The Minimum Wage is not Enough

Karl, you ignorant, coldhearted, Canadian schlub.

Many like you have argued the negative economic consequences of the minimum wage. I suggest those are a pittance and irrelevant. The issue is one of protecting the exploitation of workers by their greedy corporate masters and building on the foundation of our economic system – the middle class. This may sound a little strange coming from someone who describes himself as a free market capitalist, but I am one of those lucky people who have gone from relatively rich to poor and back. How did that happen? Fidel Castro.

Minimum Wage: Much ado about nothing?

It's funny how your thinking changes as you get older. In my younger days, things like rent control and minimum wage were, to me, unquestionably good things. When the minimum wage went up, I got a raise. Rent control meant my top hat wearing capitalist landlord couldn't just jack up my rent at the end of the year so he could afford a better brand of mustache wax.

Wednesday, Wednesday, Wednesday!!!

FOR ONE DAY ONLY (not really)

THE LONG RUN BLOG

WILL BE FEATURING A DEBATE

AND

YOU'RE INVITED.

Sometime Wednesday night, we will be posting opposing opinions on the MINIMUM WAGE issue.  In one corner, we have the spirited and astute Julio from Silicon Valley. In the other corner we have the clever and sharp Karl from Canada. Julio will presenting in favor of the minimum wage and Karl will be against it. I used a state-of-the-art random number generator ($0.25 coin) to assign each a position. Understand that they will do their best to defend their position whether or not they believe it - like O.J. Simpson's lawyers. We'll post both positions, pause for comments and let the rebuttals begin (if necessary). I will moderate. Let the insults debate begin!

Free markets and financial literacy

In a free market, individuals are supposed to patronize companies that provide a fair product at a fair price (value). Produce what the market needs and you have a viable business. Fail to deliver what the market demands and your business is toast. After all, if you bought tire brand A and the tires blew up, you would stop buying them right? Tire brand B would take market share by offering a better product at a price deemed worthy and put tire brand A out of business. Nothing terribly inciteful about that, just common sense right? The result is increased competition to satisfy consumers and healthier businesses.

Better Orgasms or the Illusion of Corporate Governance?

I was going to make my introductory post earlier this week but what with the Obama inauguration and everything I decided to wait a couple of news cycles so as not to steal his thunder. Actually, that’s not true. The real reason is that I’ve been bouncing back and forth about whether to write about the failure of governance in the recent corporate meltdowns or about a survey just published that found that women have better orgasms with rich men. After all, Brett said I could blog about anything as long as it had to do with money.

Getting rid of Lincoln and the Maple Leaf?

In Canada, there is a fair amount of American coinage in circulation. No Canadian retailer would refuse payment that includes American coinage. Of course no exchange is ever given on coin.

When you work in retail and come in contact with a great deal of coinage, you can kind of supplement your income by fishing out American coins, tossing in Canadian coins, and eventually collecting enough American coinage that you can roll the coin. Banks won't give exchange on loose coins but if you have an American funds bank account at your Canadian bank, the bank will accept rolled American coin same as American paper bills.

Hey, neat coincidence

Some of you may have noticed that the market fell over 5% today, the day Obama was inaugurated. This caught someone's attention and Bloomberg reported that from Election Day to Inauguration Day, the market fell 14% waiting for Obama. This was the worst performance for the Election-Inauguration day stretch on record. The second worst, at -13%, was waiting for Roosevelt in 1933. The almost identical loss is coincidental and not based on any fundamental math or econometric reason. FDR experienced such a drop due to the horrible, deteriorating economic conditions at the time (during the Depression). Today, conditions are rapidly deteriorating as well and we fear a depression. Just a coincidental sign of the times, I guess.

Coming Soon

As you know, we have been trying to expand our presence.  In that vein, I am happy to announce that a new blogger, Julio Guardado, will be joining us. Julio is a former tech CEO and semi-retired investment banker. Based in Silicon Valley, Julio will no doubt bring another perspective to our offering. He will be introducing himself shortly.

