Category: mafia

2014 Business Report

image credit: Ged Carroll via Flickr (cc)

I used to be in the forecasting business; still am in a way.  So here’s a forecast:  Look for financial difficulties in the next few years at Sandisk, Yankees Entertainment and Sports (YES) Network, Louisville Arena Authority, and Harmony Oaks housing development in New Orleans. What kind of difficulties and when?

I don’t exactly know.  Sandisk has apparently survived sixteen years of Goldman Sachs help, and the smart parasite does not kill its host too quickly. Maybe not all four; in fact maybe these four have been selected for survival.

With enough assumptions, you don’t have to be correct

Does anyone pay any attention to the “retirement” investment advice that financial institutions provide? I do, once in a great while. Of necessity, these comparisons assume stable tax laws and regulations, and ignore state income taxes. That’s two unrealistic assumptions right there. So why should we worry if the rest of the example is wrong, too?

What brings this to mind is an article in the Fall, 2011 issue of a publication from a major  stockbroker. The story centers on Jane, the daughter of William Smith, who died in 2010. William left her a $900,000 IRA. What should she do? Three options are presented:

  1.  Transfer the IRA into her own name immediately. According to the article, this would yield $620,100, after taxes, all received in 2011.
  2.  Inherit the IRA thru the estate. Apparently IRS regulations provide that you can sit on it for five years, then must withdraw the entire thing. Assuming 6% annual returns (another assumption that we know cannot be correct), Jane would in 2015 then inherit $782,862, after taxes.
  3.  Be the IRA’s designated beneficiary. (This would require that William had made the designation, which seems to be the point of the article.) Under this scenario, Jane withdraws minimum annual distributions, with the result that, in 2036 when she is 65 years old, she will have withdrawn $1,221,117 plus she will have an IRA worth $1,652,117.

But, if Jane took options (1) or (2), what would she have done with the money? We have assumed she is in the 35% tax bracket, so plausibly she doesn’t need the money right away, but would prefer to pile up more. So she would invest it. And we can assume she’ll get the same 6% annual return that we assumed for everything else. Further, we will assume that she pays 35% tax on this income (whereas in reality she will probably pay a lower rate on at least some dividends and capital gains, and might be able to hide some). So, netting 3.9% what is her pile worth in 2036? For option (1), I calculate $1,613,803. And she had complete control of this money, she could invest it in things prohibited to IRA’s, she could use it to flee the country, anything she wanted not effectively criminalized. That’s over twice as much as our friendly discount brokerage firm asserted.

So did the broker make a mistake here? No, because at the bottom of the chart it says:

Source: Ed Slott & Co, LLC. [the broker] is not responsible for information, opinions or services provided by third parties.

Just remember this if you are tempted to spend time reading,  or worse yet taking, “investment” advice provided without charge by financial firms. It’s worth every penny, almost.

I really shouldn’t be spending time on this, I have serious responsibilities in the world, but one does what one is compelled to do.

Discouraging inventors and tax dodgers

Major patent “reform” has passed both houses of Congress, presumably the President will sign shortly.  This is called the “America Invents Act,” apparently has as much relevance to invention as the Patriot Act has to patriotism. But dictionary.com tells me that “invent” has two meanings:

1.     to create or devise (new ideas, machines, etc)
2.     to make up (falsehoods); fabricate

Perhaps the second is what’s intended here.

From what I read, the big news is a switch of priority from “first to invent” to “first to file,” which seems to indicate that skill at patent lawyering now is officially recognized as more important than skill at inventing.

Better news, according to Vaughn Henry, is that tax strategies will no longer be patentable.  150 existing patents are grandmothered in, however. (Information from  Henry’s blog here, you need to join, free, to see it, or perhaps it is somewhere on his site. )

Government helping private “enterprise”

This is just a note I write to myself, observing a curiosity about  solar panel maker Solyndra, who filed bankruptcy yesterday and were raided by your FBI today.  The biggest equity investor in the firm is George Kaiser, with “about $337 million”.  Solyndra received a government loan for $527,808,544. OK, so bankruptcy is supposed to mean that loans are repaid to the extent possible, and if there’s anything left it goes to the equity investors.

