Tuesday, November 30, 2010

Marc Chagall's America Windows

The creation of Chagall's windows for The Art Institute of Chicago.

Markets in Everything: TSA 4th Amendment Undergarments

Will these be on every frequent flier's Christmas list this holiday season?  4th Amendment wear can be purchased at http://cargocollective.com/4thamendment

Sunday, November 28, 2010

Sunday Verse: Adrian C. Louis

Manifest Destination

A hot wind curls the leaves
and chases the dogs digging
deep into the dry soil.
I live in the gut of the bright failure
called America. I live in
this hell named Nebraska.
It's one hundred and seven today
and grasshoppers from outer
space are dancing in my brain.
The air-conditioner is broke
so I run a tub of cold water
and submerge every half hour.
There's a wet trail from the bath
to the couch and nearby fan.
The air is heavy with grain dust.
The "wheaties" are up from Oklahoma
with their caravan of combines.
I crave winter. I want a blizzard
that blinds me to my fellow man.
These are my dark times.
Every other day I grieve for the me
that was and every man or woman
I see fills me with contempt.
Nine out of ten Skins in town are
hang-around-the-fort welfare addicts.
Every weekend their violence
and drunken wretchedness
fills the county jail, but I'm
far beyond embarrassment because
the white people are even worse.
Varied branches of that inbred, toothless
mountain trash in "Deliverance,"
settled here and now own
the bank and most businesses.
It's undeniably true that these
white people in Cowturdville
could be hillbillies except for
the fact that these are The Plains.

Drive on, rednecks, to the edge
of your flat world and fall
down to a better hell.

Every single thing about this
town is sadly second-rate
and I haven't been laid
in more than two years
and there's this fat lady
with varicose veins who
calls me late at night
and begs me to come over
to her trailer for a drink.
Here, in this Panhandle town,
farm kids speed desperately up
and down the main drag wearing
baseball caps backwards and throwing
gang signs they've seen on the tube
and their parents, glad they're old
and tired, truly believe that
those pictures we're now getting
from Mars have meaning.
As far as I can tell, I'm one of the few
people in Cowturdville who's gone
to college and I often wish I
never had, but Christ on a pogo
stick . . . I think I'm starting to like
it here in this American heartland.

Thunderheads are forming
and the sweet-ass rain
of forgiveness is in the air.

~ Adrian C. Louis

Saturday, November 27, 2010

Wednesday, November 24, 2010

Tim Hawkins: Aging Rock Stars

Vernon Smith: Magnificent Bubbles

Nobel Laureate, Vernon Smith, has designed a market game that simulates bubbles. The narrator of this clip says: "This experiment suggests bubbles may be part of the fabric of financial markets." Reality seems to bear that out.

Tuesday, November 23, 2010

Quotes of the Day: Mark Perry and Scott Grannis

Mark Perry "corrects" a Washington Post article from September:
This week, committees on both sides of Capitol Hill will plumb the conundrum of Chinese currency manipulation. The conundrum isn't that -- or why -- China is manipulating its currency: By undervaluing it, China is systematically able to underprice its exports, putting American (and other nations') manufacturing consumers and businesses that purchase China's cheap imports at a significant disadvantage. The conundrum is why the hell the United States isn't doing thinks it should do anything about it.

There are certainly plenty of senators and congressmen -- and Main Street Americans U.S. producers that compete with China -- who'd like to see the White House place some tariffs taxes on American consumers and businesses who purchase the underpriced low-priced Chinese imports. If the administration doesn't act, Congress may just consider mandating some tariffs punitive taxes against American consumers and businesses on its own.

"The Chinese sell us mountains of cheap goods, then turn around and invest most of the proceeds (equivalent to our trade deficit with China) in U.S. Treasury securities. We get the goods, and we get to keep the money. Then we devalue the dollar, and they lose on their investment. Why we would want them to stop doing this is beyond me, though if I were a Chinese citizen, I would be furious with my government for directing such massive quantities of my country's export earnings to Treasuries.

