Friday, December 28, 2012

Better living from the IRS

The Ukraine has a long history of getting stomped on, abused, and put through unspeakable suffering. How are they doing these days?

Those spice blue eyes of the original human Barbie - now on her way to a mall opening near you (or not )-  hold more misery than the director's cut of Dune.

Which reminds me of a song - a song that poses the eternal question : Whiny or pretentious?

Sorry for the Polish subtitles - I couldn't find a Ukrainian, or even a Hungarian Horntail. But the Ukraine is hardly the only part of the world with suffering. The real question today is : How do we deal with the suffering of others?

There are a lot of approaches. Think kindly thoughts, but only act when it's in your face is a common one, usually effective as far as it goes, which is about the end of your nose. Another is political action. You know how to do that, & it's not really so difficult, although it certainly has risks. Another is to decide what's important to you, and join in the effort.

Here, for once, there's an  answer.  The IRS will help you find people of like mind, in your area, who are doing something. There are over a million active organizations - and half a million whose exemption has been revoked for nonfiling, so you can probably find a ton within an easy walk. Or,you can go the other way. Hear about a likely organization - say Ducks Unlimited - well, the IRS will tell you where they're headquartered whether they have a valid exemption, and if it has been revoked. (If you're just looking to give to a charity, something like Charity Navigator is useful too, but not as good if you're looking to find the nearest monastic historical society where you can go to weekly meetings and wear hairshirts in public)

The IRS does not post the annual filings on its website, although they are public information. Still, not a problem. There are various databases that collect this stuff. One easy way is to go to the home state AG. In Massachusetts, for example, it would be easier if you have a TIFF viewer, since the AGs office has switched to that annoying file type. Ducks Unlimited raises money in the Commonwealth, so there are hundreds of pages of documents and audited financials that tell you how they take in $150,000,000 per year, and how they spend it.

Looking for something cosier? How about the Boylston Chess Club? Alas, they had their 501(c)(7) exemption revoked. The name search at the IRS looks for an any word match, so otter gives 406 results. Fortunately, the Sea Otter Foundation of Yarmouth, Maine is near the top, so we can close with a bit of squee -

Tuesday, December 25, 2012

Survivors of 2012

It's been about 10 years since I first heard of Dead Pools. They seemed like a pretty safe wager (either you win, or your team lives) so I did some research & entered one. Happily, most years I've finished near the bottom. It's time to congratulate some of the mainstays over the years, people who beat diseases, turned their lives around, or just plain hung on through sheer cussedness.

Annette Funicello has had MS for 20 years. It started soon after she did ads for Skippy peanut butter. It's gotten worse, of course.

Correlation, causation - whatever. I stay away from Skippy.

Tommy Morrison is a former WBO heavyweight champion who retired after testing postive for HIV in 1996. Morrison was a BSer from an early age, as well as being absurdly tough. He made a comeback in boxing a few years ago, apparently after faking blood tests. He hangs on from when boxing was big & HIV meant death,  because BS backed by real toughness never goes out of style.

Jan Michael Vincent went from pretty boy to tough guy to Hollywood washout with more dedication than even Nick Nolte. After failing to kill himself with motorcycles, alcohol, and who knows what else, his roles ran out 10 years ago and he retired to Mississippi.

Michael Douglas is here to remind us never to believe anything we read in a paper, and certainly not in a blog like this.
Congratulations also to Michael J Fox, Ralphie May, Ethan Zohn, Muhammed Ali, Ted Johnson, Benny the Rat & Aretha Franklin. If you have any can't miss picks for 2013, please leave them in the comments, or stop by Hobies & join the fun. 6 days left to enter.

Monday, December 24, 2012

Keeping up with the Ohlemacher

There are good ways to use numbers to explain things. Tables*, charts and online calculators** are all well known. Changes in tax law need them.

Then there's the AP way : Throw a bunch of numbers in at random points in a narrative to make it confusing, like Stephen Ohlemacher did this weekend.

The basic story is fairly interesting : Since the IRS has been told repeatedly : Don't worry, things will change, they haven't sent out new withholding tables.

Social Security payroll taxes are set to increase on Jan. 1, so workers should immediately feel the squeeze of a 2 percent cut in their take-home pay. But as talks drag on over how to address other year-end tax increases, the Internal Revenue Service has delayed releasing income tax withholding tables for 2013.
As a result, employers are planning to withhold income taxes at the 2012 rates, at least for the first one or two paychecks of the year, said Michael O'Toole of the American Payroll Association.

Clear enough, yes? A side point that this means the Fiscal Cliff is an even gentler slope than you probably realized, and this would be a useful squib. Alas, however, it's a Big Story, which means 17 more paragraphs of increasing pointlessness.

