Category Archives: money

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The challenges of taxing the wealthy

Is outlined here: Taxing the Wealthy Sounds Easy. It’s Not. – The New York Times.

It’s worth a read. It’s thoughtful, even if you may not agree with it. Also, just because something is not easy does not mean do not attempt it.

Taxing drives behaviour. My thought is drive behaviour in the right direction.  Tell affluent people to use their wealth in directed ways that improve our society or tax them so that it can be done. If they disagree, then it is time to make explicit the social contracts in place and ask what has to be changed to make for a better society. Because for most societies in the world, including Canada’s, the social contract can be a lot better.

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What are the top business books?


Arguably they are the ones in this article: I read the 8 best business books of all time—here’s what I learned. If you want to know what they are and get a synopsis, read that piece.

Fifteen good links to help you manage your personal finances better


Lots of good stuff here, from how to save money on food, your kids, your transportation….and much more. From the New York Times, Vox, the Cut, and quite a few from a good site for this information called The Simple Dollar.

  1. When and How to Stop Paying Your Kids’ Bills – The Simple Dollar
  2. 13 smart ways to improve your finances in 2017 – Vox
  3. A Household Budget Strategy for People Who Hate Budgeting | Apartment Therapy
  4. 11 Lifestyle Changes That Will Help You Save Money & Depend Less On Consumerism
  5. What to Do When You’re Bad at Money – The New York Times
  6. How to Save Money But Still Have a Life
  7. What I Learned From Tracking My Spending for a Month – The New York Times
  8. 33 Productive Things to Do Without Spending Money | Apartment Therapy
  9. 5 Money-Saving Lessons I Learned in a Month of Budgeting – Bon Appétit
  10. The First Step Out of Debt – The Simple Dollar
  11. 10 Things You Should Never Pay For – The Simple Dollar
  12. Nine Frugal Strategies for Tackling the Winter Blues – The Simple Dollar
  13. Finding Meaning Within Your Job – Even If You Don’t Like It – The Simple Dollar
  14. Five Monthly Bills You Could Live Without – The Simple Dollar
  15. Five Things You Could Afford If You Didn’t Buy a New Car – The Simple Dollar

It’s RRSP season in Canada. You may feel: why bother contributing? Read this then.

If you are daunted and dismayed with the impossibiity of saving for retirement, then read this.

A few thoughts:

  1. It’s written for Americans, but it works just as well for Canadians. (Replace 401K with RRSP).
  2. You may still not be able to retire, but the more you save, the more cushion you have for later.
  3. It may help you get to sleep at night when your brain starts saying: you are doomed to die old and poor!
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On Finland and UBI (Universal Basic Income)

Two links worth reading on Finland and UBI: this one and this one.

Essentially, Finland did a form of UBI and it didn’t work. Those for UBI will argue it was implemented poorly. Those against UBI will argue those people are purists and in fact UBI will never work.

I think there are limits to UBI, but the Finnish implementation was poor. I think it can be done better than that. Read the two pieces in the New York Times and decide for yourself.

Do higher taxes cause rich people to move?


No.

You will hear anecdotes of people doing so, but in reality:

While everyone seems aware of a handful of high-profile millionaires decamping to low-tax states for tax reasons, in truth few move in response to state tax rates. Young examined tax data from every millionaire in the United States over thirteen years. He found that, even over that long time horizon, only 0.3% of all millionaires, on net, moved to a lower tax state. A larger share—about 2.5 percent– move from one state to another each year, but most do not migrate for tax reasons.

That quote is from: What Republicans and Democrats Can Learn from “The Myth of Millionaire Tax Flight” | Tax Policy Center.

Remember this the next time someone is arguing that higher taxes will cause the well off to move elsewhere.

(Image via pexels.com)

On Bitcoin rivals


While all the hype might make you think that Bitcoin is  the only cryptocurrency, there are a number of alternatives out there and this piece in Fortune outlines what they are: 5 Bitcoin Rivals That Are Rapidly on the Rise.