The central bank of China has no need to further increase its already-massive reserves; instead, the government should be relaxing capital constraints, allowing Chinese citizens more freedom to save and invest abroad in the types of vehicles with which they feel most comfortable. China's workforce is aging daily, and like Japan a few decades ago, China's economy cannot accommodate all the savings of the Chinese people—they are essentially forced to save overseas.

Contrary to what you read in the press—which mistakenly believes that our large trade deficit with China is something we need to worry about—China is the one that needs to worry, not us."

~ Scott Grannis

US-Sino Currency Rap Battle

The G20 meeting in South Korea is now history without much being achieved. The brewing currency battle between China and the United States is still simmering. China has mad stacks of US Treasury debt and fears America will inflate its way out the hole by weakening the greenback further. The US, on the other hand, says China is keeping its currency artificially undervalued to protect its exports.

Check out NMA TVs' US-Sino Currency Rap Battle, featuring Chinese president Hu Jintao and American president Barack Obama.

Monday, November 22, 2010

A Little TSA Humor

Got your TSA bumper sticker yet?

HT: Maggies Farm

In Search of.... The Coming Ice Age

Don't laugh, but just a few short years ago before the Armageddon of global warming there was the Armageddon of the coming ice age.  Humankind was doomed to extinction by global cooling.  How could the scientists be so wrong?  Or were they right back then and wrong today?  Or is it just that the scientists don't know very much about the weather and its ever changing patterns?  Or their computer models are not very accurate, and our knowledge of climate still very incomplete? For your viewing enjoyment, here is Leonard Nimoy (Mr. Spock for all you Trekkies (he's so smart there's no way he could be wrong)) narrating a special on global cooling:

My personal philosophy is this global warming hysteria is a bunch of hooey that will be proven wrong over time. But that doesn't mean we as stewards of the planet shouldn't pollute less and consume fewer resources. I do believe that peak oil is coming within the next 10 years if it isn't already here, and that carbon based energy sources will be much more costly to extract. It is vital that we continue the R&D efforts on non-carbon based energy resources in hopes of that disruptive breakthrough that will mean cheap, clean, and inexhaustible energy for the entire planet.

Sunday, November 21, 2010

Sunday Verse: Sherman Alexie


Buffalo Bill opens a pawn shop on the reservation
right across the border from the liquor store
and he stays open 24 hours a day,7 days a week

and the Indians come running in with jewelry
television sets, a VCR, a full-lenght beaded buckskin outfit
it took Inez Muse 12 years to finish. Buffalo Bill

takes everything the Indians have to offer, keeps it
all catalogued and filed in a storage room. The Indians
pawn their hands, saving the thumbs for last, they pawn

their skeletons, falling endlessly from the skin
and when the last Indian has pawned everything
but his heart, Buffalo Bill takes that for twenty bucks

closes up the pawn shop, paints a new sign over the old
charges the Indians five bucks a head to enter.

~ Sherman Alexie

Friday, November 19, 2010

Weathering the Great Recession

The 20 largest states have not faired well during the recession.  Even states like Maryland and Virginia that are heavy in government jobs are struggling.  But what's going on with Texas?  Anyone have any idea why they are bucking the trend?

Thursday, November 18, 2010

The Idiot's Guide to the Public Sector that Produces No Wealth

An idiot's guide to the public sector, and how it only consumes wealth generated by the private sector - the public sector produces no wealth for countries. This specific guide is for the UK as it shows some shocking statistics on the imbalances of the UK economy.

Recorded from Channel 4's "Britain's Trillion Pound Horror Story", 11 November 2010.


The out of control public sector is crippling the UK private sector, and hence the entire UK economy. But still "the state" is expanding, despite cuts.


Grouch: It's pretty safe to say this same phenomenon is happening today in the US. The government is making its citizen's poorer by consuming more and more of the wealth created by the private sector. How do you fix this situation? Unfortunately the US is on the wrong path with the Government consuming ever increasing levels of GDP.

The "Don't Touch My Junk" Controversy


Coming Soon to an Airport Near You: Prison-style strip searches?

