Affluent Say 'Raise Social Security Age'

Earlier this year, Bank of America conducted a study entitled the Merrill Lynch Affluent Insights Survey.  This study, which began in 2009, focuses on a variety of subjects each year, with an overall goal to provide a bit of insight into the financial and retirement needs of the American public.  For 2012's survey, they asked questions regarding the current state of retirement and Social Security.  

Mark 2022 on Your Calendars

One focus of the survey conducted by Bank of America was regarding Social Security.  As you may have heard, the Social Security is currently being threatened.  This is because the gap separating the amounts being collected and the amounts being paid out is widening.  At some point, the collected amounts will overcome the checks being sent out.  According to estimates, this will happen in the year 2022.  Once that happens, it is possible that the amounts that people receive (which are already very low) will decrease.  This is why many people believe that changes must be made to the system.

An Older Workforce

Statistics from 1993 show that 29% of the United States' workforce was older than 55, according to the Labor Department.  Last year, their newest survey showed that the number had risen to 40%.  These results demonstrate that an increasing number are not retiring simply because they reach a certain birthday.  Yes, this is how things worked in the past, but the American sentiment has changed.  Now people are retiring not because of their age, but simply because they are ready and/or feel that it is the right time.

Survey Backs Up Older Workforce

Bank of America's survey backed up the above sentiment.  The results show that, of the individuals surveyed who were under 62 years of age and had not yet retired, 62% were not planning to retire early.  Instead, a number of them planned to put off their retirement for as long as possible, both for financial and personal reasons.  In addition to this, the survey also showed that not quite 15% of those over 50 stated that age would be a main reason concerning their decision of when to retire.  These results show that, for one reason or another, the average American worker is more than willing to keep working, and that number is likely to continue increasing.

Affluent People Say "Raise the Retirement Age"

The study from Bank of America shows that affluent individuals believe that the retirement age should be raised in order to affect change to the current Social Security outlook.  In fact, of those with at least $250,000 in assets, 59% felt this way.  If the retirement age was increased to match our increased life expectancy, it could fix the problem of the widening gap between the amount being collected and the amount being paid to retirees, at least for quite a number of years.  The only thing missing from the survey was a specific age that respondents would consider having the retirement age raised to, though adding on at least a few years would probably be acceptable. 

Different Study Shows Concern For the Deficit

Toward the end of last year, Wells Fargo had its own survey completed.  The results showed that 47% of respondents with assets totaling at least $100,000 believe that a cut in benefits, whether from Social Security or Medicare, would help lower the U.S. debt.  However, the study also indicated that only 23% of a person's retirement funds would come from Social Security.  This indicates that other sources of continuing income during retirement are necessary, despite concerns of the deficit.

Source: http://firstsecurityfinancialshow.com/blog/bid/154640/Affluent-Say-Raise-Social-Security-Age

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A poem and Hope for Haiti

Bill Moyers on the crisis in Haiti, with a poem by Danielle Legros Georges.

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Santa Ana Health Crusade

The Journal profiles public health doctor America Bracho, who serves her Santa Ana, CA community – notorious for crime, poverty and disease – with her organization, Latino Health Access.

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Government Job vs Entrepreneurship – The Battle for My Soul

As a high school teacher in Manitoba, Canada I’m not going to lie, I have a pretty great gig. I started by earning 50K as a 22-year old, and at 32 I will have climbed all of my automatic pay increments and be earning the equivalent of 82K in today’s dollars. If I finish the master’s degree I am currently pursuing, it will ratchet up to 87K, with plenty of opportunities to jump into upper administration. I highly doubt inflation will hurt my earning potential as my union is ridiculously strong and seems to consistently negotiate us raises that are above inflation. On top of this, I get a great benefits package, including a sweet government match-based defined benefit pension plan, and some pretty generous holidays. Who doesn’t want all those things, plus unbelievable job security right? If I follow Andrew Hallam’s example, I should easily be a millionaire by the time I retire, plus have a great pension plan to supplement any private savings. The future looks bright indeed. So why would I ever be jealous of some of my friends who work much longer hours and receive much less compensation? On the surface it appears that I am not thankful for what I have, and that “the grass always looks greener”. Maybe there is some truth to that; however, I believe there is something else at work there as well.

The Myth of the Poor Teacher

As a teacher, compensation is not what is frustrating about my job, and contrary to popular belief, bad kids are not what is frustrating about my job the majority of the time either (seriously, people get into teaching and think that teenagers are going to listen 100% of the time?). What is frustrating is the fact that my colleagues and I get paid the same amount whether we do a terrible job or a great job. There are no incentives to really try hard (other than your own convictions of course). The result is a very large number of the people I work with doing the bare minimum (including administrators) and several consequential chain reactions that have very negative outcomes to say the least. I honestly believe there are teachers worth 200K+ out there, and I believe that a majority of teachers are worth much less than the 82K salary that most people make where I live. This often leads to me being jealous of the entrepreneurial friends I have.

Grass and Shades of Green

By some stroke of fate I ended up with several friends who are geologists. They have many different opportunities open to them, and several run their own small companies. What I am very jealous about is that when they put in a 14-hour day they get to know they are building something potentially great. That is a powerful feeling – to know that you are gradually working towards something, and that the harder you work the closer you get, or the better the final result will be. Ideologically, I love the idea that you sink or swim based on your own merits (or lack thereof) when you are an entrepreneur, unlike in my union-dominated world. I believe that to know that you truly were/are a self-made person would be extremely rewarding. Yet I am not ignorant to the extreme risks most entrepreneurs face, and the overall lack of success most of them realize. This results in a real battle within my day dreams.

