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Is it possible to balance the federal budget without raising taxes?

Can Congress balance the federal budget without a tax increase?

Indeed it is possible, but to do it Congress would have to undertake fiscal policy changes of Herculean proportions. Namely: radically changing Social Security's benefit for retirees, turn Medicaid over to the states, and implement other spending cuts.

Continue reading Is it possible to balance the federal budget without raising taxes?

Are bank bonuses excessive?

Wall Street is getting back to normal. How do we know that? One gauge: measuring Wall Street's health is the amount of bonuses bank employees receive.

Here are just a few numbers that reflect how Wall Street is doing:

  • Goldman Sachs Group (NYSE GS) set aside $16.7 billion dollars for compensation in 2009, just a few dollars short of the record $16.9 billion set in 2007.
  • Each employee at Goldman averages $527,192.00

Continue reading Are bank bonuses excessive?

How fragile are stock returns?

Earnings season seems to be off to a promising start. So far Alcoa (NYSE: AA) cut enough costs to get back into profitable territory and same-store retail sales are up collectively for the first time since last year.

This sounds good and the major market indexes are up on the news reaching mid-September's resistance levels. A break here could turn into another extension of the rally. However, should investors be moving more heavily into stocks?

Continue reading How fragile are stock returns?

Toyota to recall around 3.8 million vehicles

Toyota safety recallThe world's largest auto maker, Toyota Motor Corp. (NYSE: TM) announced Tuesday that is was about to issue the biggest recall in the company's history, as problems with some floor mats has led to numerous accidents and at least five deaths.

The recall involves eight different models of Toyota and Lexus vehicles manufactured and sold in the U.S. over the past six years, and include the popular Prius hybrid. Apparently, there is a problem with the driver side floor mats that result in the mats coming loose and jamming down the accelerator.

Continue reading Toyota to recall around 3.8 million vehicles

Chasing Value: Newcastle up 500% -- why?

They say you should not look a gift horse in the mouth. Sorry folks, sometimes you do. In the case of the recently catapulting Newcastle Investment Corp. (NYSE: NCT), which I bought at 60 cents a share, I am.

I have been following this company for a while and have both made and lost money. Although it started out as a penny stock for me it has jumped over 150% in a week and closed today at $3.61 up $0.39 (12.11%) -- for a total gain to date of 502%. So why am I complaining?

Continue reading Chasing Value: Newcastle up 500% -- why?

High yield bond funds take a break

High yield is a nice way of saying "junk" when talking about bonds. These bonds are issued by firms who must pay a higher interest rate when raising capital than those companies that issue bonds that qualify as investment grade. Those higher interest rates are attractive to investors and lately demand for high yield bonds has led to a very nice rally in junk bond funds like the iShares High Yield Corporate Bond Fund (HYG).

Today, HYG is finally pausing in its uptrend as investors take some profits off the table across the bond market. Investors are concerned about the fact that the Treasury plans to flood the $112 billion worth of new debt into the market next week. That will be a record auction amount and could put temporary downward pressure on bond prices.

Continue reading High yield bond funds take a break

Collectible Investments: U.S. patent medicine tax stamps

Can investing and collecting go hand-in-hand? Yes -- especially if you are collecting coins, stock certificates, bank notes, or other rare items of value. Larry Schutts, an expert in investment-related collectibles, will periodically review items of interest from his collection and answer your questions here.

In the summer of 1862, the rising costs of the Civil War prompted the U.S. Congress to enact a broad new tax program. The Revenue Act of 1862 created the office of the Commissioner of Internal Revenue and introduced Americans to their first progressive rate income tax. The Act also required that taxes be paid on documented business transactions and on the sale of certain proprietary retail goods. In order to prove payment, citizens and businesses bought government-issued revenue stamps and applied them to their documents and merchandise. On the documentary side, the inconvenience of dealing with stamps led many to order such paper goods as checks and stock certificates with government-approved stamp designs already printed on them. Retailers, on the other hand, quickly saw the advertising possibilities and were ultimately granted permission to obtain stamps bearing their own private labels.

Continue reading Collectible Investments: U.S. patent medicine tax stamps

Apple accused of being monopolist, sued over new Snow Leopard software

Apple, Inc. (NASDAQ: AAPL), the consumer electronics manufacturer with unmatched style, was just accused of being a lame monopolist. Why? For ensuring the operating system software it makes only runs on personal computers it manufactures itself. Oh, the horror!