See Me, Feel Me:

TSA Humor Book:

Big Sis:

The more aggressive full body scan and/or pat-down at airports has been generating a lot of controversy and negative feedback from the commentators on the airwaves. As we approach the heaviest travel weekends of the year, the controversy is growing to the point that some are calling for boycotts of the full body scanners to force the TSA to do pat downs of all air travelers.

Will these changes in policy affect your plans for air travel? Will you be more inclined to pass up the airport and choose instead to drive to your destinations? I do very little air travel these days so I haven't personally experienced these new security measures. Would anyone care to share their experience?

Tuesday, November 16, 2010

A Blast from the Past

Back in the mid-1970s, global cooling was the rallying cry of the alarmists and crisis seekers-- a new ice age was upon us threatening to destroy the human race.  My, how times have changed, but the rhetoric has stayed the same----

"As they review the bizarre and unpredictable weather pattern of the past several years, a growing number of scientists are beginning to suspect that many seemingly contradictory meteorological fluctuations are actually part of a global climatic upheaval. However widely the weather varies from place to place and time to time, when meteorologists take an average of temperatures around the globe they find that the atmosphere has been growing gradually cooler for the past three decades. The trend shows no indication of reversing. Climatological Cassandras are becoming increasingly apprehensive, for the weather aberrations they are studying may be the harbinger of another ice age."

~ Time Magazine, Another Ice Age, June 24, 1974

Sunday, November 14, 2010

Sunday Verse: Mary TallMountain

The Last Wolf

The last wolf hurried toward me
through the ruined city
and I heard his baying echoes
down the steep smashed warrens
of Montgomery Street and past
the few ruby-crowned highrises
left standing
their lighted elevators useless

Passing the flicking red and green
of traffic signals
baying his way eastward
in the mystery of his wild loping gait
closer the sounds in the deadly night
through clutter and rubble of quiet blocks
I heard his voice ascending the hill
and at last his low whine as he came
floor by empty floor to the room
where I sat in my narrow bed looking west, waiting
I heard him snuffle at the door
and I watched

He trotted across the floor
he laid his long gray muzzle
on the spare white spread
and his eyes burned yellow
his small dotted eyebrows quivered

Yes, I said.

I know what they have done.

~ Mary TallMountain

Saturday, November 13, 2010

Quantitative Easing Explained

First the Robots:

Then the marketplace.org senior editor:

Friday, November 12, 2010

How Ink is Made

A Chief Ink Maker shows how colour and ink is created from the raw ingredients--powder, varnish, and passion. Everything designers and printers need to know about the process, the challenges and joy of ink making.

My Thoughts on Presidential Debt Commissions

Quote of the Day: Lazarus Long

A human being should be able to change a diaper, plan an invasion, butcher a hog, con a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, and die gallantly. Specialization is for insects.

~ Lazarus Long

Wednesday, November 10, 2010

Semper Fi: Today the Marine Corp is 235 Years Strong

The Marine Corps was founded 235 years ago on Nov. 10, 1775 at Tun Tavern in Philadelphia.

The Wreck of the Edmund Fitzgerald

A tribute to the 29 men who died November 10, 1975, aboard the Edmund Fitzgerald in Lake Superior.



The legend lives on from the Chippewa on down
of the big lake they called "Gitche Gumee"
The lake, it is said, never gives up her dead
when the skies of November turn gloomy
With a load of iron ore twenty-six thousand tons more
than the Edmund Fitzgerald weighed empty,
that big ship and true was a bone to be chewed
when the Gales of November came early

The ship was the pride of the American side
coming back from some mill in Wisconsin
As the big freighters go, it was bigger than most
with a crew and good captain well seasoned,
concluding some terms with a couple of steel firms
when they left fully loaded for Cleveland
And later that night when the ship's bell rang,
could it be the north wind they'd been feelin'?