Do I stick with the government job and all of the guaranteed benefits (as well as the noble idea of preparing future generations) or do I branch out on my own and have complete control over what I can and can’t do? Another reason that I feel stifled as a teacher is that I truly believe there are MANY common sense strategies that we are ordered to completely abandon in favour of flavour-of-the-month guides that are made up in order to justify some useless person’s job, as well as policies that are made simply to placate a small group of extreme individuals, yet have unintended consequences for the entire student body. As an entrepreneur I could act on my instincts and the consequences would be mine to face. For right now, as a young adult, the security and benefits of teaching are too great to ignore, but the situation will definitely change as I go forward. As a side note, I think this is a solid example of why government jobs shouldn’t be compensated so well. I have so much negative incentive to leave my job and pursue making a living on the free market. Regardless of my personal financial situation, this is not a good trend for the long term health of an economy.

Having My Cake and Eating it Too

I have thought about combining the two worlds in various ways as well. Obviously Justin and I are currently satisfying our entrepreneurial dreams by doing this whole internet thing. Since both of our jobs leave us with large blocks of free time (***Note from Justin*** – At least his job does…), the two appear to complement each other quite well. I think using a government job as a platform to launch your own side gig is a very smart move and more people should be open to it. It kind of gives you the best of both worlds in my opinion.

The other combination I have considered (only in very vague terms) is starting my own private school one day. This would combine my passion for youth and education, my complete frustration with the public school system, and my entrepreneurial streak. It would also be an absolutely massive undertaking. I know that I would definitely wake up every day with a sense or purpose, and that even if I worked 16-hour days, I would have a sense of building something worthwhile. I would also be given much more freedom to pursue education the way I know in my heart that it should be pursued instead of being handcuffed by top-heavy unions, completely disconnected academics, and disinterested politicians-cum-administrators. I’m not sure it is financially viable for the type of area I want to live in, and I would be competing against institutions that have been around for over a hundred years, but man it is fun to think about. Until I make a decision one way or the other (probably several years down the road), the battle between security and the pursuit of merit-based compensation will continue to wrestle within me!

Would readers be interested in taking an in-depth look at what an ideal private school would look like? What would be some key characteristics? Should I instead apply my energies to trying to reforming the public sector?

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A Few Basic Tax Terms That 'The Man' Doesn't Want You to Understand

Filed under: Taxes

Is the American tax code designed to be confusing?

Looking at the thing, it's hard to escape that conclusion. To begin with, there's its size: The full code is over 70,000 pages long -- 22 times as long as Remembrance of Things Past, 62 times as long as the King James Bible, and 54 times as long as the complete works of William Shakespeare. Or, to put it another way, it's about 175 times as long as its first edition, which was published in 1913.

Contained within its 3.7 million words are thousands of exemptions, definitions, deductions and loopholes, and teasing them out requires an estimated 7.6 billion hours of tax preparation per year. That's more than 24 hours for every man, woman and child in the country. Even the head of the IRS hires an accountant to do his taxes.

Given all that, it's hard to dismiss the notion that the tax code is deliberately designed to confuse the average taxpayer: Its byzantine structure supports an army of accountants and attorneys, computer programmers and bean counters who rake in an estimated $27.7 billion per year helping us prepare our taxes.

But the tax prep industry isn't the only group that benefits. Arguments about cuts and deductions, minimums and premiums have fueled many a political campaign. And whether you're inclined to raise tax rates or lower them, increase incentives or decrease exemptions, chances are that you've been tripped up at least once or twice by a confusing term -- or a slick politician wielding it. With that in mind, we decided to unpack a few of the most weaselly of the IRS's weasel words -- and look at how they may affect your yearly taxpaying ritual.


Income vs. Taxable Income

One of the most slippery tax phrases is income. Taken at face value, its definition seems obvious -- clearly, "income" is supposed to refer to the amount of money that a worker brings home in a year. But in the hands of the tax industry, even this clearest of words becomes cloudy. Recently, The New York Times highlighted this with its tale of the ridiculous tax rate paid by James Ross (right). The founder of an investment firm, Ross paid 102% of his 2010 income to the taxman.

The tale was tailor-made for tax critics: Ross -- a job-creator, a graduate of Yale and Columbia, and a one-man economic powerhouse -- was clearly being charged a cruel and unusual tax rate. How could the government possibly rob such an upstanding citizen like that? Where do we live, Sweden? By God, Ross had to withdraw money from his savings account to cover his taxes!

Of course, there was more to the story. Ross didn't actually pay 102% of his income, but rather 102% of his taxable income -- the money left over after he subtracted out his mortgage interest, state taxes, and all the other clever deductions and exemptions he was allowed to take from his total income. In fact, Ross actually paid only 20% of his real earnings in 2011 -- about 4 percentage points less than the average tax paid by someone at his level. Thanks to his impressive list of deductions and business-related expenses, he actually scored a nice tax cut, rather than the brutal burn that the Times story would at first seem to suggest.

Income should be an straightforward, clear term, but it's often muddied for political purposes. Total income -- the amount of money that one makes in a year -- can be hard to quantify, so pundits and politicians tend to focus on more easily-defined terms. For example, depending on a politician's leanings, he or she may consistently discuss earned income (all the taxable wages and tips that one gets from a job), adjusted gross income (earned income, minus personal exemptions), or taxable income (earned income, minus all exemptions and all deductions). Because wealthy people often have more deductions and exemptions than lower-level earners, changing which term you use can radically alter how you frame any tax debate -- not to mention the degree to which the rich seem to be unfairly targeted by the tax code.


Dividends: Qualified to Cause Trouble

By all rights, a dividend should be easy to understand: It's money that a company pays out to its stockholders, and for most of the modern era, it was generally taxed at the same rate as any other income. Beginning in 2003, however, special tax breaks for stockholders muddied the waters, turning a relatively simple idea into a complicated -- and controversial -- tax nightmare.



