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7 posts from October 2012


Postal Service Must Sink or Swim

As of mid-October, the United States Postal Service has reached its $15 billion borrowing limit for the first time ever, according to Kim Dixon of Reuters. Because it operates as an independent agency of the government, it relies solely on the sales of stamps and products such as envelopes and greeting cards.


So like the rest of the world, it’s either sell more goods or reduce staff and costs. Innovate or perish.

An April 30 article in the Economist, You’ve Got No Mail, summarizes that the postal service has been hit hard by the recession and popularity of email over standard mail, but there are no bailout plans for the postal service.

Phil DiNuzzo said on the Quora site that is highly unlikely that the United States Postal Service would shut down in the medium-term. “There are a variety of ways that agency can cut costs or increase revenue, including raising the cost of delivery, charging a surcharge for direct mail advertising, eliminating mail delivery days and reducing mail pickup frequency,” said DiNuzzo.


Tax Payers Pay Twice for Solyndra’s Financial Collapse

The Wall Street Journal reported in its Solyndra Memorial Tax Break article October 15 that one of President Obama’s 2008 billionaire campaign donors is trying to sidestep a federal tax bill amounting to hundreds of millions of dollars.


Under Solyndra’s bankruptcy plan, taxpayers will recoup $27 million at most on Obama’s $535 million in tax payer dollars lent to Solyndra in the government’s 2011 bailout effort.

Solyndra has formed two companies, Argonaut Ventures and Madrone Partners, as holding companies that won’t make products or employ workers, but will get the Solyndra tax offsets.



Republicans Stand Firm on No Tax Increases in 2013

Regardless if Obama wins re-election this fall, Republicans will oppose any tax increases as part of negotiations to reduce the budget deficit, according to U.S. House Speaker John Boehner. 


Obama won’t agree to extend tax cuts for top earners, leaving the parties at a standstill. In preparation for the Democrats to pass tax increases, Republicans have passed bills to avert “automatic changes,” according to journalist Richard Rubin with Bloomberg.

While tax policy continues to divide the parties, Boehner said, “It’s important for our country to fix our debt problem and to have a tax code that’s competitive in the worldwide economy,” according to a Sept. 21 Bloomberg post.


What To Do with the Money of the Rich

Eleven more billionaires have signed Bill Gates and Warren Buffet’s Giving Pledge, promising publically to give away half their wealth before they die.

Manoj Bhargava, founder of 5-Hour Energy drink; Reed Hastings, Chief Executive Officer of Netflix; Gordon Moore, co-founder of Intel Corporation; and Mark Zuckerberg, founder of Facebook all are onboard to influence and attempt to increase charitable giving while they still have a voice in the distribution of their wealth.


Other wealthy chief executive officers have declined because they are awaiting proof that the Giving Pledge is bringing additional money to causes benefitting the neediest people – as opposed to trusts for the children of the wealthy.

Marc Benioff, founder of Salesforce.com, declined to sign the pledge and donated $100 million to a children’s hospital of his choice. German shipping billionaire, Peter Kramer, questions the power of the super-wealthy shaping issues of public concern such as education and prefers a democratic dialogue that includes government over a private committee. 

Since Gates and Buffet started the effort in 2010, total estimated charitable giving has increased four percent and giving by foundations increased 1.8 percent.*


*SOURCE;  Giving USA Foundation.


US Corps Moving Taxable Dollars Overseas Challenged

Four tech giants, Microsoft, Hewlett-Packard, Apple and Google, faced questions by the Senate subcommittee this month about sheltering their overseas profits from United States Taxes.

Senator Carl Levin, D-Michigan, chairman of the subcommittee, says American corporations house nearly $1.7 trillion offshore and sees this tax avoidance as a transfer pricing scheme.

Senator Tom Coburn, R-Oklahoma, says the maneuvers constitute ‘properly legal tax avoidance, ‘which is the fiduciary duty of all companies to their shareholders.

William Sample, Vice-President for Worldwide Tax at Microsoft said, “the United States international tax rules are outdated and not competitive…which is a disincentive for U.S. investment.”

Sample went on to say that one of its centers in Puerto Rico has a long history of offering tax incentives to attract export business. Is it time the United States addresses its “exceedingly complex” tax structure and makes it competitive in a global business arena or are mega-companies just taking advantage of tax loopholes? Let us know your thoughts.


SOURCE:  Sept. 20, 2012 Wall Street Journal


Check for Fees on Your Free Checking Account

Because of new regulations, banks are increasing the minimum balance rules to receive free checking. According to a survey released by Bankrate, free checking balance requirements jumped 23% over the last year and the average monthly fees associated with non-interest checking accounts rose 25%.

Bank customers now must keep an average minimum balance of $723 in their noninterest bearing free checking accounts and should expect to pay about $5.48 monthly in fees if this balance drops beneath $723. 

And the fees don’t stop there. SunTrust, the 11th biggest bank ranked by assets, raised other checking account related fees last month. Basic checking account customers will now pay  $36 on all overdrafts instead of the former $25.

The fees are the banking industry’s effort to address losing $10 billion a year in revenue because of federal restrictions on debit cards and overdraft policies, according to a Sept. 24th article in the Wall Street Journal.

In addition to adding or upping fees, banks such as Bank of America are cutting staff. BOA intends to shed 16,000 jobs by the end of 2012.

Want to learn more about the cost of free checking? Watch this WSJ video.



Should You Take a Timeout from Stocks?

Though the year is far from over, some money managers are considering staying on the stock sideline for now. The Wall Street Journal reported in its Sept. 24 article that money managers who caught the year’s stock market rally are sitting on percentage gains well into the double-digits .

One manager of $18 billion in assets from Brown Brothers Harriman in New York said that the “market has gotten ahead of itself.” He is advising his clients to take some profits from their winning stocks because he’s concerned that headlines from Washington, Europe, the Middle East or China could upend the rally.


The market is now trading at much higher levels while economic trouble spots remain unresolved. The Dow Jones was up 11.1% last week nearing the October 2007 peak; and the S&P stock index was up 16.1%, gaining almost 30% from where it stood a year ago.

Another portfolio manager at Neville, Rodie & Shaw, Reed Choate, said even though the headlines are taking a breather for now, that political issues could spring up and erode confidence.

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