The wind in the wires made a tattle-tale sound
and a wave broke over the railing
And ev'ry man knew, as the captain did too
'twas the witch of November come stealin'
The dawn came late and the breakfast had to wait
when the Gales of November came slashin'
When afternoon came it was freezin' rain
in the face of a hurricane west wind

When suppertime came the old cook came on deck sayin'
"Fellas, it's too rough t'feed ya"
At seven P.M. a main hatchway caved in; he said,
"Fellas, it's bin good t'know ya!"
The captain wired in he had water comin' in
and the good ship and crew was in peril
And later that night when 'is lights went outta sight
came the wreck of the Edmund Fitzgerald

Does any one know where the love of God goes
when the waves turn the minutes to hours?
The searchers all say they'd have made Whitefish Bay
if they'd put fifteen more miles behind 'er
They might have split up or they might have capsized;
they may have broke deep and took water
And all that remains is the faces and the names
of the wives and the sons and the daughters

Lake Huron rolls, Superior sings
in the rooms of her ice-water mansion
Old Michigan steams like a young man's dreams;
the islands and bays are for sportsmen
And farther below Lake Ontario
takes in what Lake Erie can send her,
And the iron boats go as the mariners all know
with the Gales of November remembered

In a musty old hall in Detroit they prayed,
in the Maritime Sailors' Cathedral
The church bell chimed 'til it rang twenty-nine times
for each man on the Edmund Fitzgerald
The legend lives on from the Chippewa on down
of the big lake they call "Gitche Gumee"
"Superior," they said, "never gives up her dead
when the gales of November come early"

Tuesday, November 9, 2010

Lame Duck

Clint Howard, brother of uber-liberal Ron Howard, spoofs the lame ducks left in Congress. Star Trek fans might remember him from the picture below:

Monday, November 8, 2010

Camp Politics: Training the Next Generation of Politicians

Hey mom and dads. Does your child like to argue? Does he like to boss his younger siblings around? Does he love the sound of his own voice?

If you answered “yes” to any of these questions, your child is a natural born politician. Now to ensure his success in the political world, send him to Camp Politics for a three-week intensive training program....

Waste, Waste Everywhere, and Not a Program to Cut

The chart to the right shows the project federal deficits for the next ten years if the government does nothing about current spending trends.  This chart scares the living crap out of me, and helps explain the fear paralyzing the business community and the reason that gold and other precious metals, which many people consider to be the only real money, are hitting all-time highs.

Politicians are poor stewards of taxpayer money, and focus more on funneling goodies to their constituents and districts than worrying about whether tax dollars are being wisely spent.  Failed federal programs do not get cut, they just require more and more funding.  Is this the way free enterprise works?  Of course not.  No one in their right mind would run an organization this way, except our civil servants.

All of my adult life I've heard politicians on both sides rail against deficits, but precious few practical suggestions materialize on what to cut.  Even after the most recent election, which to my mind as centered around public unhappiness over the excesses of the past two years, I've heard few specifics on spending cuts.  Well, let me provide a few suggestions:

  1. Stop using “emergency” spending loopholes to get around budget rules.
  2. Put every federal transaction and contract online in real time so the public will have transparency into how their dollars are being spent.
  3. Freeze Federal hiring at current levels along with employee salaries and benefits.  Only replace employees as they leave.
  4. Block grant education funding and welfare to the states.
  5. Sitting Congressmen and Senators should not be able to name buildings or other monuments to themselves, and none should be named for them while they are still living.
  6. Stop defending Western Europe.  They are wealthy; let them defend themselves.  The Soviet threat is long dead, and there's no need to have thousands of US troops in Germany.
  7. Close down most of the other foreign bases except those that provide a true strategic interest.
  8. Get our troops out of Iraq and Afghanistan.  
  9. Eliminate obsolete weapon's programs.
  10. Eliminate earmarks.
  11. How many kilowatts of power does the Department of Energy produce or barrels of oil?  This department should be eliminated.
  12. How many children does the Department of Education actually educate?  This department should be eliminated.
  13. Repeal the Davis-Bacon Act which artificially inflates the cost of federal construction contracts by mandating workers are paid no less than local prevailing wages.
  14. Phase out farm subsidies that distort the market by incentivizing farmers to over or under produce certain products.
  15. Repeal Obamacare.  The costs of this program have been deliberately underestimated and are another entitlement program set to spiral out of control.
  16. Revamp the Financial Reform Act to eliminate the new, unnecessary bureaucracies.   New bureaucracies will not fix the failings of the old bureaucracies and just run up the taxpayer's tab for little benefit.
  17. Privatize the US Post Office, Amtrak, the Corporation for Public Broadcasting, and National Public Radio.
  18. Close down Fannie Mae and Freddie Mac.
  19. Reduce foreign-aid and let other countries pick up the lion's share of the tab for the UN.
  20. The most pressing problem is entitlements-- Social Security, Medicare and Medicaid.  Benefits must be reduced or we will be bankrupt as a country.  Since this is political dynamite, the best that can be hoped for is a cap on growth or a freeze on increases. 
  21. For programs not directly eliminated, impose a 10% across the board cut that will encourage administrators to run their departments more efficiently.
I have barely exposed the tip of the iceberg with these suggestions.  What other ways can you think of to help our elected representatives figure out how to cut spending?

