From the NYT:
Housing Costs After Retirement
Paying off the mortgage isn’t the priority it once was, and for many households, it isn’t even a possibility. But a new report from Harvard University’s Joint Center for Housing Studies reaffirms the common belief that retirees who own their homes outright are considerably better off than those carrying mortgages or paying rent.
The report, called “Housing America’s Older Adults,” focuses on the changes needed to supply sufficient affordable housing for the country’s 50-and-over population, which is projected to increase about 20 percent by 2030. The report found that paying off a mortgage dramatically reduces housing costs and provides an equity cushion to help cover other major expenses.
About a third of mortgaged households between the ages of 50 and 64 are moderately to severely burdened by housing costs, which include property taxes, insurance and utilities, the report said. (Moderately burdened is defined as spending 30 to 50 percent of income on housing costs; severely burdened households dedicate more than half their income to housing.)
But among similarly aged homeowners without mortgages, only 12 percent are cost-burdened.
Because income declines with age, the housing burden rises dramatically for households aged 80 and over. Nearly two-thirds of these households still paying mortgages are cost-burdened, compared with less than a quarter of homeowners over 80 without mortgages.
Lower-income renters are in the worst financial position. Some 77 percent of renters over 50 with annual incomes below $15,000 are cost-burdened, as well as about half of those with incomes from $15,000 to $29,999. Unlike homeowners, renters lack an equity cushion to ease the strain.
“Those groups are going to struggle through much of their retirement years,” Mr. Herbert said, “and at the end have very little to draw upon.”
Among baby boomers with mortgage debt, more are carrying it into retirement. As of 2010, 40 percent of households 65 and up were still paying a mortgage, compared with about 18 percent in 1992, according to the report.
Who said I was dead:
(Brought to you by WalCartons – Providing housing to the millenial generation since 2008. With a 75% discount and FHA Financing available now on our double-wide Sub-Zero Refrigerator boxes, made specially to fit under bridge trusses so the State Trooper can’t see you )
Calculated risk Blog
From Tim Logan and Andrew Khouri at the LA Times: Housing price cuts point to a shift in Southland market
The latest sign that buyers are gaining leverage in Southern California’s housing market: Price cuts are back.
The number of homes with reduced asking prices has risen sharply in recent months … In Orange County, the region’s priciest market, about one-third of sellers have been forced to cut prices, according to data from real estate firm Redfin. …
These trends have been building all year. But home sellers — often the last to see market shifts — are finally getting the message, said Paul Reid, a Redfin agent in Temecula.
“A lot of what we’ve seen over the last six or eight weeks is people lowering their prices to get buyers in the door,” Reid said.
Inventory has increased significantly in a number of markets, after bottoming in 2013. And more inventory means slower price increases (maybe even price declines in some markets). Yet many sellers have listed their homes assuming the double digit price increases would continue. The result: no buyers and price cuts.
The Passion of the Fruit must not pay for food or energy else he would have some first hand knowledge about inflation.
 Cali was the epicenter when the bubble started, maybe it will be the beginning of the great fart that is still left in the housing whoopee cushion.
Time to get ready for my favorite spectator sport of late – Girls Travel
Go to the final post of the last thread. Fcuktard chided me for not understanding the cyclical nature of RE. Yeah, I’m 54 y/o, grew up in a family of RE developers and owned a RE company during both the biggest run-up and the biggest crash in recorded history.
What do I know?
I would have loved to have seen this chump in RE back when the prime rate climbed above 20%.
I guess Grandma’s gift gave this dolt a nice little margin for error in his magical RE thinking.
Please, Fcuktard, ask me how many people I know of- just in Somerset and Hunterdon Counties- who defaulted in 2007 and are still in their houses through a combination of legal wrangling, multiple (failed) workouts and bailouts, BK and old-fashioned delay tactics.
Seven years, chimp. Seven freaking years…and the people I know are probably just the tip of the iceberg.
BTW, many of these are tidy, well-maintained homes in the blueribboniest of neighborhoods.
50-100 years of wandering in the wilderness and gnashing of teeth.
No other way out.
God I need to wait until next month to get the new iPhone? Argh.
Life what a b!tch!