Nowadays, there are two basic classes of dividends -- "ordinary" and "qualified." Ordinary dividends, which come from stocks that have been held for a short period of time, are taxed at the same rate as ordinary income. "Qualified" dividends, on the other hand, come from stocks that have been held for longer periods, and are taxed at a much lower rate.

The differences between the rates are major. People who earn up to $33,950 per year pay a basic tax rate of 10% to 15%. But people who make that money from qualified tax dividends don't pay any tax on it at all. Meanwhile, those who earn more than $33,951 per year pay between 25% and 35% on their taxes, but those who get that money from qualified dividends pay only 15%. This, by the way, explains how tycoons like Mitt Romney and Warren Buffett reach overall tax rates of 15% or lower, while people who make $34,000 per year pay a base rate of 25%.

While the qualified dividend tax rate is attractive, it is also confusing: The IRS' rulebook states that qualified dividends must come from stocks that the owner has held "for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date." But there's also qualified preferred stock, which must have been held "more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days."


Interest Gets Too Interesting

As if dividends weren't confusing enough, some things classed as "dividends" are actually misnamed -- and are taxed as regular income. For example, the "dividends" that you get from your credit union or savings and loan bank are actually classed as interest. This money counts as regular income, and is taxed as such.

(Of course, interest income isn't a huge problem these days. As long as the Federal Reserve keeps its interest rate at or near zero, most financial institutions aren't going pay much interest to their customers. This, incidentally, is part of why banks have been piling on fees and charges over the last few years. But that's another story.)

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Interest itself is another tax oddity. For example, in the current election cycle, something called "carried interest" has come under scrutiny. Essentially, it's a payment method used by many hedge funds and investment firms that pays fund managers and execs out of the proceeds of the funds they manage. By linking paychecks directly to investment income instead of salary, carried interest enables these high-earners to pay a 15% tax rate instead of the 35% that wage earners pay. President Obama's 2013 tax proposal suggests that Congress close the carried interest loophole.

But even regular interest can be confusing. The interest that one gets from a standard bank account, CD or money market account is taxed at the same rate as regular income, but interest from a savings bond doesn't count until the bond matures or until you redeem it. And, if you use your savings bond interest to pay for some of your college expenses, you may be able to avoid paying taxes on it.

If you own U.S. Treasury bills, notes or bonds, the interest that you get from them is subject to federal tax, but not to state tax. On the other hand, interest on bonds that are issued by states may be exempt from federal tax! For that matter, some of the interest you pay -- specifically the interest on your mortgage and your student loans -- may be deductible.


Bruce Watson is a senior features writer for DailyFinance. You can reach him by e-mail at bruce.watson@teamaol.com, or follow him on Twitter at @bruce1971.

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Source: http://www.dailyfinance.com/2012/02/16/a-few-basic-tax-terms-that-the-man-doesnt-want-you-to-underst/

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Debt crisis: as it happened - July 10, 2012

French president says policy to raise taxes for the highest earners is "not a punishment," as Sir Mervyn King warns of the damaging effect of the euro crisis on Britain and businesses around the world.

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Are You Seriously Considering Buying Bonds?

Filed under: Investing, Investing Basics

For many investors, the imperative to own a certain percentage of your portfolio in bonds trumps every other consideration. But the same investors who wouldn't hesitate to pull back on stock allocations when stocks were overpriced don't seem to recognize the same conditions in the bond market.

Bond investors have had to make huge sacrifices in recent years. With rock-bottom interest rates, Treasuries pay so little that they're hardly worth investing in. Banks aren't paying their CD customers any better. When you look at the absolute reward and risk involved, buying corporate bonds makes less sense than ever. In comparison, corporate offerings look attractive -- at least in a relative sense.

Giving up every bit of upside potential for a yield that barely covers inflation doesn't make sense for most investors. Bonds are useful tools, but only when they give you returns worth buying them for.

A Snapshot of Bond Land
As some people fear a return of the conditions that brought on the 2008 financial crisis, bond yields have tumbled. That's good news for those who already own bonds, as bond prices move up when yields fall.

But if you're looking put new money to work now, low rates aren't your friend. The iShares Investment Grade Corporate (LQD) ETF has a current SEC yield of just 4% despite having a quarter of its holdings rated BBB, just above junk status.

Of course, it's possible that bond prices could continue to climb from here. Even now that the Fed has stopped making additional bond purchases through QE2, a new economic slowdown could keep interest rates low for some time. Bond buyers could end up looking smart, especially if the stock market responds to economic woes by falling sharply.

News like yesterday's favorable jobs reports put a more positive spin on the future, but then this morning's jobs number brought all that euphoria back into question.

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Still Not Convinced?
It's a fundamental truth of investing that any time you make an investment thinking that it will climb through the roof, the person selling that investment to you thinks it won't.

When the folks on the other side of the trade are financially savvy companies taking advantage of historically unprecedented favorable market conditions, investors should think twice before taking the opposing position.

Amid such uncertainty, there's one group that isn't taking any chances: Corporations have once again stepped up in issuing new bonds, locking in attractive low interest rates before the fallout from the end of the Federal Reserve's quantitative easing program -- along with a more solid economic recovery -- finally take away the low-rate punch bowl.

Some of the companies issuing new debt included the following:

• Early in the holiday-shortened week, Devon Energy (DVN) and General Dynamics (GD) were among investment-grade corporate issuers that combined for $10 billion in new bonds Tuesday and Wednesday.
• Yesterday, Bank of America (BAC) and Deere's (DE) John Deere Capital division successfully sold debt carrying rates of less than 4%, with maturities extending from 2016 to 2021.
• In addition, Anheuser-Busch InBev (BUD) and Toronto-Dominion Bank (TD) each raised more than $1 billion through a combination of fixed-rate and floating-rate bonds. All of the bonds offered came in with spreads of less than 1 percentage point over Treasuries with the same maturity date.