While this piece lists a handful, I expect that there will be a flood of such things in the future as financial markets look to capitalize on this mixture of money and technology.

The Fortune piece is also not bad in summarizing some key facts about Bitcoin if you still find it hard to get your head around it.

I expect Bitcoin to crash to a much lower level, but I don’t see cryptocurrencies going away. Knowing more about them, especially because they could have a major impact on global economies, is worthwhile.

Where to buy and sell Bitcoin in Toronto


I don’t recommend participating in the madness that is Bitcoin, but if you want to and you live in Toronto, then check this out: How to buy Bitcoin in Toronto.

Caveat emptor.

 Ko-fi: a new way to raise money online

a small cup of coffee
There are many ways to raise money on line, from Patreon to Indiegogo to Kickstarter. A more modest way to raise money online is this site: Ko-fi. I think it is perfect for anyone wanting to share things with others in exchange for a modest amount of money (i.e. the cost of a cup of coffee, approximately). If you were looking for something like this for your site, I recommend you check it out.

By the way, if you want to check it out (and buy ME a coffee), here is my link. Thank you!

A cautionary tale of what low taxes and libertarianism brings

Amish women on the beach
There can be many lessons that can be drawn from the story here: The Rise and Fall of the ‘Freest Little City in Texas’

The ones I drew were

  • You get the society you pay for. In this case, the people of this part of Texas were unwilling to pay for anything, and they got nothing in return. It’s hard to believe this even needs to be said in this age, but apparently it does.
  • Even basic services cost money. That money comes from taxes or service fees.
  • Those services are expensive to pay for individually: it makes much more sense for people to pool their money (in the form of taxes),  to make it cheaper overall for everyone.
  • Taxes are only part of what makes a society, but a society that is based on money and that does not have taxes is no society at all.
  • Only a society that does not depend on money can get away without taxes. Typically those a tightly knit,  cohesive, pre-money communities that depend heavily on sharing and barter. These communities are more socialist or communist in nature as opposed to libertarian. More like an Amish community or hippie commune or a religious community of some form.
  • The best way to have a libertarian society is to have one of great abundance. Scarcity requires people to share and work together if they want to survive.

It’s a good story. Read it for yourself and draw your own conclusions.

(Photo above is Amish women on the beach)

Why the stock market goes down and why it goes up (and what you should consider)

Stock market gains chart since 2009

Since the start of the great recession in 2009, two things have happened in the stock market:

  • In the short term, events have occurred that correlate with declines in the stock market
  • In the long term, the stock market has steadily improved significantly

This leads me to two conclusions

  • Always take a longer term view of the stock market
  • The things that drive the stock market in the long term are very different than the short term drivers

The second conclusion is something that this piece tries to tackle: Gradual Improvements Go Unnoticed. It is easy to see what drives the stock market down in the short term: it is difficult to ascertain what drives the stock market up in the long term. Gradual improvements could be a contributor. Other things, like the activity of the central bank, affects this. Even how other markets in the world in the world can affect the stock market.

Want to know why it is so expensive to get tickets to special events?

Then you want to read these two really good pieces on why it is brutally tough to get tickets to an event without paying a fortune:

What it comes down to is a very limited supply and a very high demand. But that’s obvious. Read the pieces to see just how it really plays out.

The rich stay richer and the poor stay poorer (now with data to back this up)

I was impressed by this study of economic mobility over many generations in Florence: What’s your (sur)name? Intergenerational mobility over six centuries | VOX, CEPR’s Policy Portal. They make a good case that the richer families stay richer and the poorer families stay poorer regardless of the many other changes that occur in an area.To add to this, VOX reviews it and also references a study done in Sweden that finds something similar (Today’s rich families in Florence, Italy, were rich 700 years ago – Vox).

It’s depressing, but not surprising to me. I suspect that while individuals may rise and fall in terms of economic mobility, specific families work to insure that the wealth acquired is maintained through marriage and inheritance. Worse, conditions for poorer families are such that they can never acquire enough wealth to move them from the lower percentile to a higher one.