Sunday, November 7, 2010

Sunday Verse: John Haines

If the Owl Calls Again

at dusk
from the island in the river,
and it's not too cold,

I'll wait for the moon
to rise,
then take wing and glide
to meet him.

We will not speak,
but hooded against the frost
soar above
the alder flats, searching
with tawny eyes.

And then we'll sit
in the shadowy spruce
and pick the bones
of careless mice,

while the long moon drifts
toward Asia
and the river mutters
in its icy bed.

And when the morning climbs
the limbs
we'll part without a sound,

fulfilled, floating
homeward as
the cold world awakens.

Saturday, November 6, 2010

Daniel Hannan: The New Road to Serfdom: A Letter of Warning to America

A journalist and author, Daniel Hannan has been a British member of the European Parliament since 1999. He first came to wide notice in the United States when he made a speech on the floor of the European Parliament addressing the then-prime minister of Great Britain, Gordon Brown, about his disastrous economic policies:
“The truth, Prime Minister, is that you have run out of our money … you cannot carry on forever squeezing the productive bit of the economy in order to fund an unprecedented engorgement of the unproductive bit. You cannot spend your way out of recession or borrow your way out of debt. And when you repeat, in that wooden and perfunctory way, that our situation is better than others, that we’re ‘well-placed to weather the storm’, I have to tell you that you sound like a Brezhnev-era apparatchik giving the party line… And soon the voters too will get their chance to say so. They can see what the markets have already seen: that you are the devalued Prime Minister of a devalued government.”

Hannan's latest book is A New Road to Serfdom: A Letter of Warning to America. Amplifying on his new book, Daniel Hannan warns that the United States is Europeanizing, with all the inherent dangers that come with the expansion of the welfare state. "This expansion doesn't just reduce economic growth, it tends to squeeze out personal morality." Hannan, who connects the decline of the European family and society with the rise of cradle-to-grave welfare in Europe, has a special warning about the dangers of Obamacare: "Once politicians assume responsibility for health care, they find that they have made an almost irreversible decision." Hannan concludes that this drift to Europeanization is not inevitable if Americans honor the genius of the Founding Fathers.

Eine kleine Musik aus Multikulti Eurabia: The Burka Band

An interesting piece of pop music out of Europe.

Friday, November 5, 2010

Ridley Scott's 1980s Deficit Commercial

Ridley Scott envisions the future in the 1980's deficit commercial. Who is Ridley Scott? The director of such cinematic hits as The Duellists (1977), Alien (1979), Blade Runner (1982), Legend (1985), Thelma & Louise (1991), Gladiator (2000), Black Hawk Down (2001), Hannibal (2001), Kingdom of Heaven (2005), American Gangster (2007), Body of Lies (2008), and Robin Hood (2010).

Nanny of the Month: Happy Meals Banned as Part of "Food Justice" Agenda

Last month the food police sued a North Carolina man for growing fresh vegetables, and early this month the Baltimore police issued their first trans-fat citation against a Chinese restaurant. Now we learn that San Francisco's food cops have committed a different kind of atrocity by making the City by the Bay the first major metropolis to ban toys in happy meals.

