big exams and I have been doing the job search thing for some time now.  I hope that by the end of this semester I will have secured at least an internship with one of the companies I am interviewing with.  The one I want remains to be seen, however, that will require much thought in the future, if the decision presents itself.

After this Wed. passes, expect the usual me posting on a regular basis, for now….study, study, study…..

Let the wins begin…

We need two things to happen today.  Nadal needs to beat Federer and the Cardinals need to beat the Steelers.  I will also settle for me passing my two exams on Wed.  Both pairs of events would be nice…

$urprising…I think not

The above image should be all to familiar to everyone.  For a long period of time in 2008, it felt like going to pump for gas was like having to spend your life savings with each visit.  At one point oil per barrel reached a record high almost everyday and the news casters wasted no time to point this out to us, as if we needed the constant reminder.  With a record high at almost $150 a barrel, you just wonder how much money the crooks that are oil tycoons were making.

Today on yahoo, they felt that Exxon/Mobil having record high net profits of over $45.2 billion was news worthy.  It is as if they think we need the constant reminder of how badly oil companies are screwing us.  With oil at the price it once was, I am more shocked they didn’t report more net profit.  At $150 a barrel, these people should basically be walking on carpets made of $100 dollar bills.

It sickens me to think that these people feel they have control over the market and can raise and lower the price at their leisure; I beg to differ.  Why is it that we as consumers feel the need to give them such power over us?  In today’s world, gas isn’t even a choice anymore, it is a necessity, something it should never have become.  Gas is one of the worst things a person can invest in.

When consumed, gas creates emission, it is constantly wasting and is in dire need at all times, and what has it brought us?  When I read articles like this one by Yahoo!, it makes me sick to think Americans have come to accept $2-4 a gallon as the norm.  They should be selling us this stuff at much cheaper and seeing as to process a barrel of oil costs so little, why is it at $42 today?  Why was it ever at $150?  

You would think the U.S. would do something about it, instead, our credit card companies charge gas stations a 2% fee for each credit card transaction, forcing them to inflate the prices to try and make some form of profit.  It is as if no one cares and everyone has simply accepted it and learned to live with it.  

We should consider alternate sources of energy, and pursue these sources, as well as make them as affordable as possible.  Look I love the 400 horsepower car just as much as the next guy, but give me an efficient 100 horsepower car that runs on something other than gas, and I’ll probably be happier.

On a lighter note, oil today has continued to drop in the face of a drooping world economy.  I don’t know whether to smile at the price of oil, or frown at the sight of our frail economy.

Thank God!

“Gov. Rod Blagojevich was thrown out of office Thursday without a single lawmaker coming to his defense, brought down by a government-for-sale scandal that stretched from Chicago to Capitol Hill and turned the foul-mouthed politician into a national punchline.” – Yahoo

I think the title says it all.

Super Bowl Love….or lack thereof

Driving home last night listening to my favorite radio station, 790AM, I came across a piece of information I couldn’t pass on.  As we all know the Super Bowl is this weekend and already people are firing up their grills and stocking up on alcohol and chicken wings for what many call one of the greatest moments in sports.  Everyone knows the Super Bowl not only for its huge meaning in the world of sports, but also for the ridiculous commercials they play during the breaks.  Usually they are all funny, and most carry a price tag of somewhere in the range of $3 million for 30 seconds.  That is a whole lot of money for the average person if you ask me.  With $3 million dollars I can do a lot.  Invest in stocks, buy a car or two, donate some, help the family, take a trip around the world, spend it on a 30 second ad during the Super Bowl to help me find my soul mate, start a compan….wait what?

You heard right.  If you don’t believe me, take a quick trip over to http://www.superbowlsinglegirl.com, and witness what I am labeling stupidity.  I understand that their are people out their desparate to find that special someone with whom they want to spend the rest of their lives with, but seriously, raising $3 million  to advertise yourself on the day of football holiness, that is stupid.  If I raised $3 million I really wouldn’t care so much about finding my significant someone at that very moment, I would be more concerned on what to do with all that money.

Of course, you know me, I have to look at this from a tax perspective.  This woman is coming out on top.  Every amount she is given by anyone is considered a gift and is therefore not taxable to her.  The person giving the gift can’t take the gift as a charitable contribution to reduce income, and should they decide to give more than $12,000, they will be assessed a gift tax for having contributed such an amount, all the while this woman is assessed no taxes.  

I think the publicity she is receiving from her wonderful idea is exposure enough to get some men wanting to date her.  She may be better off like that anyway as most guys will have beer goggles on during the big game.  I can’t imagine what would happen if she did have the commercial.  What would happen to whatever phone number she posts, the amount of calls would be innumerable and most would probably have nothing to do with what she wants.  

Really all this shows is how far people will go to make fools of themselves for publicity.  What would be the epitome of stupidity is if she achieved her goal.  I think America at that point would reach a new level of stupidity.  I really don’t understand what it is drives people to make decisions like this and to publicize themselves on a large scale for the sake of nothing.  Does she honestly believe that she will get the money to actually do this?  Say she did, does she then honestly believe she will find that special someone?  Sorry, did I use to much logic?  

On a nicer note at least she is saying that should she not achieve her massive goal in the one week of the Super Bowl, she plans on donating the amount to the Boys and Girls Club.  Regardless, if you really want to donate to her, you should skip the idea, and go straight to donating to the Boys & Girls Club, at least that way you will get deduction for next years tax return.