What companies mean when they say money is offshore

When you hear of companies like Apple having their money offshore, you might imagine piles of gold bullion or paper bills sitting in a physical bank somewhere in Switzerland or Ireland. More likely that money is residing in one of the big banks head-quartered somewhere in the United States. (For that matter, it is likely residing as so many numbers in a computer run by one of these banks and not piles of paper or gold.)

The Times and Slate explain it here: For U.S. Companies, Money ‘Offshore’ Means Manhattan – The New York Times and Offshore accounts not actually offshore.

Why Bankers Want Rate Hikes

It looks like the Fed in the US is going to raise rates. It is highly arguable whether it is a good idea. For a long time, it was a bad idea. Despite that, commercial banks recently have been arguing for the Fed to raise rates.  Now whatever reasons they have been given, the true and underlying reason is mentioned here:  Why Bankers Want Rate Hikes – The New York Times.

It is more difficult for banks to make money with lower rates. Higher rates make it easier for them to make money. Hence the push by some of them to raise the rates.

Banks aren’t stupid: they don’t want the economy to tank: they don’t make money that way either. But the sooner rates rise, the easier it is for them. Here’s hoping the US Fed continues to be smart enough to resist the pressure and do the right thing for the American economy.

 

Why you should not buy insurance for rental cars, toys or video games

Sales people asking you if you want insurance at a counter leans on your anxiety and often leads you to end up buying it. Should you? Well, if it is rental car insurance, Vox says no and does so persuasively, here: Why rental car insurance is usually a rip-off – Vox.

Two other places I see people wasting money on insurance is toys and video games. Toys R Us used to push insurance on me all the time. Before you buy it, consider how your child plays with a toy. Chances are, the insurance doesn’t buy you anything. If it is the only toy you are going to buy your child and the only one they will play with for a long time, then sure. But most children will play intently with a toy for awhile and then the interest drops.

Likewise with video games. Perhaps your child will play with it for a year and it will be their favorite game. Most times, I’ll bet they play intently for awhile, and then the interest drops.  During that time, the chance of damage is very slight.

The insurance for toys and video games is low, but it buys you next to nothing. If the store said: do you mind if we charge you an extra 5-10% on this item, you would laugh and say “no!”. Yet that is what they are doing with insurance.

Skip it and use the few bucks to treat your child to a sweet or yourself to a coffee or give it to someone in need.

Janet Yellen, Forecasting Ace

I didn’t expect a positive review of Janet Yellen in the wsj, but this piece, linked to below, is really positive. Here’s a sample:

Steering central bank policy depends more than anything on assessing where the economy is heading. Yet, central bankers, surprisingly, are seldom picked for their forecasting acumen. More often they are former public servants, bankers or academics.

Then there is Janet Yellen.

Her forecasts as a Fed official have been strikingly accurate, as the release of 2009 transcripts to the Fed’s deliberations make clear. If she worked on Wall Street, she’d be a “hot hand.” This does not mean as chairwoman she is necessarily right; but it does suggest her forecasts deserve the benefit of the doubt.

via Janet Yellen, Forecasting Ace – Real Time Economics – WSJ. A really good piece.

The Performance of Many Hedge Funds Comes Down to Owning *ONE* company

The one company? Apple. How dependent are the hedge funds? According to Bloomberg Business:

A group of companies representing the most popular long positions for hedge funds is up just 0.2 percent in 2015, compared to a 2.3 percent gain for the Standard & Poor’s 500 Index, data compiled by Goldman Sachs show. A 19 percent year-to-date increase for Apple, which is owned by one in every five hedge funds and is a top-10 position for 12 percent of them, has provided a needed boost, the firm said.

That’s a bad thing. A similar thing happened in Canada when fund managers held large holdings in companies like Nortel and RIM. It didn’t end well.

For more, see this: The Performance of Many Hedge Funds Just Comes Down to Owning Apple – Bloomberg Business.

