LIVING OFF DIVIDENDS & PASSIVE INCOME

Angelo Mozilo, former CEO of CountryWide Financial was fined $67.5 million to settle charges of insider trading and civil fraud. Of this, $45 million or 66% will be paid by Bank of America, who acquired the toxic asset and must now indemnify the former head. As I mentioned back in early 2007, CountryWide insiders were dumping stock as fast as they while simultaneously publicly pumping it. Mozillo made about $134 million from insider trading and then another $100 million on the sale of the company to Bank of America. Having profited over $200 million, being fined a mere $22.5 million doesn’t seem like much of a punishment.

Of course, being a CEO of a major US financial institution seems to provide immunity against any wrongdoing.  Now and then, the SEC will prosecute someone to make an example of them, but the most part you can get away with far more than the average white collar criminal.  Read more... (201 words, 9 images, estimated 48 secs reading time)

If you believe the government or the popular press, the economy is out of recession and everything is business as usual again. Last month there was an increase in jobs by 162,000, home sales jumped 8.2%, the Dow is now almost at 11,000 and interest rates are inching upwards  in recognition of the economic recovery. It’s all peaches and cream isn’t it!

Unfortunately, I don’t believe the government or the popular press. I like to look at the facts and draw my own conclusions. First of all, the 162,000 new jobs includes 48,000 temporary census jobs. What happens when these jobs go away? And compared to the millions of jobs lost, 162,000 jobs doesn’t feel like anything to celebrate in the first place.  Read more... (625 words, 8 images, estimated 2:30 mins reading time)

This is an interesting rant on the equality of paying taxes by newsletter editor Porter Stansberry:

According to the federales themselves, the top 1% of wage earners in the United States earned more than $388,806 in 2006.

There were 1.65 million citizens in this category. As a group, they paid $488 billion in income taxes. That was 40% of all income taxes. But they only earned 22% of all wages. In short, the marginal tax rates on America’s top earners were almost 100% more than average. OBAMA! will increase the top rate these people pay – because paying 100% more than average just isn’t quite “fair” enough.

We might argue about whether or not we ought to charge some citizens different rates of income tax. But if you’ll take the time to read the U.S. Constitution, it’s clear that progressive taxation is unconstitutional. Just read the 14th Amendment. It says the government “may not deny to any person within its jurisdiction the equal protection of the laws.” That means the law can’t treat one citizen differently from another – white or black, rich or poor.  Read more... (525 words, 8 images, estimated 2:06 mins reading time)

About 4 months ago, I protest against the government bail-out of the auto industry. I said they were inefficient operations that were being driven out of business by the Auto Workers Union and they’d be back asking for more money pretty soon.

Well, it looks like the time to ask for more money has arrived! GM just announced it would need another $16.6 Billion if economic conditions continued to worsen, in addition to the $13.4 Billion it has already recieved.  Of course economic conditions are going to worsen. GM’s statement that it may achieve profitability in 2 years and might be able to pay off its loans by 2017 sounds completely bogus to me.

GM claims it will be out of money by March. That means it spent the $13.4 Billion it recieved in December in just 3 months, or nearly $4.5 Billion every month! The company claimed that if it had to file Chapter 11, the cost to the government could reach $100 Billion, so in fact, pay them $16.6 Billion is actually a good deal.  Read more... (306 words, 8 images, estimated 1:13 mins reading time)

I got into a lively debate yesterday with a fellow student about the bailout of the auto-industry. He said the social ramifications of letting them fail were too high. The impact on the local communities would be too high and so they should be bailed out by the tax-payers.

I said they were not cost-effective and there wasn’t enough demand for their cars to keep them in business. Even if the government gave them $25 billion, they’d plow through it and be back at the door asking for another handout. The government, too ashamed to admit it had wasted the first $25 billion would probably hand them another $25 billion. (This is called the Concorde effect, after the failed Concorde partnership between England and France which was a financial disaster).

I read some articles with also drew similar conclusions, but with different viewpoints.  Read more... (967 words, 9 images, estimated 3:52 mins reading time)

In July and August, the USD has actually become stronger against most other currencies, on apparently no news. Gold had also dropped as low as $790/oz from a high of $1030/oz this year, even though there is a shortage of physical gold in the US and the US mint had stopped selling gold coins like the American Gold Eagles. I was wondering if there was some manipulation going on in these markets.

Hedge fund manager John Lee thinks that gold prices are being manipulated in an effort to keep up the dollar afloat.

According to an article on Forbes, the central banks of the US, Europe and Japan planned in mid-March to prop up the US Dollar if it continued to slide.

Officials from the U.S. Treasury Department, Japan’s Finance Ministry and the European Central Bank reportedly drew up a currency contingency plan over the weekend of March 15-16.  Read more... (583 words, 8 images, estimated 2:20 mins reading time)