Applying that fundamental axiom of investing, which side of this trade do you think made the better move: companies or bond investors? My money's on the corporations that issued that debt.

Don't Allocate Your Assets Blindly
Before you jump out and buy bonds that companies are issuing now, take a step back and consider: Who's getting the better end of the trade? Your better bet may well be to buy shares of the companies who are cashing in on low rates.

Motley Fool contributor Dan Caplinger likes investments that pay you back. He doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of General Dynamics and Devon Energy and Bank of America.

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Source: http://www.dailyfinance.com/2011/07/08/are-you-seriously-considering-buying-bonds/

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Euro Opportunity Could Be Coming

Note: Despite today’s weak market, the S&P 500 lost only 7 points this week; the NASDAQ finished with a slight weekly gain.

It didn’t take long for the press to hop on the “pressure grows on Fed to act” train following the weak employment data on Friday morning. From Reuters:

Expectations rose that the Federal Reserve would have to resort to more monetary easing to revive U.S. growth. But that did not stop the dollar from surging amid the flight from risk. The Labor Department said U.S. nonfarm payrolls expanded by just 80,000 jobs in June, falling short of forecasts. A Reuters poll showed the market expected 90,000 additional jobs. The data raised pressure on the Fed to launch a third round of quantitative easing. The first two rounds involved large-scale Treasuries buying, aimed at lowering long-term interest rates. “After this, we can expect some Fed action at their next meeting, said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Since quantitative easing (QE) involves buying bonds with newly printed U.S. dollars, a Fed announcement of QE3 later this month would put downward pressure on the U.S. dollar and put some wind at the euro’s back.

From a technical perspective, Friday’s run for the euro exits was accompanied by short-term bullish divergences. A positive or bullish divergence occurs when price makes a lower low and an indicator makes a higher low. The divergences can be seen by comparing the slopes of lines A, B, and C in the chart below.

A weekly MACD divergence can be one of the best signals in technical analysis. The chart of the euro has one heading into the weekend.

Divergences can appear on charts early in a bottoming process, meaning even if the euro rallies, it may experience more downside pressure in the short-term. The divergences above are “pay attention” signals rather than buy signals. A bullish divergence in the euro increases the odds of another leg higher in stocks.

Source: http://ciovaccocapital.com/wordpress/index.php/stock-market-us/euro-opportunity-could-be-coming/

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An Honourable Mention

I was so pleased to find me on Jeremy's honourable mention list for his Top Canadian PF blogs. He also has his top Canadian Investing Blogs as well.

Thanks so much Jeremy and to those who voted for me.

If you haven't had a chance to check out ModestMoney, please do so. Great articles over there by a man much smarter than I.

Source: http://shakingthemoneytree.blogspot.com/2012/07/honourable-mention.html

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Ex-Lawyer Gets Longest Insider Trading Sentence Ever

Filed under: Investing, Market News, Crime

By DAVID PORTER

NEWARK, N.J. -- A former attorney who admitted feeding privileged information to two confederates over the course of a 17-year insider stock trading scheme was sentenced Monday to 12 years in prison, the longest sentence ever handed out for insider trading, and the trader who reaped more than $20 million in profits from the tips received a nine-year sentence, authorities said.

U.S. Attorney Paul Fishman said former attorney Matthew Kluger's sentence is the longest handed out for that crime. The scheme was carried out from 1994 to 2011 and is believed to be the longest ever uncovered by law enforcement, though the crimes charged dated only to 2005.

"At the end of the day, the judge agreed that these were extraordinarily serious crimes that betray people's trust in the stock market and were motivated purely by greed," Fishman said.

The 51-year-old Kluger, of Oakton, Va., and former trader Garrett Bauer, 44, of New York, admitted last year they conspired with a third man, New York mortgage broker Kenneth Robinson, who acted as the middleman.

Robinson was arrested in 2011 and secretly recorded conversations with the other men, including one in which Bauer discussed lighting $175,000 on fire to erase his fingerprints, according to court documents.

Robinson, who pleaded guilty to his role in the scheme, is scheduled to be sentenced Tuesday.

Kluger admitted passing advance information on company mergers to Robinson, who would give it to Bauer. The trio was estimated to have made $11 million on tech company Oracle's acquisition of Sun Microsystems.

Assistant U.S. Attorney Judith Germano told the judge that Kluger was the mastermind.

"He had wealth, intelligence and family support," she said. "He abused it all. Why? Because he could."

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• The Temptation of Insider Trading: Why Top Professionals Might Slip

Defense Attorney Alan Zegas argued for a shorter sentence for Kluger and said that Bauer realized the lion's share of the profits while Kluger took only a small fraction of the total and was not aware of many trades that Bauer made on his own.

U.S. District Judge Katharine Hayden rejected Zegas' argument and said that every one of more than 30 insider trades made by Bauer was based on information provided by Kluger, whom she characterized as "amoral" and "thuggish." She compared the trio to drug dealers for the way they used throwaway cellphones and multiple ATM accounts to withdraw cash and exchange it in envelopes or bags.

Zegas said he would appeal the sentence.

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Kluger, who said in remarks to the court that he was "deeply, deeply sorry," insisted afterward that the sentence was too harsh. Hedge fund billionaire Raj Rajaratnam was sentenced to 11 years in October after being convicted in the biggest insider trading case in U.S. history.

"I guess it's better to take $68 million and go to trial and be unwilling to accept responsibility for what you did," Kluger said, referring to Rajaratnam, who maintained that he traded only on publicly available information.