Continue reading Apple accused of being monopolist, sued over new Snow Leopard software

Chasing Value: Blaming GE's Immelt for what?

Some of the venom spewed at General Electric Company (NYSE: GE) every time I write about it, is getting kind of old. I understand the criticism of Jeffrey Immelt, the CEO who takes the blame for everything that is wrong with the company and the economy.

I too have felt that he might have done more. In particular, while I argued Monday that most of the companies divisions were well integrated, or at least related, I am not sure that entertainment has to be a part of the mix, and the company is on the record to jettison the appliance division already.

In considering the plight of the GE shareholder, myself included, what exactly is it that investors would like Immelt to do?

Continue reading Chasing Value: Blaming GE's Immelt for what?

FedEx & UPS challenged by USPS flat rates

The United States Postal Service has been heavily promoting it's flat rate deliveries based on the the size of the box instead of the weight in an attempt to retrieve some of the business that it has lost to Federal Express Corp (NYSE: FDX) and United Parcel Service.(NYSE: UPS) over the years.

The increasing use of the internet has reduced snail-mail traffic, hurting USPS revenue, while the internet has increased the traffic of package delivery services as sites like Amazon.com (NASDAQ: AMZN) and eBay (NASDAQ: EBAY) continue to expand their businesses and new enterprises and existing traditional companies expand their web presence.

Continue reading FedEx & UPS challenged by USPS flat rates

Chasing Value: GE -- the Exxon of water

While I'm chasing value, General Electric (NYSE: GE) is chasing revenue from water projects. It may not amount to much now, but GE is betting it will be huge some day and it has been working towards this goal for many years.

Although GE had estimated 2009 revenue of $2.5 billion from the water business, that is only a meager 1.6% of the $156 billion in worldwide sales generated by its major business divisions that the world's largest maker of jet engines and electricity-producing turbines is expected to generate this year.

Continue reading Chasing Value: GE -- the Exxon of water

When the U.S. goes public, the economy benefits

Here's a brain teaser for investors: What enabled the United States to ascend to superpower status?

Was it the inherent genetic superiority of Americans? Perhaps it was the nation's work ethic? Was it the vast and ample nature resources, or generally favorably climate? Or perhaps is was the nation's location, bordered by two, large oceans that discouraged many who had thoughts of launching an assault?

Well, while ruling out the first variable (there are a lot of smart people in the states, but no, Americans aren't genetically superior to others), the remaining variables played a role in the nation's ascendancy. But there was another pivotal factor.

Continue reading When the U.S. goes public, the economy benefits

What happens when private insurance companies cover only healthy people?

One economic point brought to the forefront in the universal health care debate is something economists have talked about for decades, but one that only recently Americans are beginning to understand fully.

Namely, efficiency in health care is a good thing, but if it's applied to private health insurance company business models -- i.e. insuring only healthy people or the healthiest citizens -- the logical consequence of it is, obviously, a larger and larger pool of excluded, less-healthy citizens and/or people who need more care and whose health care costs are higher.

Continue reading What happens when private insurance companies cover only healthy people?

Market absolutism, like orthodox communism, is dead

Here's something I try to convey to students I teach at the undergraduate level: it can take years, even decades to confirm economic trends -- 'instant-analysis' is frequently wrong and often serves little purpose -- but there are trends one can discern fairly quickly.

One economic trend that's clear and one investors need to recognize: Like orthodox communism, market absolutism is dead as an economic philosophy.

Continue reading Market absolutism, like orthodox communism, is dead

Reform the health care system, the U.S. must

As New York Times (NYSE: NYT) Columnist and Nobel Prize-winning economist Paul Krugman has noted on numerous occasions, the health care insurance industry in the nation has been a success. The problem is the method used to succeed -- insuring only healthy people -- has negative consequences, particularly in a democracy and in a sphere that directly impacts life itself: human health.

The original argument, really a belief, was that the uninsured would not present a problem -- fiscally, economically, or socially -- for the nation.

Continue reading Reform the health care system, the U.S. must

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DJIA+30.6910,464.40
NASDAQ+6.872,176.05
S&P 500+4.981,110.63

Last updated: November 25, 2009: 08:42 PM

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