(Brought to you by – The proud citizens of Fort Lee NJ, where driving the wrong way and running over pedestrians is a tradition. But we don’t tolerate fat blowhards that jam up our traffic)
Is New Jersey Fudging Its Pension Fund Results to Deflect a Christie Scandal?
Posted on September 13, 2014 by Yves Smith
You cannot make stuff like this up. New Jersey, in its attempt to diffuse a pension fund scandal that implicates Chris Christie (it roused him to respond in public), looks to have committed the classic crisis management blunder of a cover-up worse than the original crime.
International Business Times reporter David Sirota has been putting questionable relationships between state pension funds and Wall Street under the hot lights. One of the objects of his scrutiny has been the New Jersey pension fund, which is seriously underfunded. A recent tally puts it at number 43 out of 50 states in the level of its pension funding, with only 60% of its commitments funded. The New Jersey shortfall is the result of a series of classic blunders, starting with a decision to starve the pension system in the 1990s under governor Christine Todd Whitman.
New Jersey dug its hole even deeper during the crisis, by taking risky bets right before the markets unraveled, including investing in Lehman shortly before its collapse.
This bad situation was made worse under Christie. As we wrote in 2011:
A more accurate rendition would be that, at least in New Jersey, the state has been raiding the pension kitty for over 15 years. This is not news to anyone who has been paying attention, any more than underfunding of corporate pensions. In the Garden State’s case, Governor Chris Christie skipped the required $3.1 billion pension fund contribution last year. He claimed this move was to force reform, but what impact does another $3.1 billion failure to pay have on an unfunded liability that was already over $50 billion?
Fast forward to the Sirota investigation. Sirota showed how Christie shifted fund allocations to managers of “alternative assets” like hedge funds and private equity funds, which charge vastly more in the way of fees than simple stock and bond funds. It should be no surprise that hedge and private fund managers are heavyweight political donors. The result was more fees to the managers and underperformance for New Jersey. As Sirota wrote:
Gov. Chris Christie’s administration openly acknowledged that more New Jersey taxpayer dollars were going to land in the coffers of major financial institutions. It was 2010, and Christie had just installed a longtime private equity executive, Robert Grady, to manage the state’s pension money. Grady promoted a plan to put more of those funds into riskier investments managed by Wall Street firms. Though this would entail higher fees, Grady said the strategy would “maximize returns while appropriately managing risk.”
Four years later, New Jersey has secured only half the promised results. The state has sent more pension money to big-name Wall Street firms like Blackstone, Third Point, Omega Advisors, Elliott Associates and Grady’s old firm, The Carlyle Group. Additionally, the amount of fees the state pays financial managers has more than tripled since Christie assumed office. New Jersey is now one of America’s largest investors in hedge funds.
The “maximized returns” have yet to materialize… Had New Jersey’s pension system simply matched the median rate of return, the state would have reaped roughly $3.8 billion more than it did between fiscal years 2011 and 2014, says pension consultant Chris Tobe.
Unfortunately, it is all too common for pension fund systems to swing for the fences when they are in trouble and commit even more money to supposedly higher return investment approaches like private equity. In fact, due to too much money flooding into these strategies, returns for both hedge funds and private equity funds have generally lagged stock market returns in the post-crisis period.
On top of that, New Jersey’s authorized allocation to alternative investments is a full one third, a stunningly high level. Even CalPERS, a long-standing investor in alternatives, has less than half that level committed to these strategies.
But in New Jersey’s case, there’s even more reason than usual to doubt that the motivation for the shift to riskier investments was due to desperation to catch up, as opposed to rank corruption. After all, Christie’s professed strategy has been to worsen the crisis at the pension fund. What better way to achieve that result than to invest the money indifferently in high fee strategies, and get the side benefit of currying favor with extremely well-heeled donors?
Now, under heat for the suspicious-looking shift to Wall Street firms combined with embarrassing underperformance, New Jersey is suddenly reporting higher results as if no one would notice the change. On Friday, Sirota published a new scoop: New Jersey is now saying its pension fund returns for 2013 are a full 1% higher than previously announced. As Sirota writes:
Facing an ethics complaint after disclosures of the state’s below-market pension investment returns, Gov. Chris Christie’s top economic officials defended themselves by declaring that they delivered 16.9 percent returns in fiscal year 2014. Yet only weeks ago, the Christie administration reported the returns were 15.9 percent — lower by more than $700 million.