Defense attorney Michael Bachner attempted to persuade the judge to reduce Bauer's sentence by mentioning the numerous public speaking appearances Bauer has made since his arrest at business schools and law schools and the extensive work he has done with children's charities.

"He is not like Gordon Gekko," Bachner said, referring to the Michael Douglas character who said in the 1987 movie Wall Street that "Greed is good."

Assistant U.S. Attorney Matthew Beck painted a contrasting picture to the court, pointing out that after Securities and Exchange Commission regulators began probing his activities in 2007, Bauer upped his trading volume.

"That's a moment of self-reflection for anyone," Beck said. "That's not what they did. Garrett Bauer instead began increasing the size of his trades. This is hubris like you've never seen."

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Source: http://www.dailyfinance.com/2012/06/05/ex-lawyer-gets-longest-insider-trading-sentence-ever/

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Does Wall Street Have Your Best Interest At Heart?

It's no secret that Wall Street is an essential part of the United States' overall economy.  Without it, the infrastructure would be severely threatened.  Knowing how important it is, you would think that Wall Street investors would have the public's best interest at heart, seeing as how if the system falls apart, the economy might not be too far behind.

Unfortunately, it has become clear in recent years that Wall Street definitely doesn't "have our backs," which makes it hard to know who to trust as you attempt to strengthen your retirement plan.

An Ongoing Issue

Investors defrauding their clients is a tale as old as time.  Or, at least, almost.  Although some clients have become more astute concerning certain practices and warning signs, a great number of them simply go about their daily business, unaware that a problem might be lurking around the next financial corner. 

The problem seems to have gotten worse over the past few years.  If not the frequency, at least the severity.  Take the case of Bernie Madoff, for example.  He defrauded millions out of investors, even the more savvy ones.  Yet most people haven't taken any steps to protect themselves, because they trust the people they're working with.  Arguably, so did Madoff's clientele.

If you want to protect yourself, now is the time, and no financial advisor worth his or her weight in gold will question your motives for doing so.  After all, it is your retirement we're talking about here.

A Public Resignation

The financial world can be a cutthroat business.  Just ask Greg Smith.

Greg started out as a summer intern for Goldman Sachs.  He worked for the company for nearly two decades, and the job took him from New York to London, and he moved all the way up to an executive position.  His growth with the company is what many employees would kill for.  And what did he do?  He quit.

The reason why he quit was covered in an op-ed piece he wrote for the New York Times.  He used it as a letter of resignation and laid it all out very candidly.  He explained that he had been given the opportunity to witness the inner workings of a large financial company and he didn't like what he had seen.  He recounted how Goldman Sachs had once been a great company, but in recent years, he had witnessed a number of events where the focus had been taken off of client satisfaction and placed onto the company's bottom line.  He also indicated that the financial giant could become what it was once again, but as long as they continued down the path they was currently on, he wanted no part of it.

Who Can You Trust?

Seeing as how companies like Goldman Sachs and investors like Bernie Madoff haven't had the clients' best interest at heart (in the case of Madoff, that is a gross understatement), it is important that you take steps to protect yourself.  Don't simply choose a financial company to advise you in your retirement plans because of name recognition.  Get a feel for how they do business and how they treat you.  If you're especially skittish, start with a small investment and grow your portfolio as you gain confidence in their ability.  And don't be afraid to get a second opinion from an outside source who can analyze your financial strategy and make sure that the course your advisor has set up is a wise one.

Source: http://firstsecurityfinancialshow.com/blog/bid/136348/Does-Wall-Street-Have-Your-Best-Interest-At-Heart

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Judge Richard Goldstone Pt 1

Bill Moyers talks with Judge Richard Goldstone, who headed up the controversial UN Human Rights Council investigation into the fighting in Gaza between Israel and Hamas.

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Volunteering Time vs Charitable Donations

When it comes to making charitable donations and volunteering time there is no doubt that both types of contributions are much appreciated by the organizations that receive them, and by those that ultimately benefit. The interesting thing that I’ve run into in doing a fairly substantial amount of volunteering is the attitude of those that put the boots on the ground toward some of the people that “only” make monetary donations.

After doing a whole day of sandbagging, or helping out over a dinner rush in a soup kitchen, it can be awful tempting to say, “Must be nice to just write a cheque and spend your guilt away,” but is that realistically a good attitude to have? In fact, from an economist’s point of view, looking at pure outcomes, couldn’t people that donate money as opposed to time actually have quite a strong claim to helping more at the end of the day?

Show Me The Money

To make an accurate “apples to apples” comparison I’m going to try and look at the situation in terms of final outcomes as opposed to the grey moral aspect of this debate. In order to do that, we must first state that everyone’s time is worth a different amount of money. We don’t like to admit this, and it isn’t politically correct to say. This is likely because it sounds very similar to “some peoples’ lives are worth more than others’,” which of course a pretty scary thought indeed.

The idea that an hour of work for one person has a different value than an hour of work for another person might seem awkward for some people, by the market pretty clearly dictates that some peoples’ skills and knowledge are worth more than others. If we believe this to be true, then doesn’t it follow that if a world class entertainer, or a doctor for example donates an hour of their time (say $300 worth of market value), isn’t that worth substantially more than a high school student volunteering for a couple of hours after school?

It’s an interesting quandary, because if we look at it in purely financial terms, one could say the doctor’s hour is worth 30 or so hours of volunteer time from the high school student if they are working at minimum wage; however, I think most people would agree that with 30 hours of volunteer work the high school student has made a bigger sacrifice. Then the question becomes should he feel morally superior? Or should they feel equal since a person earning a lot of money has presumably made great investment choices, or spent a lot of time honing their craft, or worked very hard to reach an elite status in their field? Should that time investment that allowed them to volunteer the quantity of money that they did be factored into the equation as well?

Does Morals or Hard Work Feed The Homeless?