I wonder what would happen if say all this came to pass and she ends up marrying some poor sap, what happens if they get a divorce years later?  Would she file a form to the IRS trying to justify why her divorce constitutes an ordinary loss to her income and that she should be allowed to take the loss against her income.  That would be awesome.  I would love to be the guy that writes back and tells her she is dumb.  I am such a cynic.  Dear Jesus, forgive me, I am a jerk.

Obama’s Tax Plan

So I have to say, inspite of the fact that I never was happy Obama became president, as a tax professional, I like where his plans are going for tax credits and the like.  Obviously their are two sides to the coin and what might be beneficial to you and I, may not be so beneficial to the reduction of our budget deficit of infinity trillions of dollars.

So everyone knows, I am majoring in accounting and plan on gettting a Masters in Taxation.  I work for a Liberty Tax Service, but consider myself to know more than the average tax professional.  To put it in other words, I spend my free time going on a tax forum at About.com and posting responses to people’s questions.  I also tend to read IRS publications and receive emails whenever tax laws are updated, yeah I am crazy.

Of course Obama’s tax laws are of the utmost importance to me, and recently doing some research on his latest act, The American Recovery and Reinvestment Act (HR 598), I was actually pleased with what I saw.

I obviously don’t want to go into any major detail because I could sit here and go on and on, however, I wanted to highlight the major changes that I found important.

Among some of the changes included increases to credits like the Hope Tax Credit, the Earned Income Credit, the new Homeowners Credit, the Child Tax Credit, and a few other things as well.  I found these important as far as credits were concerned especially since one of them directly affects me.  Obama wants to change the Hope Tax Credit (which is one of the educational credits given), and allow students to include the cost of books as qualifying expenses for the purpose of calculating the credit, in addition, he also wants to increase the credit and make 40% of it refundable, which to me is huge as this credit is nonrefundable and generally only benefits a person if they have any tax liability after all deductions have been taken.

One of the major tax changes that I especially enjoyed was the Marking Work Pay Tax Credit.  With this credit, a person receives a $500 credit for the first 6.2% of earned income and this credit would either reduce the amount of FICA taxes withheld throughout the year, or appear as a refundable credit on the person’s tax return.  The wording may seem a bit deceiving, like most tax laws do, but it would greatly benefit most people, as its phaseout doesn’t start until your Adjusted Gross Income reaches $75,000.

Other things like the revised Net Operating Loss Carryback rules are a big help for  businesses.  The new law would allow businesses to carryback 2008 and 2009 losses 5 years, rather than the current 2 year limit.  What this does is allows companies that had profit in the years of 2003-2008, to reduce their previous profit with losses they may have seen as a result of the current economic downturn, which would in turn yield a refund to them, and a hefty one for most as the corporate tax brackets start at 15%.

 Granted these are just some of the credits, but you get the idea, most of the changes are just like he said, help the middle to lower classes.  Of course this is the positive side to the argument, because remember that every credit we receive is money the government doesn’t see in revenue, which you may not care to much about, however, that doesn’t help our deficit.  We’ll save that conversation for another day.  Below is the article with the information, in case you get bored… Oh and if anyone ever has any tax questions, I offer a free consultation if needed.

The cost of this new tax act you ask?  A mere 550 billion dollars….chump change if you ask GM, Ford and Chrysler….

Link

The Palm Pre: The phone dressed in a suit

The Palm Pre:  

“The Palm Pre smartphone took home both honors and became the first cell phone/smartphone to win the Best in Show since CNET started presenting the Best of CES awards in 2006″ – CNET

“The Palm Pre isn’t just Palm’s saving grace. This brand new smartphone for Sprint offers an innovative new WebOS that’s fully integrated with the internet.” – Laptop Magazine

“Palm, the creators of the PDA—and, you could argue, the smart phone—finally responded to the iPhone with a multitouch smartphone of its own” – Popular Mechanics

The Palm Pre: “A phone whose name will soon be covered in a myriad of law suits for its use of the Apple Patented Multi-touch platform” – Me

Wait what?  Where did that last quote come from?  Quote me now because you may hear about it later.  In a recent post made by Macrumors.com, Apple was awarded a patent on their application titled Touch screen device, method, and graphical user interface for determining commands by applying heuristics, which in layman’s terms means that any phone that falls in that category that is currently out or in production may just see be covered in a suit, designed and created by the iLawyers themselves.  But their is more to this than what we might think.

Their are of course two sides to the coin as is true in every situation.  To Palm and other cell phone companies this might be a big set back on their future touch screen phones, to Apple, this would be the future CEO’s way of not letting Apple be pushed aside, and Apple’s way of protecting their investment.  To me and the rest of us iPhone users, this may actually be more bad than good.  

What do we care whether or not other multi-touch cell phones come out, we have our iPhones and if something comes out and is better, we’ll just switch.  I for one care a little more than the average user as I, like most Apple/Mac users, am part of the Apple Discipleship Church for a Healthier User Interface World.  Well we may not really care that other phones come out, however, if we love our iPhones and are die hard users, we should care if Apple has the ability to hinder or even restrict the production of cell phones just like it.

Without competition, features that are currently absent on iPhones, that are otherwise present on most other cell phones would take months to develop.  Those months wouldn’t translate into actual development time, but rather Apple taking their sweet time developing the features WE want when THEY want us to have it.  The consumer market just doesnt’ work that way.  Granted, Apple has worked this way for some time now, and let me say, what they do give us is far better than the competition, however, I wouldn’t mind a phone to come out to give the iPhone a run for its money, like that I might see better features sooner.

And if no other comparable phone is released, whose phone will I make fun of then?  I love my iPhone, I just hate your phone more…