The discrepancy surfaces amid intensifying criticism of the Christie administration’s decision to triple the amount of pension money invested in high-fee private equity, venture capital, hedge fund, real estate and other “alternative investment” firms — many of whose employees have made financial contributions to Republican organizations backing Christie’s election campaigns.
In an op-ed published in the Newark Star-Ledger on Friday, the two top officials of New Jersey’s State Investment Council, Robert Grady and Thomas Byrne, criticized the investment strategy proposed by investors such as Warren Buffett, who say pension money should be primarily in stock index funds, not in alternative investments. Defending New Jersey’s $20 billion bet on alternatives, Grady and Byrne declared that “in the fiscal year ended June 30, 2014, the pension fund achieved a return of 16.9%.”
A return of 16.9 percent would still trail median public pension returns.
“The July 22 release says the fund produced returns of 15.9, according to preliminary data compiled as of June 30, 2014. Now final audited results showed the fund returned 16.9 percent,” Christopher Santarelli, from the New Jersey Department of Treasury, told International Business Times in response to a request for comment about the differing numbers.
This sort of revision is unheard of. Remember, even with New Jersey, over 2/3 of pension fund assets are invested in stocks and bonds. Those valuations are unambiguous. Similarly, hedge funds are required to provide valuations (so-called “net asset values”) monthly, with those figures verified by third party appraisal firms. The stock, bond, and hedge fund results come in shortly after month-end; there’s no basis for revision after the fact (put it another way: a change in valuation for any of these types of funds, even if favorable, would warrant withdrawing funds as soon as possible, because it would be proof of serious deficiencies in controls and accounting at the fund manager).
So the only types of investments where results are less clear-cut are in private equity, venture capital, and other illiquid strategies where the fund managers rather than third parties provide the valuations for their investments.
But even here, those managers have other investors in their funds besides New Jersey. They calculate the net asset value across the entire fund and then give valuations to investors based on their percent participation. So if New Jersey was getting revised valuations for such a large portion of its funds, you’d expect some other public pension funds to report significant upticks as well. But New Jersey seems to be suspiciously unique in this regard.
To understand how implausible this miraculous 1% performance improvement is, let’s look at New Jersey’s current asset allocation, as of June 30:
Christie New Jersey pension fund allocation
We will charitably include “Commodities and Other Real Assets,” “Real Estate Debt,” and “Real Estate” in the not-independently-valued funds for the purpose of this back-of-the-envelope calculation.
If you total Debt Related Private Equity, Real Estate Debt, Police and Fire Mortgage Program, Commodities and Other Real Assets, Real Estate, and Buyouts/Venture Capital, you get 17.13%. Remember, the total that is not independently valued is almost certainly lower.
The 1% miraculous improvement in performance is attributable to at most 17.13% of the portfolio. That is tantamount to that portion of the portfolio producing returns that were at least 5.8% higher than initially reported. That is simply not plausible.
We have to believe either that New Jersey is utterly incompetent at record-keeping,which would be a violation of its fiduciary duty, or something stinks to high heaven. It’s not hard to guess which is more likely.
I know three (couples with kids) in Morris County and two in Warren County that havn’t made a payment since 2009 and are still occupying the properties with no forced removal in sight.
NONE of them though are banking the payment. A friend in Chester (way underwater) is thinking about it (strategic default and cash in a safe instead of sending to a TBTF). Five years and he’ll have enough to buy a place (and new cars) for cash in Warren County. His kids will be out of school by then, too.
I shoulda did that (stop making mortgage payments) and rented the place back in MoCO. Coulda paid cash for another rental property here!
Oh well, rain is lettin’ up time to get back to work painting.
Live ‘n learn (the hard way…as usual).
September 13, 2014 at 8:14 am
They didn’t take a 23 year old serious.
“seriously” …not “serious”
Nothing for nothing, some of you are obsessed with negativity.
Speaking a negativity…..not for nothing is a double negative…..it would be more appropriate to write “not for anything”……although I’m not even sure WTF that means…..maybe you would do better using the phrase “no offense intended, but….”