There is one other avenue of this debate that we might want to explore. That is, what if the aforementioned doctor simply paid a high school student to work the 30 hours at minimum wage for the charity he wishes to donate to. Now, not only has the doctor contributed a great amount to society, he has actually helped the economy by creating a job too right? Is this philanthropy the best of all worlds since it creates so many positive outcomes? The government seems to believe so since it gives a pretty decent monetary incentive to donate to charities in the form of a tax credit, whereas there are not many incentives to volunteering time that I ever seen (recent Federal volunteer fire fighter tax credit aside).

It’s interesting to note that a charity would be way further ahead to pay people to come work, then have those people donate the money to generate a tax credit for themselves. I’ve never heard of this being done, but it might be an interesting way for a desperate charity to boost the pairs of hands it has available.

If someone has a skill set that makes them very good at allocating capital or writing novels, isn’t it everyone’s best interests for them to donate an extra hour at work as opposed to helping pass out food at a food kitchen? Yet for some reason we look down on these people. At the same time, I know the feeling of personal sacrifice doesn’t feel the same when you cut a check as opposed to getting down and dirty somewhere to get a job done, so there must be some inherent truth there as well.

Where do you stand? Is one sort of good deed better than another? Do you tend to donate more time or money?

Related Posts:

• Charitable Donations
• Investing Your Charitable Donations Credit
• Are You Spending Too Much Time On Things That Don’t Matter?

Volunteering Time vs Charitable Donations originally appeared on Canadian Finance Blog on July 5, 2012.

Source: http://canadianfinanceblog.com/volunteering-time-vs-charitable-donations/

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Lynn Sherr on the Century of Women

Lynn Sherr on the century of women.

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July 10, 2012 Fact of the Day

Millionaire investors under 45 years old are optimistic about their personal financial situation, with 70 percent believing it will be stronger one year from now. 

Source: http://www.millionairecorner.com/article/july-10-2012-fact-day

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Financial Crisis Creates Productivity Bonanza? No.

This morning's productivity numbers showed a huge gain in output per hour in the third quarter--up at an annual rate of 9.5% in the nonfarm business sector.

But here's something else. If we are to believe these numbers, the biggest financial crisis since the Great Depression has actually produced a productivity gain of 5.1% since the downturn started in the fourth quarter of 2007.

If you think that productivity has risen by 5.1% during the financial crisis, I've got a subprime bond to sell you.

Let me get this straight. We have a collapse of the housing and construction sector, massive layoffs in almost every part of the economy, a sharp downturn in consumer spending, and bank failures on an astonishing scale---and the numbers show an increase in productivity?

It defies common sense.

I suggest two reasons why the numbers are off. First, as in my recent cover, companies are cutting educated workers such as scientists and engineers who are not directly involved in the immediate production process. This means a drop in important but unmeasured intangible investments in R&D, product development, training, and advertising, which are not getting picked up by the GDP statistics.

Second, and this is relevant to the DC conference mentioned in the previous post, the statistics are being greatly distorted by globalization. Let's take a look at the computer purchases and supply, as reported by BEA.

According to the BEA's number, final sales of U.S.-produced computers has *risen* by 3.9% since 07IV, while imports of computers have *fallen* by 1.5%. Over the same stretch, employment in the computer industry has fallen by 12.5%. Being incredibly simple-minded, that would suggest that productivity in the U.S. computer industry has risen by about 19% in the downturn. Not bad, if true!

But there's a problem. According to the BEA's stats, the price of imported computers has fallen by 9.6% since the end of 2007, while the price of computers to consumers has fallen by 22.2%.

That doesn't make sense. It's far more likely, as I argued here, that the import price stats are mismeasured.

If we assume that import computer prices really fell at the same rate as domestic consumption, that would mean import growth is really faster, and domestic output growth is slower, as is productivity growth. By my back of the envelope calculation, the effect on computer industry productivity growth is potentially huge (I'll give the details later after I have had a chance to check them). This sort of calculation extends to the rest of the economy, though less dramatically.

So for these two reasons, I am quite skeptical of the proposition that the financial crisis has increased output per hour.

Source: http://www.businessweek.com/the_thread/economicsunbound/archives/2009/11/_financial_cris.html

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What's Next For Campaign Finance?

In the wake of a controversial Supreme Court decision giving corporations and unions more freedom to spend on elections, many federal and state lawmakers are hoping to curb Citizens United V. FEC's effect on elections. Find out how some legislators are fighting to curb Big Money spending even as the Court invalidates laws in 24 states aimed at keeping elections clean.

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Jane Mayer

Perspective from journalist Jane Mayer on the debate over whether the U.S. sanctioned torture to prosecute the war on terror. Mayer's recent book, THE DARK SIDE: THE INSIDE STORY OF HOW THE WAR ON TERROR TURNED INTO A WAR ON AMERICAN IDEALS, documents the war on terror and the struggle over whether the president should have limitless power to wage it.

Source: http://feedproxy.google.com/~r/bmjvodcast/~3/cQ32EXFrxjY/profile.html

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Apple releases iOS 6 beta 2 to developers OTA

In typical fashion Apple released little information about the iOS 6 beta 2 update other than that it contains "bug fixes and improvements."

Source: http://www.zdnet.com/blog/apple/apple-releases-ios-6-beta-2-to-developers-ota/13197

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Sony's Outlook on Gaming Gets Cloudy (Finally!) with Gaikai Buy

Filed under: Technology, Microsoft, Sony, Apple, Facebook, Entertainment

Sony (SNE) isn't about to concede that the console and dedicated handheld gaming platforms are dead, but it's willing to bet on a new horse.

The Japanese giant is acquiring California-based Gaikai in a $380 million deal that will move it closer to the cloud.