This month's top busybody is the pol who sponsored the ordinance to make happy meals sad, the one who hopes his "food justice" agenda goes nationwide.

Since when do governments have the right to tell us what our children can't eat? Isn't it up to parents not bureaucrats to determine what food is suitable for their kids? I think this is going way to far. What's types of regulations on consumer tastes are coming next? Where does it all end?

Thursday, November 4, 2010

The World's Geekiest Hobby No Longer?

Quote of the Day: Paul Krugman

...announce a fairly high inflation target over an extended period, and commit to meeting that target.

What am I talking about? Something like a commitment to achieve 5 percent annual inflation over the next 5 years — or, perhaps better, to hit a price level 28 percent higher at the end of 2015 than the level today. (Compounding) Crucially, this target would have to be non-contingent — not something you'll call off if the economy recovers.

~ Paul Krugman, from If I Were King Bernanke

Does Government Intervention Help or Hurt in the Long Run?

Has the United States abandoned the market mechanism?

According to John Allison, chairman of BB&T, the financial crisis of 2008-09 the product of market distortion created by government (not market failure) and the cure may be worse long-term than the disease. He is also one of the few people who could see taking on inordinate risks would mean his own company's undoing. Allison believes that collusion between banks and government is bad medicine. While other banks continue to wallow in TARP money or have disappeared, BB&T is completely solvent today. He has taken his message of reasoned entrepreneurship, long-term wealth creation, prudence and market fundamentals to the people.

Allison asks us to keep in mind short term fixes almost always lead to perverse effects over time. We are only now reaping what we sewed through the loose monetary policy and subsidized home ownership of more than thirty years. Allison thinks we are also setting ourselves up for failure with massive unfunded liabilities in Social Security and healthcare entitlements.

He believes that only a renewed commitment to the profit and loss system will help us right our economic ship. We should heed the age-old lesson that long-term value creation cannot be achieved through short cuts.

Do you agree with Allison's point of view?

Wednesday, November 3, 2010

How To Detect a Lie

Are you getting the whole truth and nothing but? The answer may be lying right in front of you.

To complete this How-To you will need:

A good ear
Good eyes
A healthy skepticism

Step 1: Watch their hands

Watch the suspected liar's hands. Body language studies show that people tend to touch their face and scratch their nose when they lie.

Step 2: Follow their eyes

Follow their eyes. Liars tend to blink a lot and don't maintain eye contact.

Step 3: Note their words

Note their words. A liar will skip contractions—saying "I did not" instead of "I didn't"—and avoid pronouns, using someone's full name instead of "he" or "she."

Step 4: Check their smile

Check their smile. People who are telling the truth use many facial muscles, but liars smile with just their mouth.

Step 5: Note their posture

Notice their posture. Liars tend to keep their body posture closed (by folding their arms, for example). They may also unconsciously put an object between you, like a cup of coffee.

Step 6: Pause before responding

Pause momentarily before responding; if the silence makes them uncomfortable, they may be lying.

Step 7: Note the details

Pay attention to details. If they provide more information than necessary, that's a bad sign. People tend to be overly specific when they're making something up.

Step 8: Change the subject

Change the subject. If they seem relieved, that's probably a red flag that they've been lying straight to your face!

Step 9: Teach your liar a lesson

What you do from here is up to you. It may be smart to file your knowledge away for future use. However, if you're noticing a trend, it might just be time to teach your liar a lesson.

Alice Dancing Under the Gallows

The stories that I find most inspiring are those where people have overcome great obstacles or hardships and still maintain an optimistic point of view. This is one such story of concert pianist Alice Herz-Sommer. I won't give away any more details of her life, but I encourage all to watch.

Tuesday, November 2, 2010

An Ordinary Day in 2014

So You Want to be a Futurist?

I'd love to be a futurist, but, alas, my visions of the future fall far short of existing futurist and I have no idea how to get paid for just sitting around all day long dreaming up new ideas.