While there are plenty of creative ways for corporations to avoid paying U.S. taxes by stashing money in Ireland, the Netherlands or the Cayman Islands, inversions go a step further: those companies are more or less renouncing their corporate citizenship to avoid taxes. They want the benefits of U.S. talent and markets but not the responsibilities. This strikes many as grossly unfair, particularly given that taxpayer-funded, early-stage investments in areas like the Internet, transportation and health care research are the reason many of the largest U.S. companies got so big and successful to begin with. That’s a leg up–call it corporate welfare–that most firms conveniently forget when they start looking for places to hide their profits. As the academic Mariana Mazzucato argues in her excellent book The Entrepreneurial State, many of the most lauded corporate innovations, including the parts of smartphones that make them smart (Internet, GPS, touchscreen display and voice recognition), came out of state-funded research. Ditto any number of pharmaceutical, biotech and cybersecurity innovations. “In so many cases, public investments have become business giveaways, making individuals and their companies rich but providing little return to the economy or the state,” says Mazzucato.
13- The last line is a powerful statement….”In other words, why do we socialize the risks but not the rewards?”
“‘The Entrepreneurial State explores the leading role that the State plays in generating long run growth in modern capitalism. The project began as a collaboration with the UK think tank DEMOS, and is now part of a new project funded by the US Ford Foundation (Reforming Global Financial Governance initiative), which resulted in the publication of a much expanded version of the original DEMOS report. The Entrepreneurial State: Debunking Public vs. Private Sector Myths, published by Anthem Press in 2013, develops a critique of the view that government intervention is only justified in case of ‘market failures’, revealing—theoretically and empirically—the inability of this approach to capture the active role that the State plays in leading rather than following radical technical change.
An important reason why the concept of market failure is problematic in understanding the role of government in the innovation process is that it ignores a fundamental fact about the history of innovation: not only has government funded the most risky research—whether applied or basic—but it has indeed been the source of the most radical, trail-blazing types of innovation. To this extent it has actively created markets not just fixed them. It has led in the development of key ‘General Purpose Technologies’ such as the US ‘mass production’ system, aviation technologies, space technologies, information technology, Internet technologies and nuclear power. In each case it was not just funding innovation or creating the right conditions for it, but also envisioning the opportunity space, engaging in the most risky and uncertain early research, and overseeing the commercialization process. Far from the often-heard criticisms of the State potentially ‘crowding out’ private investments, such bold ‘mission-oriented’ public investments (amongst decentralized public actors) created new opportunities that later the private initiative seized.
In detailed case studies of the investments that led to the IT revolution, the biotech revolution, and the emerging ‘green’ revolution, The Entrepreneurial State highlights the entrepreneurial—risk taking— investments that global public agencies have made along the entire innovation chain before the private sector invested. In doing so, the book debunks the common myth of the State as a large bureaucratic organization that can at best facilitate creative innovation, which is usually seen to happen in the dynamic private sector. The book argues that ignoring this reality only serves ideological ends, and puts both innovation and inclusive growth at risk. After describing the full range of public investments that made all the technologies behind the iPhone possible (internet, GPS, touch-screen display, Siri), the book asks a key question about the distribution of risks and rewards: Who will fund the next technological wave, if companies like Apple and Google pay so little tax? In other words, why do we socialize the risks but not the rewards?”
14- I think the author makes a great point, who is going to fund the next technological wave, if companies like Apple or Google pay so little tax. It’s as simple as that. Corporations have to have a stake in our communities. They can’t just keep taking the money and sending it to other countries in the name of tax avoidance. It’s common sense to understand what kind of destruction this brings long term to the country. President Kennedy, they have it all wrong. They believe the opposite. Ask not what I can do for this country, but what can this country do for me….new motto for corporations.
If we can’t effectively collect the necessary taxes by basing the calculations on income, perhaps then we should simply tax consumption instead?
This is great. You get to hear both sides of the story. This is someone critiquing her book. My next post is the response from the author to this critique.