Not in this case.  Somehow, after the loan was made, documents were revised so that $69 million of Kaiser’s money is first in line for repayment, followed by the government loan. Also, Kaiser was a fundraiser for the current President’s campaign, and visited the White House 16 times since the inauguration.

Lately I kind of figured this is how business is done, it is to be expected that major campaign donors will receive substantial favors from those they helped elect. But at least in this case Reuters has demonstrated some interest, and investigations are giving the appearance of commencing.

Maybe somebody didn’t get their share.

Yes, LVT falls on the rich

In case anyone doubted it, Bloomberg reports that real estate prices in vacation areas favored by the wealthy, such as Mount Desert ME and the Hamptons on Long Island, continue to rise even as prices generally have dropped.  And, yes, these are land prices, not house prices:

[B]illionaire Mitchell Rales bought a $5.5 million estate and tore it down to build a $25 million mansion

The only specific figure given for the wealthy enclaves is a rise of 14% in Southhampton, and the period to which this applies isn’t specified.

One hopes that local assessors are closely monitoring and responding to these trends.

Land Economics and Ownership– cancelled

I am back to the blog, after a series of computer difficulties and travel distractions. I could have resumed earlier, but had (still have) too many things to write about, so I waited for something simple and outrageous. And here it is.

What two products, planned for the 2007 U S Census of Agriculture, have been cancelled?  One is a report on acquaculture.  The other? Land Economics and Ownership.  One inclined to conspiracy theory might say TPTB are trying to prevent folks from learning the truth.  I would tend more to think it’s a product of ignorance, no need for conspiracy. I wonder what the report would have said.

 

 

Producing electricity from waste heat

The general concept of using waste heat from one process as an energy source for another is quite old, but this report says that some University of Minnesota researchers have figured out a practical way to generate electricity from it. It involves a new alloy which changes magnetic properties when it’s exposed to heat. Of course I have no idea whether it’s practical, or even whether some patent troll will step in to exact a fee for its use.  It will be interesting to check back in a year or two and see what has become of it.

And let’s remember, it was publicly funded (fortunately completed before the State of Minnesota suspended operations)

Funding for early research on the alloy came from a Multidisciplinary University Research Initiative (MURI) grant from the U.S. Office of Naval Research (involving other universities including the California Institute of Technology, Rutgers University, University of Washington and University of Maryland), and research grants from the U.S. Air Force and the National Science Foundation. The research is also tentatively funded by a small seed grant from the University of Minnesota’s Initiative for Renewable Energy and the Environment.

(No, I don’t know what “tentatively funded” means regarding completed work.)

This is your technology.  Don’t let the big guys take it away from you.Famous photo, unless it has been relocated

Banksters vs. Patent Holders

The Capitol Hill site Roll Call reports that a proposed bill would make it harder for holders of “business process patents” to sue banks which they claim are infringing.  Frankly I do not understand the details, what a “government review of the patent’s validity” means, since I thought patent examiners review all applications before a patent is granted.  An opposing lobbyist is quoted as saying “This is nothing less than an earmark for big banks disguised as a new government program.”  One presumes that bank lobbyists have something equally cogent to say, but somehow that didn’t get into the article.

Unfortunately, it seems very unlikely that both sides could lose this one.

The limits of Econned

Over the years, Naked Capitalism has provided a fine, if discouraging, play-by-play of the worsening corruption of our financial and governmental powers.  Dense daily posts, plus links to relevant news stories, supported by thoughtful and knowledgable commenters, makes it one of the few sites I really ought to read daily. (Cute animal pictures are a bonus.)

When chief blogger Yves Smith published Econned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, I was anxious to read it. Which I finally did over the last couple of weeks. Continue reading The limits of Econned