As always, please continue to challenge us with questions and comments, particularly if you think we missed something or are simply wrong.

And suggestions!  Please email us with suggestions and/or questions.  We can write about what tickles our fancy anytime, but addressing topics of interest to readers is even better.

"Double Taxation"

Inspired by the comments after the Death Taxes post, I checked a couple of sources about "double taxation". Although we use this term rather loosely, it actually refers to a very specific situation occurring when taxes are paid twice on the same source of income. There are only two solid examples of this.

The first example involves the taxation of dividends. A corporation earns profit which is taxed as income. If that corporation decides to pay a dividend to shareholders, the shareholder receiving the dividend must also pay tax on the dividend as income. The profits of the company are thus taxed twice- first as corporate income and secondly when paid to the owner despite being the exact same source of income. This is as if you picked up your paycheck at work net of taxes and then took it to the bank to cash. The bank then withheld even more taxes from your already shrunken check for the privalege of taking the money home from work.

Death Taxes

Yes the dreaded "death tax".  You even have to pay a tax to die, how distasteful! Obama has indicated he wants to keep the tax at current levels rather than letting it expire next year as was intended under the Bush tax cuts. Of course, the "death tax" is really the "estate tax" and is far more complicated than most realize.

Time to Retire Ben and Borden, Grant and King?

One of the problems, post Christmas, is having one or more hundred dollar bills in your wallet. This is the traditional Christmas gift in my family, from elder to younger. My dad hands me a $100 bill. My mother hands me a $100 bill. When my grandparents were alive that meant another couple $100 bills. I have one nephew which means I take one of the $100 bills given to me and simply pass it down to my nephew. I don't even bother anymore to put it in a new Christmas card for my nephew. I simply remove the bill from my mother's card, issue the customary mock surprise and real gratitude, and then put it in my pocket. Next day when I see my nephew, I just take it out of my pocket and hand it to my nephew. My nephew, being 17 years old, does not at all mind the lack of the personal touch.

Mortgages, Congress and Contractual Rights

A number of stories regarding mortgages and Congress have been circling this week. More specifically, Congress has been working on legislation that would allow bankruptcy judges to modify mortgage contracts. In fact, some of the rumored provisions only apply to second homes and investment properties. There are some serious issues with this sort of idea.

Suicide Myths

There have been quite a few unfortunate, high profile suicides lately. Several were directly a result of the Madoff scandal- investors who lost everything or were disgraced by participation. Another just this week, German billionaire Adolf Merckle ,threw himself in front of a train.

Misery Loves Company

I recently happened upon a conversation where people were discussing how much their 401K's lost last year. Down 35, 40, 45%. All stock investments presumably, and no bonds. It was very interesting to hear how they were taking solace in each other's losses. "Misery loves company" goes the old saying, and for good reason.

Obama's Stimulus Plan

Since late November, ideas have been steadily leaked regarding the form of the stimulus package. So far, I have refrained from commenting since the final package will look very different from today's talk. What did prompt this post, however, is just how masterful a politician Obama is from the start. As one would expect from seasoned Washington leaders, Obama's aids have been steadily leaking ideas, no doubt to test the water and see what Wall St and Washington think.

Asset Classes

It occurred to me, for reasons I'll mention shortly, that we haven't specifically discussed the concept of an 'asset class'. There is a universe of assets out there: you can buy stocks, bonds or real estate for example. Some assets trade on exchanges with daily liquidity and pricing while some assets, like direct investments in real estate, have little liquidity and vague estimates of the current value. There are currencies and gold, commodities and collectibles (e.g. art, wine) amongst others.

Where we stand II

First, a very happy New Year to everyone. I hope everyone enjoyed their holiday week(s) and some time off (I did). We are going to try something a little different this week. For the next week or so, I will post everyday about something. Whatever catches my eye will get mention, whether it is in depth or simply an observation.