“APPLE is generally regarded as an embodiment of everything that is best about innovative businesses. It was started in a garage. For years it played a cool David to Microsoft’s lumbering Goliath. Then it disrupted itself, and the entire entertainment industry, by shifting its focus from computers to mobile devices. But there is something missing from this story, argues Mariana Mazzucato of Sussex University in England, in her book, “The Entrepreneurial State”. Steve Jobs was undoubtedly a genius who understood both engineering and design. Apple was undoubtedly a nimble innovator. But Apple’s success would have been impossible without the active role of the state, the unacknowledged enabler of today’s consumer-electronics revolution.
Consider the technologies that put the smart into Apple’s smartphones. The armed forces pioneered the internet, GPS positioning and voice-activated “virtual assistants”. They also provided much of the early funding for Silicon Valley. Academic scientists in publicly funded universities and labs developed the touchscreen and the HTML language. An obscure government body even lent Apple $500,000 before it went public. Ms Mazzucato considers it a travesty of justice that a company that owes so much to public investment devotes so much energy to reducing its tax burden by shifting its money offshore and assigning its intellectual property to low-tax jurisdictions such as Ireland.
In this section
Time to get started
Up, up and away
A heated row over coolants
Dreaming of a new golden age
The entrepreneurial state
Likewise, the research that produced Google’s search algorithm, the fount of its wealth, was financed by a grant from the National Science Foundation. As for pharmaceutical companies, they are even bigger beneficiaries of state research than internet and electronics firms. America’s National Institutes of Health, with an annual budget of more than $30 billion, finances studies that lead to many of the most revolutionary new drugs.
Economists have long recognised that the state has a role in promoting innovation. It can correct market failures by investing directly in public goods such as research, or by using the tax system to nudge businesses towards doing so. But Ms Mazzucato argues that the entrepreneurial state does far more than just make up for the private sector’s shortcomings: through the big bets it makes on new technologies, such as aircraft or the internet, it creates and shapes the markets of the future. At its best the state is nothing less than the ultimate Schumpeterian innovator—generating the gales of creative destruction that provide strong tailwinds for private firms like Apple.
Ms Mazzucato says that the most successful entrepreneurial state can be found in the most unlikely place: the United States. Americans have traditionally been divided between Jeffersonians (who think that he governs best who governs least) and Hamiltonians (who favour active government). The secret of the country’s success lies, she thinks, in talking like Jeffersonians but acting like Hamiltonians. Whatever their rhetoric, governments have always invested heavily in promoting the spread of existing technologies such as the railways (by giving the rail barons free land) and in seeking potentially lucrative scientific breakthroughs (by financing almost 60% of basic research).
So far, so good. However, Ms Mazzucato omits to acknowledge how often would-be entrepreneurial states end up pouring money down ratholes. The world is littered with imitation Silicon Valleys that produce nothing but debt. Yes, private-sector ventures also frequently fail, but their investors know when to stop: their own money runs out. Governments can keep on throwing taxpayers’ money away. It was once fashionable to praise Japan as an entrepreneurial state being guided to world-domination by the enlightened thinkers in its mighty industry ministry. Nowadays it is clearer that the ministry has been a dead hand holding back innovation and entrepreneurship.
Ms Mazzucato laments that private businesses are too short-termist. But governments also routinely make investments on the basis of short-run political calculations rather than long-term pay-offs. She worries that anti-statist ideology is reducing the state’s ability to make important investments for the future. In fact, the explosion of entitlement spending, which is allocating ever more of the country’s income to the old, is doing more to undermine the entrepreneurial state than the tea party. She is also too hard on business: putting all those different state-funded technologies together into user-friendly iPads and iPhones required rare genius that deserves rare rewards.
The book offers only hints, rather than a complete answer, to the central practical question in all this: why are some states successful entrepreneurs while others are failures? Successful states are obsessed by competition; they make scientists compete for research grants, and businesses compete for start-up funds—and leave the decisions to experts, rather than politicians or bureaucrats. They also foster networks of innovation that stretch from universities to profit-maximising companies, keeping their own role to a minimum. The Jeffersonian-Hamiltonian paradox is important here: the more governments think in terms of mighty “entrepreneurial states” the less successful they are likely to be.