Well respected futurist, Ray Kurzweil, uses fairly simple and reasonable assumptions upon which to base his predictions, which seem to be continuously borne out. Kurzweil is an optimist. He believes in the power of science to improve human lives and individual experience. He does not have a dark view of the future.

I like that Kurzweil focuses his discussion on practical applications of technology to improve humankind, especially his comments on solar power. Currently, solar power is not cost-effective compared to fossil fuels. But if the technology continues to improve at an exponential rate, along with improvements in energy storage technologies, market forces could help solar reduce fossil fuel consumption. But this doesn't mean taxpayers need to subsidize solar energy to make it viable. Government involvement often retards progress and innovation. The rich may be some of the few enjoying the benefits of solar energy, but as with most disruptive technologies the benefits will eventually flow down to the masses.

Kurzweil as even started his own university, Singularity University. Those who create crisis from half-backed truths and false assumptions should pay attention to the Kurzweil optimism.

Monday, November 1, 2010

Classic Johnny Carson Skit-- Lie Detector Politician

Voting Schmoting: The Case for Not Voting

In this irreverent look at voting, one of the world's greatest living economists, Gordon Tullock, explains why he believes you're better off avoiding the polls altogether on election day.

I don't agree with this point of view and will be exercising my to either throw the bums out or reelect my favorites.

Quote of the Day: Paul Krugman

To fight this recession, the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of PIMCO put it, Allen Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

~ Paul Krugman, 2002

How Tax Adverse Are You?

With a potential rise in tax rates on the horizon if Congress doesn't act in the upcoming lame duck session, many people are thinking about their own tax situation, i.e. how to legally keep more for themselves and their families and give less to the government. For those who feel especially patriotic, I've outlined in recent posts how to make gifts to the IRS. I don't know of anyone who has taken me up on the challenge yet. I doubt anyone will, because people's self-interest is to keep as much of their own earnings as possible.

I recently read on Greg Mankiw's blog how tax adverse the Rolling Stones are:
I broach the subject with Keith [Richards] in Camp X-Ray, as he calls his backstage lair. There is incense in the air and Ronnie Wood drifts in and out--it is, in other words, a perfect venue for such a discussion. "The whole business thing is predicated a lot on the tax laws," says Keith, Marlboro in one hand, vodka and juice in the other. "It's why we rehearse in Canada and not in the U.S. A lot of our astute moves have been basically keeping up with tax laws, where to go, where not to put it. Whether to sit on it or not. We left England because we'd be paying 98 cents on the dollar. We left, and they lost out. No taxes at all. I don't want to screw anybody out of anything, least of all the governments that I work with. We put 30% in holding until we sort it out." No wonder Keith chooses to live not in London, or even New York City, but in Weston, Conn. Source(http://www.you.com.au/news/1253.htm)

Anyone attune to modern culture is well aware of all the celebrities fleeing high tax states like New York and California for tax-friendlier locales. But what can the Average Joe do?
  1. Max out your 401ks.  The 2011 contribution limit is $16,500, with an additional catch up contribution for those over 50 of $5,500.
  2. Max out your IRA contributions if they are tax deductible.
  3. Capture stock/mutual fund losses prior to the end of the year by selling positions at a loss and replacing with similar invests.
  4. Purchase low turnover or tax managed mutual funds.  Indexes that do little buying and selling help keep the taxman away.
  5. Consider muni bonds for the income portion of your taxable portfolio.  Just be aware that a number of states and municipalities have severe budget challenges.
  6. Clean out your closets and make a donation to our favorite charity. Just make sure you get a receipt. Charitable donations, be they cash, goods or services, are deductible.
  7. Participate in your employers flexible spending account for out-of-pocket medical expenses.
  8. Take advantage of energy tax credits while to last to make your home more energy efficient.
  9. Live in tax friendly states and localities.
  10. Defer income to years when adjusted gross income will be lower than normal.
  11. Consider acquiring rental real estate for the tax advantages. 
  12. Take more income in dividends to harvest the 15% rate.
I'm no expert on taxes, but like everyone else I have a keen interest in paying as little as I can to Uncle Sam.  What other ways can you think of that I have left out?