It’s official. The Bay State is having another weekend where the state’s 6.25% sales tax will not be added to most purchases under $2,500. It’s this coming weekend, August 14-15. Not that I want you to run out and spend wildly. But if you’ve had something on your list for a while, or you’ve got a long list of school supplies to get, this might be the best weekend to get things purchased, including beer, wine and alcohol.
The MA Department of Revenue estimates consumers may save between $20 and $23 million. That’s certainly a chunk of money I’m sure the state could use, but tax revenues are bound to be significantly higher through the increased economic activity that’s bound to be generated. The state has done this for several years and it’s always a popular move. It’s especially popular with the Retailers Association of Massachusetts which has hailed the move as an important stimulus in this tough economy. 19 states are having a sales tax holiday this year according to the Federation of Tax Administrators.
So, make a list of the bigger ticket items that you need….and happy shopping! Until next time, here’s to good planning!
I have to admit that I hadn’t heard the term “liar loans” until the U.S. Senate voted to prohibit them a couple of days ago. These mortgages got their name because (during the height of the most recent real estate boom…in the mid-2000’s) borrowers didn’t have to provide any documentation about their income or even disclose what their income was. So, it became pretty easy for someone to just…uh…fib about their financial situation (perhaps) knowing they’d never be able to keep up with the payments. Before the bottom dropped out of the housing market, a lot of people probably thought they’d never have a problem making their mortgage payments. But then, you lose your job, fall behind in your bills and your house goes into foreclosure. It’s happened to millions of Americans. The House has already approved a similar measure.
Also on the chopping block were those incentives to real estate brokers which had been designed to steer borrowers toward loans with higher interest rates and prepayment penalties. All of these provisions are part of the sweeping financial regulatory reform bill that’s moving through Congress like molasses. Ever watched molasses? Painful…especially when it goes around a corner. Until next time, when I expect to have posted new photos, here’s to good planning!
Yesterday was a double whammy with some whiplash thrown in. The Dow Jones Industrial Average dropped like a rock (998 points) in a short period of time and then recovered roughly two thirds of its loss by the close of trading. Concerns about European debt and a stupid trading error in the U.S. appear to be the culprits. I hope you didn’t do anything rash.
The first whammy was Greece, a country with huge budget deficits. Things can’t continue there without belt tightening, tax increases and BIG spending cuts. At least that’s what the country must do in order to have its debt guaranteed by the European Union (EU). Protestors are trying to prevent the impending frugality, but they will not succeed. There’s much at stake for the EU, because if Greece falters and can’t sell its bonds to raise money, Portugal, Spain and Italy may not be far behind. Many believe this is similar to what happened in the U.S. after Lehman Brothers failed back in 2008.
Whammy #2 reportedly happened at Citibank, where a trader appears to have mistakenly sold Billions of shares of Proctor and Gamble instead of Millions. That snowballed into the longest downward roller coaster ride for the Dow, in one day, in its history. Now…..looking at my keyboard, I see that the “n” is the only letter between the “b” and the “m”. I’m sure these traders are working fast, but this really shouldn’t happen. Maybe that trader just has fat fingers and needs some cutbacks at the dinner table. The market was able to come back up 650 points, which created the whiplash. I’d say that’s just a little too much excitement for one day. I’m hoping the Europeans pull together and help each other get through these tough times. Typing classes at the big banks may also be a good idea. With all those bonuses they’ve handed out, surely there’s some dough for that. Until next time, here’s to good planning!
I hope you’ll be paying attention on Thursday when the President makes a speech in New York on why financial reform must be passed by Congress. If it were me, I’d sit atop that famous bull that epitomizes the Wall Street culture. Probably wouldn’t be very presidential.
I swear I heard people cheering last Friday when the news broke about the civil lawsuit by the Securities and Exchange Commission (SEC) against Wall Street powerhouse Goldman Sachs. (OK….maybe it was just me making the noise.) The timing was pretty interesting, don’t you think? Did the SEC wait until the economy and markets were strong enough to withstand such news? Or, maybe, the Friday before Congress started debating ways to rein in Wall Street, as a way to influence the final vote? Sorry to be so cynical. Either way, it’s about time!
Back in 2007, there were people in the Goldman Sachs mortgage division, reportedly backed by management, bundling together bonds, backed by residential mortgages to homeowners who couldn’t afford their payments (sub-prime mortgages). When the mortgage payments stopped coming, the loans defaulted, and the results, as you know, were disastrous. Everything went south. But not the pinheads at Goldman Sachs. Knowing things would go south (but not disclosing that to investors), they had used complicated investments known as derivatives, to bet against their own bonds, thus making billions when the bottom fell out of the housing market. And now there are some in Congress (the minority) that thinks we don’t need financial reform. They must have owned some of those derivatives, because I can’t imagine why anyone wouldn’t want to prevent such a disaster in the future. Call your senator or congressperson. I suspect more shoes will drop from this centipede before it’s all over. Until next time, here’s to good planning!
I get weekly emails from the city where I live, Cambridge, MA. It’s a great way to keep up on what’s going on and what’s coming up. Part of last week’s email told of the nearly $6.5 million Cambridge has received from the American Recovery and Reinvestment Act (the stimulus). I hear plenty of people complaining about the cost of the stimulus program, so was curious where the dough was going. Here’s some of what I found:
* $1,224,854 to improve programs for children with disabilities (and their families)
* $380,199 to support and expand the teaching and learning for students at schools in high poverty areas, most at risk of failing to meet the state’s academic achievement standards
* $674,070 to improve streets and sidewalks
* $162,000 for job training programs
* $995,000 for homeless prevention programs. This consists of financial assistance, housing relocation and stabilization services
* $759,600 for a municipal building energy efficiency program
* $100,000 for an energy efficiency program an 1-4 unit multi-family homes
Real money affecting real people. If you live in Massachusetts, check out how much of the stimulus money is coming to your community. Here’s the link: http://www.mass.gov/?pageID=stimhomepage&L=1&L0=Home&sid=Fstim . Until next week, here’s to good government and good planning!
I love Warren Buffet. He strikes me as the closest thing we’ve got to Harry Truman, the ultimate straight shooter. Buffett has been the chairman of Berkshire Hathaway since 1965 and has had an annual salary of $100,000 for the last 25 years. In a letter last Saturday to his shareholders, he was very critical of those “too big to fail” banks. According to an article in Fortune Magazine, Buffett said there’s one easy way to fix the problems with these banks: make sure the high-level execs have some skin in the game by putting their bank accounts on the line. What a great idea!
Fortune quotes from Buffett’s letter: “It’s the behavior of these CEO’s and directors that needs to be changed. They have long benefitted from oversized financial carrots; some meaningful sticks now need to be employed as well. The CEO’s and directors have largely gone unscathed.” Case in point: Neither of the former executives of Bear Stearns or Lehman Brothers had very much of their wealth tied to their former respective firms as they ran their companies into the ground. It was the smaller shareholders (and ultimately the American taxpayers) who bore the brunt of the huge losses.
The Obama Administration has proposed separating the banks’ proprietary trading activities from their federally subsidized deposit-gathering and lending. Others have proposed requiring the banks to hike the amount of money they have on hand to guard against losses. So far, there aren’t enough votes in Congress to get anything done. I like Warren’s way. Until next time, here’s to good planning!
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