How not to spend it
Quibbles aside, Ms Mazzucato is right to argue that the state has played a central role in producing game-changing breakthroughs, and that its contribution to the success of technology-based businesses should not be underestimated. She is also right to point out that the “profligate” countries that are suffering the most from the current crisis (such as Greece and Italy) are those that have spent the least on R&D and education. There are many reasons why policymakers must modernise the state and bring entitlements under control. But one of the most important is that a well-run state is a vital part of a successful innovation system.”
MarianaMazzucatoSep 2nd 2013, 12:57
Thanks for the review, and the comments. Some clarifications.
First, my point is not that the state is always entrepreneurial. But that it CAN be, and that the constant depiction of it as a heavy-handed impediment to innovation and entrepreneurship is based on ideology not empirical evidence. There are of course plenty of states that waste money—and that are anything but entrepreneurial. My recent piece in the FT (21/8/13) made exactly that point the problems in Greece & Italy are that their high debt/GDP is a result of spending in the wrong places—areas that increase debt without growth. And as entitlements are important for redistributing wealth, if investments are not made in wealth creation, then there is nothing to redistribute and the system becomes unsustainable. Spain’s recent 40% drop in research spending since 2009 will not help it become a ‘surplus’ country like Germany.
Second, what we learn from looking at the public spending that helped create Silicon Valley is that the form of state institutions/agencies matter. Top down decisions from ‘ministries of innovation’ are less successful than when those investment decisions happen bottom up, via dynamic, de-centralized, and well-funded state agencies, coordinated by higher-level ministries but not overly directed by them (see work of Block & Keller). And to attract the kind of ‘expertise’ that DARPA and ARPA-E are able to attract, it is important to create dynamic ‘missions’ (going to the moon in the past, tackling climate change today), and to give the relevant agencies serious budgets. Indeed, the ability of DARPA to hire top minds, and to nurture an atmosphere where risk-taking is welcomed rather than feared was related to its ability to know when to halt investments that were going no where. Ironically, it is the type of states that have timid missions, and small budgets, that are not able to attract this kind of expertise in government, and that are thus more likely to make both wasteful investments, and failing ones that go on too long.
Third, precisely because innovation is so uncertain (most will fail), it is fundamental to consider the risk-reward relationship in innovation. This is not about asking the public sector to act like the private sector, and to seek profits. Indeed, the state should be driven by big missions, and invest precisely in the areas that the private sector fears. This means thinking big and going beyond investing only in the ‘basics’, spending also, for example, on seed finance which private venture capital (VC) has proved too risk-averse to fund. Revolutionaries like Steve Jobs have surfed waves of state investments which today are under threat. VC often enters the game after the capital intensive and high-risk investments have been absorbed by the state. We saw this in biotech and are seeing this again today in clean-tech. Of course these private sector actors are important. And, are especially important when co-investing alongside the state in the big opportunities of the future, as was the case with the crucial investments made in Xerox Parc and Bell Labs—rather than the focus today by companies like Cisco on share-buybacks (be careful Apple). The problem is that ideology is preventing us from understanding the role that the state is playing in this co-investment process. Once we understand that it is much more than providing the ‘basics’ and is actually making things happen that otherwise would not, the question arises, ‘Where will the public funding come from in the future to fund such activity?’ If risks (in innovation) are being socialize, so should the rewards. Not to fill up the pockets of ‘government bureaucrats’ but to replenish the innovation funds that are so important in funding areas like Google’s algorithm (National Science Foundation), Compaq and Intel’s early stage funds (SBIR), the research behind the Internet (DARPA, CERN), and the funding that today goes to the discovery of the most radical new medicines (NIH spending $32bn/year), and the most revolutionary high clean-tech investments (ARPA-E). It does not matter whether in some of these cases the government is ‘only funding’ the research (e.g. NSF grant) or actually doing it (e.g. in NIH labs, or CERN). The issue is that the funds are coming from the taxpayer. Given that many of the companies that benefit from such funding pay back very little tax, and many of the jobs generated go global, thinking less naively about the risk-return nexus will make the innovation cycle more sustainable (regenerated in the future, rather than start/stop), but also more inclusive. Is it right that Silicon Valley public schools have not benefitted from the ‘wealth creation’ process in Silicon Valley that the public sector was fundamental to making happen? I don’t think so.