Gaikai provides a platform that lets gamers play its partners' video games on any browser or Web-connected device. As an open-cloud platform, Gaikai serves up the games so players neither need to download them nor install them -- and they certainly don't need to physically bring home a copy.

In other words, a hot new console game may potentially be able to play on someone's smartphone, tablet, and even smart television. The only limitation, really, is the quality of the broadband connection on the player's end.

You've Come a Long Way, Gamer

The past few years have been brutal for the video game industry. Hardware and software sales have fallen sharply over the past three years. Some marquee titles continue to do well. Activision Blizzard (ATVI) manages to break sales records with every installment of its Call of Duty franchise.

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However, gaming companies are largely trading near their lows because the occasional hit with die-hard gamers doesn't make up for missing out on a mainstream audience that has moved on from consoles -- and especially portables.

One can't compare the rich gaming experience of Uncharted 3 to Angry Birds on an Apple (AAPL) iPhone or CityVille on Facebook (FB), but easy access to free or nearly free apps and social networking games has eaten away at the masses who would at least play traditional video games casually.

Sony has been feeling the pain, and especially so since its own PS3 has been losing ground to Microsoft's (MSFT) Xbox 360. Its market share is a shrinking pie slice within a shrinking pie.

Gallery: 10 Brands That Will Disappear in 2013

Hopping on the streaming bandwagon makes sense from a strategic standpoint. Gamers are moving to games that are device-agnostic. Someone can begin a game of Zynga's (ZNGA) Words With Friends on a smartphone, then play later rounds on Facebook or a tablet.

The problem here comes in the monetization. Video game companies that once sold $200 systems and $60 video games will have to adapt to a model that nickels-and-dimes gamers through ads on casual or social games. Die-hard gamers will be willing to pay monthly subscriptions for high-end gaming platforms. But the sum of those profits may not be enough to match what the conventional gaming companies were making during the industry's heyday.

The game of gaming is changing, and it's happening right before our eyes.

Related Articles

• 'Call of Duty: Black Ops' Video Game Sales Soar Past $1 Billion
• Sony Learns From Activision Blizzard's Mistake
• The Rich Get Richer in Social Gaming: Zynga Buys OMGPOP

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Facebook, Microsoft, and Apple. The Fool owns shares of and has written calls on Activision Blizzard, and has sold shares of Sony short. Motley Fool newsletter services have recommended buying shares of Apple, Activision Blizzard, and Microsoft. Motley Fool newsletter services have also recommended creating bull call spread positions in Microsoft and Apple, as well as creating a synthetic long position in Activision Blizzard.

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• ATVI
• FB
• SNE
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Source: http://www.dailyfinance.com/2012/07/03/sonys-outlook-on-gaming-gets-cloudy-finally-with-gaikai-buy/

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Thank You For Getting Speeding Tickets

Photo: brewbooks

A while back I wrote a tongue-in-cheek post about irresponsible credit card usage. Apparently some people didn’t particularly like that approach, especially when they were in denial about their own credit card mistakes. I didn’t mean to offend anyone, but I guess certain people are just overly sensitive. It seemed to be a good topic though as I recently saw another blogger cover the same topic with the exact same angle.

Well I decided I should continue my appreciation for other people’s mistakes. I’m a pretty thankful guy after all. This time around I want to thank you all for something that I’ve been guilty of plenty of times in the past…speeding. Ok not just speeding itself, but I want to thank all of you who have sped, got caught and had to pay some pricey ticket.

My Speeding Ticket Experiences

Just so nobody feels like I’m picking on them, here’s my own story about speeding tickets…

My first incident was back when I was growing up in a small town. To get an idea of how small it was, we literally had to drive 40 minutes to the neighboring town if we wanted McDonalds or 7-11. We did have convenience stores, but for burgers it was pretty much just Dairy Queen.

So one night my buddy and I were looking for something to do. One of us had the bright idea to go for a drive to catch McDonalds before it closed in 30 minutes. It sounded like a better plan than hanging out at the local gas station and figured we could shave the 10 minutes off the drive easily at night.

Halfway there we were making pretty good time, maybe too good time. In my rearview mirror I noticed the telltale red and blue flashing lights. I don’t remember how fast I was going, but I know it was quite excessive and would’ve been very expensive.

Luck was on our side though. It happened to be the one female cop in town and she was particularly nice…and rather good looking lol. She laughed at our reason for driving so fast and I think she felt too bad for us to slap us with the expensive ticket. Unfortunately that prevented me from really learning my lesson.

Later that summer I was camping at the lake with some friends. Rather than eating more campfire food for breakfast, we decided to drive into town to pick up something to eat. Being young and foolish, I was again driving way faster than I needed to.

This time around though it was a cop from the neighboring town that caught us. It happened to be one with a reputation of being notoriously strict. Just like that I was down $345. I think I was 2 kilometers above the limit where the fines double. No break at all this time. It was probably my most expensive ‘purchase’ at the time.

I would say those two incidents taught me my lesson, but I’ve been caught speeding a few times since then. I still have a hard time driving less than 10-20 km/h above the speed limit. I do a better job of not getting caught though.

Why We Should Be Thankful

Obviously driving fast enough to get a $300+ speeding ticket is very unsafe. So yeah there is the side of getting caught helps keep the roads safer for everyone.

The other side is that those speeding tickets go a long way for paying for various policing and government resources. Depending where you live the money might go to different areas. Regardless where it goes, that’s less money that needs to be collected via income tax, property tax and other taxes.

So each time someone gets a speeding ticket, it is ultimately saving everyone else money. With the high price of speeding tickets, that must add up to a whole lot of money.