If you are thinking of writing apps for a living, this is still worth reading

This came out awhile ago (As Boom Lures App Creators, Tough Part Is Making a Living – NYTimes.com) but if you are thinking about writing apps for a living, then you should read it.

If you have a great idea for an app and a passion to develop it, you should. Just finish the above piece in the Times and keep it in mind.

Bitcoin 101 (with references to up and comer alternatives)

You’ve likely heard lots about bitcoin. You may have heard of some of the other alternatives, such as dogecoin. If you finally decided: “I should try and understand more about this”, I recommend this article in the Washington Post. There is lots changing with this technology, but this will give you a good grounding.

I think bitcoin is a highly speculative financial instrument and I’ll continue to think it is a very risky thing to participate in. Still, it looks like it is not going away, and so I think it’s time to share some of the better pieces on the topic.

Neutron loans, or how the subprime disaster works

Over at bloomberg.com is a very simple explanation of how the subprime problem works it’s destructive effect:

Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month. Now he owes $192,000. The 66-year-old Minneapolis house painter has a payment- option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, he said his monthly minimum could jump to about $2,800, which he can’t afford. “We’re barely making it right now,” Ripplinger said. The estimated 1 million homeowners with $500 billion of option ARMs are beyond the help of interest-rate cuts by Federal Reserve Chairman Ben S. Bernanke. While subprime borrowers face an average increase of 8 percent or less when their adjustable- rate mortgages reset, option ARM homeowners may see their monthly payments double after their adjustments kick in. “We call them neutron loans because they’re like a neutron bomb,” said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. “Three years later the house is still there and the people are gone.”

ARMs are fine for speculators who know what they are doing and can handle the risk. For people like Joe Ripplinger, they are anything but fine. And there are alot of people like him out there. See: Bloomberg.com: Exclusive

Avoiding the sub-prime mortgage disaster…for now

The whirlpool that is the sub-prime mortgage disaster in the U.S. continues to get bigger and suck more things into it. But not everyone.

At kottke.org, the excellent Jason Kottke has some good references to smart people who have managed to see the problem coming and avoid it (for now). For more details, see his entry: Yay! Today is sub-prime mortgage day on kottke.org, I guess. The… (kottke.org)

Also, check out the site n+1 — he referenced earlier — that has an interview with a Hedge Fund Manager that not only talks about this problem but problems in the world of high finance generally. An eye-opening interview.

Be afraid.

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More on cheap wine



If you want regular updates on value wine in Ontario, check out the excellent Billy’s Best (Value) Bottles. Always great advice. For example, one wine I forgot is the the Italian Merlot from Cesari: $6.20! A steal.

Bill Clinton was here

The washingtonpost.com has a cool map showing all the places in the world Bill Clinton has spoken. It’s impressive.
(Clinton’s Golden Voice | Bill Clinton’s Paid Speeches | washingtonpost.com)

If you read this article, Bill Clinton Made $10 Million From Speeches – washingtonpost.com you’ll see some impressive numbers, including:

For example, Clinton earned $750,000 from three speeches over three days in February in Australia and New Zealand and $1.74 million from six speeches over four days in September in England, Ireland, South Africa, Germany and Denmark. The latter total included $450,000 for a single speech in London on Sept. 26 at a gala dinner of the Fortune Forum, a nonprofit group that aids international charities.Clinton made 352 speeches last year, but only 57 of them were reported on today’s form as having generated personal income. The others were given for no fee or for donations to the William J. Clinton Foundation, a charity he founded to promote causes such as fighting HIV/AIDS and global warming.

Clinton has earned more than $40 million in speaking fees in the past six years, records show. After leaving office, he made more than $9 million a year in 2001 and 2002. His income from speeches dropped to $4.4 million in 2003, when he was writing his memoirs, and less than $1 million in 2004, when he had heart surgery, before picking up in 2005, when he pulled in $7.5 million.

352 speeches last year?! That’s almost one a day!