Mariana Mazzucato, author of The Entrepreneurial State: debunking public vs. private sector myths (Anthem 2013)
I don’t know. It’s a good idea, but it will not work. Some people are so cheap(for some it’s a disease) that they will stop buying things just to save on taxes. I’m talking about the people that get off on being cheap. The one’s that die a millionaire, but were living on 30,000 a year.
Bottom line, the corporations have to realize the destruction it brings by avoiding taxes. Who will finance the risky innovation? No one except govt and that’s the bottom line. A venture capitalist only invests when they have someone desperate for money who has a really great idea. Not much risk involved, compared with investing in a totally new technology or creating a new market, which the govt ends up having to do. People with immense capital for investing do not take major risks. So the end result of inversion is a slow down in innovation. It will hurt everyone in the end.
September 14, 2014 at 7:50 am
If we can’t effectively collect the necessary taxes by basing the calculations on income, perhaps then we should simply tax consumption instead?
This is applies to many that participate on this blog. Ideology is preventing you from understanding. For some of you, it might be too late for you. Your obsession with ideology will prevent you from ever understanding this. You hate govt and taxes. You only see one way. You believe private enterprise is the only thing that brings value to the economy and country. Too bad that you will never ever realize just how wrong you really are.
“The problem is that ideology is preventing us from understanding the role that the state is playing in this co-investment process. Once we understand that it is much more than providing the ‘basics’ and is actually making things happen that otherwise would not, the question arises, ‘Where will the public funding come from in the future to fund such activity?’ If risks (in innovation) are being socialize, so should the rewards. Not to fill up the pockets of ‘government bureaucrats’ but to replenish the innovation funds that are so important in funding areas like Google’s algorithm (National Science Foundation), Compaq and Intel’s early stage funds (SBIR), the research behind the Internet (DARPA, CERN), and the funding that today goes to the discovery of the most radical new medicines (NIH spending $32bn/year), and the most revolutionary high clean-tech investments (ARPA-E). It does not matter whether in some of these cases the government is ‘only funding’ the research (e.g. NSF grant) or actually doing it (e.g. in NIH labs, or CERN). The issue is that the funds are coming from the taxpayer. Given that many of the companies that benefit from such funding pay back very little tax, and many of the jobs generated go global, thinking less naively about the risk-return nexus will make the innovation cycle more sustainable (regenerated in the future, rather than start/stop), but also more inclusive. Is it right that Silicon Valley public schools have not benefitted from the ‘wealth creation’ process in Silicon Valley that the public sector was fundamental to making happen? I don’t think so.”
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 grim – That would be my preference. Rich people spend more, so they are automatically taxed more. Meanwhile, cheapos like JJ, Stu, and I will be able to bank a ton more money by hardly buying anything. I think in Denmark there is something like 25% sales tax on the purchase of new vehicles. That would be fine with me too.
If we can’t effectively collect the necessary taxes by basing the calculations on income, perhaps then we should simply tax consumption instead?
LOL – Make that 200% sales tax on cars in Denmark:
Yeah, I stand corrected. Look what a utopia gubmint taxation, regulation, cronyism and meddling in markets has given us.
“You hate govt and taxes. You only see one way. You believe private enterprise is the only thing that brings value to the economy and country. Too bad that you will never ever realize just how wrong you really are.”
Please, God, can some Latter Day Lee Harvey put this varmint out of his misery?
Vermont Independent Sen. Bernie Sanders is considering a run for president — as a Democrat.
“I am thinking about running for president,” Sanders, a self-proclaimed “Democratic soci@list,” said in an interview on NBC’s “Meet the Press” on Sunday. “Running as a Democrat — that’s something that I’m looking at right now.”
The 73-year-old, who has served in Congress — both in the House and Senate — for more than two decades, is in Iowa this weekend to test the waters for 2016.
“I am the longest-serving independent in the history of the United States Congress — that’s how I’ve always won in the state of Vermont,” Sanders said. “One of the reasons I’m going to Iowa is to get a sense of how people feel about it. The truth is, [there is] profound anger at both political parties, more and more people are becoming Independent.”