If they did start catching less speeders, the likely scenario is that they would beef up their efforts and start pulling over people that are just barely speeding. Personally I like the small buffer they usually give where you won’t get a ticket. I’d hate to see that to disappear. Then again, those borderline tickets are likely easier to fight in court since radar guns tend to have a degree of possible error.

Next time you see someone pulled over speeding, give them thanks. They voluntarily made the mistake and are now paying more than their share of taxes.

Also think twice about warning other drivers of a radar trap. In most areas it is probably illegal to do so anyway. I know it used to be common to get the high-beam flash from other drivers when there were cops ahead. I won’t incriminate myself and say whether I did this myself, but I do like to help people out. I look at it a little differently these days though.

Have you had any bad experiences with speeding tickets? Do you feel bad when you see drivers pulled over for speeding?

Source: http://feedproxy.google.com/~r/ModestMoney/~3/maAdOiivsLA/

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Obama's First Year

The JOURNAL assesses Obama's first year as President in the wake of Democrats' defeat in Massachusetts' special election for Senate with Princeton politics and African American studies professor Melissa Harris-Lacewell and journalist Eric Alterman.

Source: http://feedproxy.google.com/~r/bmjvodcast/~3/E7Ge9VvZTAE/profile.html

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Jeff Bezos of Amazon.com on web services

Source: http://www.technologyreview.com/blog/VideoPosts.aspx?id=17420

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Los Angeles Labor

Bill Moyers Journal analyzes the growing inequality gap on the ground in Los Angeles where recently union workers marched to bring attention to how they are getting squeezed out of the shrinking middle class.

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Bank reform may have $220 billion global capital hit – analysts

LONDON, Feb 17 (Reuters) – Top global banks will need an extra $221 billion of capital and see annual profits slump by $110 billion if all proposed regulations to reform the industry are brought in, leading analysts said on Wednesday.

If all the initiatives from regulators are implemented it would cut the average return on equity to 5.4 percent from 13.3 percent next year, hurt economic growth and raise costs for bank services, JPMorgan analysts warned.

“The cumulative impact of all the proposed regulation suggests that there is a real risk that we may move from a system that was under regulated to one that is over regulated and that that could cause a significant increase in lending costs and a negative impact on the economy,” Nick O’Donohue, head of research at JPMorgan, said in a research note.

The capital needs of banks would be $221 billion higher in the extreme event that all the reforms were brought in.

British banks alone would need $91 billion, other European banks would need $86 billion and U.S. banks would need $44 billion, JPMorgan estimated.

The most impacted banks could be Britain’s part-nationalised Royal Bank of Scotland and Lloyds, it said.

Pretax profits among the global banks would be cut by $110 billion. Net income in 2011 would more than halve to $74 billion, JPMorgan forecast.

G20 countries had been coordinating efforts to create a strong banking landscape, but the United States and other countries have also put forward separate proposals.

Among the plans are increasing capital and liquidity requirements; the possible separation of retail and investment banking activities; caps on size and potential levies on systemically important institutions.

Banks could end up passing the cost on to customers through higher prices.

“In order to return to similar levels of profitability as per current forecasts, we estimate that pricing on all products (retail banking, commercial banking and investment banking) would have to go up by 33 percent,” O’Donohoe said. (Reporting by Steve Slater; Editing by Rupert Winchester) ((steve.slater@reuters.com; +44 207 542 4367; Reuters Messaging: steve.slater.reuters.com@reuters.net))

Source: http://blogs.reuters.com/financial-regulatory-forum/2010/02/17/bank-reform-may-have-220-billion-global-capital-hit-analysts/

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German president tells Angela Merkel to come clean on EU debt deal

Joachim Gauck, the German president, has ordered Chancellor Angela Merkel to clarify exactly what she agreed behind closed doors at the EU crisis summit ten days ago.

Source: http://telegraph.feedsportal.com/c/32726/f/579300/s/2122e0eb/l/0L0Stelegraph0O0Cfinance0Cfinancialcrisis0C93852310CGerman0Epresident0Etells0EAngela0EMerkel0Eto0Ecome0Eclean0Eon0EEU0Edebt0Edeal0Bhtml/story01.htm

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jpmorgan: @AMHateRadio I am not the bank, fyi

jpmorgan: @AMHateRadio I am not the bank, fyi

Source: http://twitter.com/jpmorgan/statuses/203343214336421888

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SEC Claims Dead Money Manager Sold Fake Bonds

Filed under: Investing, Investment, Crime

The Securities and Exchange Commission is going after the assets of dead money manager Joel David Salinas, accusing him and his partner, Brian A. Bjork, of defrauding investors of $50 million. The SEC sued Salinas's estate Monday in the U.S. District Court for Southern Texas.

The 19-page complaint alleges that the men created two firms -- Select Asset Management and J. David Financial -- to sell fake bonds. Salinas, founder and president of J. David, and Bjork, chief investment officer of Select Asset Management, offered yields of as much as 9% on the investments. The fraud began in 2004 and ended only recently, according to the lawsuit.

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Salinas died of an apparent suicide on July 17, according to the SEC, and left a note in which he took sole responsibility for the Ponzi scheme.

Texas authorities also took action against Bjork and Select Asset Management. The State Securities Board's inspections and compliance division has filed to revoke their state registrations, claiming that neither Bjork nor Salinas bought the bonds that Bjork sold to his clients.

Investors Include Basketball Coaches

A new twist in the story emerged Monday: At least two prominent basketball coaches lost money in the schemes.

Salinas was a founder of an elite high-school summer basketball program in Houston and a donor to college sports programs, according to a Bloomberg article, and his investors included college basketball coaches Lute Olson, former coach at the University of Arizona, and Scott Drew, coach at Baylor University. Several other coaches may have been defrauded as well.

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Source: http://www.dailyfinance.com/2011/08/02/sec-claims-dead-money-manager-sold-fake-bonds/

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