The Brooklyn-born Sanders said he may run as a Democrat because setting up “a 50-state infrastructure as an Independent” could be too difficult.”
Denmark’s contributions to the world right now:
Fcuking Danish can’t even play football anymore.
Danish are about as useful as Lebanese.
Waiting for fcuktard to claim the Danish are more evolved because they are closer to the singularity.
After some thought, I actually prefer Lebanese.
“As a side note on the accuracy of this government data, in a previous role at IKEA, when I was a much younger man, I was responsible for filling out the monthly government retail surveys for the Census Bureau. The government drones collecting this data do not check it. They do not require proof that it is right. It is self reported by retailers across the country. Filling out this crap for the government was about as low on my priority list as whale shit. If I was really busy, I’d make the numbers up, scribble them on the form and put it in the mail. The numbers the government are accumulating are crap. And then they massage the crap. And then they publish the crap as if it means something. It’s nothing but crap.
When you see the headlines touting strong retail sales, you need to consider what you are actually seeing in the real world. RadioShack will be filing for bankruptcy within months. Wet Seal will follow. Sears is about two years from a bankruptcy filing. JC Penney’s turnaround is a sham. They continue to lose hundreds of millions every quarter and will be filing for bankruptcy within the next couple years. Target and Wal-Mart continue to post awful sales results and have stopped expanding. And as you drive around in your leased BMW, you see more Space Available signs than operating outlets in every strip center in America.
My anecdotal proof of this relentless slow motion retail trainwreck is twofold. We received our second 30% off discount coupon from Kohl’s in the last three weeks. We are so indifferent to these constant offers that we didn’t even use the first one. I have to wear dress clothes to work every day, so I went over to Kohl’s this morning when they opened at 8:00 am to get some dress shirts and pants.
The parking lot was an oasis of empty spots and there were maybe 5 customers in the entire store. I went to the mens’ section and was shocked to see about two dozen 60% to 80% off racks. There are usually two or three racks. The store was overflowing with summer merchandise. Summer is over. The store should have been overflowing with Fall merchandise. They are clearly in the midst of an inventory disaster. I found excellent dress shirts on the 70% off rack. Everything I bought was at least 50% off, even before my 30% coupon and another $10 menswear coupon.
I live in a relatively upscale suburban area and still this Kohl’s is an absolute disaster. Their gross margin is going to be hammered. Profits are going to implode. Kohl’s has always been a favorite retailer of the middle class. Decent quality at reasonable prices. Their comp store sales were between positive 5% and 15% for years, until the 2008 financial collapse. Their struggles since then coincide with the decline of middle class incomes and the fake jobs recovery. The fact that they are spiraling downward flies in the face of the propaganda being spewed by the government and media.There is no recovery for the average American.
My second data point happened on Thursday. An accident on the Turnpike forced me to take Lincoln Drive and Germantown Pike home from work (1 hour and 55 minutes of agony). I hadn’t taken this route in about six months. Germantown Pike winds through the Chestnut Hill section of Philly. This is an artsy fartsy area with boutique retail, chic outlets, and fancy restaurants. The upper middle class frequents the area. The retail stores were always open, occupied and busy.
Not anymore. I saw dozens of empty storefronts, Space Available, and For Lease signs. The open stores had no customers. The trendy eating establishments had few patrons. Even the yuppie latte drinking areas are beginning to crumble. Every office park I passed had Space Available signs in front. The amount of vacant retail and office space in this country is too vast to comprehend and is being under-reported by the real estate whores whose job it is to rent space. Ignoring the facts and the truth doesn’t change the facts and the truth.
Do you believe the government and the corporate media, or do you believe your own two eyes?”
I’m using my Cabelas points for more ammo and survival gear. I so hope you’re wrong but I have been seeing the same thing as the writer.
In Philly Saturday night for some eats (Memphis Tap Room) and fun.
Other than Center City, there was a definite Mogadishu vibe. There’s no goddam wealth there, and you can literally see and feel the effects of the tax base having been chased away.
#32..could it be location?, these stores are always packed where I am , Rt 46-80, Wayne/Woodland park/Totowa…
condo, NJ is bleeding wealth. ;)
Buy now, or be priced out forever.
I think we are “bleeding” monthly payments…..
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