The tax increases could be steep. If Congress fails to act, workers at every income level face significant tax increases next year as part of the year-end "fiscal cliff."
A taxpayer making between $50,000 and $75,000 would get an average tax increase of $2,400, according to the Tax Policy Center, a Washington research group. If the worker is paid every two weeks, that's about $92 a paycheck, on average.
Someone making between $75,000 and $100,000 would get a tax increase averaging nearly $3,700. If the worker is paid every two weeks, that's about $142 a paycheck.

Feeling stupider? It's working.

There's one fun bit along the way:

In addition, dozens of other tax breaks for businesses and individuals that are routinely renewed each year already expired at the end of 2011. Congress was expected to renew many of them by January, so taxpayers could still claim them on their 2012 tax returns.

Read it over a couple times, and it just gets crazier. This one we can't blame on Ohlemacher : He's clearly stated the actual situation. The year is likely to end, and tax law will be retroactively changed. The biggest provision is the annual AMT patch. Since it isn't indexed to inflation, there is $92,000,000,000 at stake for 2012.

*Forbes laid out the tables nicely last month
Scenario 1: Tax cuts under the extension of the Bush-era tax cuts for all
RateSingle FilersMarried Joint FilersHead of Household Filers
10%$0 to $8,950$0 to $17,900$0 to $12,750
15%$8,950 to $36,250$17,900 to $72,500$12,750 to $48,600
25%$36,250 to $87,850$72,500 to $146,400$48,600 to $125,450
28%$87,850 to $183,250$146,400 to $223,050$125,450 to $203,150
33%$183,250 to $398,350$223,050 to $398,350$203,150 to $398,350
35%$398,350 and up$398,350 and up$398,350 and up
Scenario 2: Tax brackets under the expiration of the Bush-era tax cuts for all
RateSingle FilersMarried Joint FilersHead of Household Filers
15%$0 to $36,250$0 to $60,550$0 to $48,600
28%$36,250 to $87,850$60,550 to $146,400$48,600 to $125,450
31%$87,850 to $183,250$146,400 to $223,050$125,450 to $203,150
36%$183,250 to $398,350$223,050 to $398,350$203,150 to $398,350
39.60%$398,350and up
Which means a tax increase basically of $450+ 3% of your excess over the top of the 15% bracket, a bit more if you make over $200,000 taxable. There are also various credits, the AMT, the possible reversion of dividends to ordinary, the increase o fhte capital gain rate to 20%. the expansion of the Medicare tax.... Well, there's a lot of details.

**Bankrate has a simple calculator

Merry Christmas.

Tuesday, December 18, 2012

We Can't Have Nice Things

Sure, US exceptionalism means we can't have security from violence, a low prison population, well fed children or universal health care, but what about physical projects?

In the 40 years since Apollo, what neat public stuff has the US built? I can't think of anything major. Sure, there are a lot of big projects (Aswan High Dam) that would have been better not getting started, but let's take a look at some good ones:

Bullet trains
Even India has them.

London Eye

(We have Coney Island & used to have the Jersey Shore)

Dubai City:

This is like a giant version of Las Vegas. Maybe not so great.

In any event, I'm just trying to point out a contradiction. The more we insist on Private Sector Rulez! Gummint fails, the less hope we have of doing anything really special.

And I want special, not more eyesores.

At last, a Church that GOD won't touch!

Thursday, December 13, 2012

If you have something nasty to say...

I need to hear it.

This is post #189 on this blog. Every now & then I produce a real lemon*.

Only twice has anybody mentioned this. Once I wrote a post about Them when it should have been about Us. Someone got upset. I don't know if the rewrite is good, but I'm damn sure it's better.  My last post was just a mess, and needed a straightforward cleanup.

So seriously : what other ones in this work need Edit: Stat??

*At least worse than usual. If it's time to just surrender, say so.

Tuesday, December 11, 2012

Ohlemacher does Steno

On a day the Chronicle of Higher Education did a salary survey , finding 36 private (non-profit) college presidents making over a million last year, the Asspress excreted an atrocity that will have to bump it. Sorry, Bob Kerrey! Your $3 million pay will be the story another day.

Stephen Ohlemacher has done it again. Every easily refuted chestnut about tax hikes and small business you ever heard, taken down with a breathless stenography worthy of Paula Broadwell.

I could stop here, but why not sear your eyeballs with the gory details? Let's roll:

President Barack Obama's plan to increase taxes on top earners would have only a small impact on the nation's economy, according to congressional budget experts. But don't tell that to small business owners facing a tax hike.
Obama's proposal would hit about 940,000 people who report business income on their individual or household returns, says the Joint Committee on Taxation, the official scorekeeper for Congress. That's only 3.5 percent of the people who report business income, but those business owners are projected to earn 53 percent of the $1.3 trillion in business income that will be reported on individual returns next year.
That, Republicans in Congress argue, makes those business owners an important engine for economic growth and job creation.
They recite it as gospel: Paying higher taxes will reduce the amount of profits business owners would otherwise re-invest in their companies, making them less likely to expand and hire more workers. Many economists agree that tax increases in general limit economic growth. But there are big disagreements about magnitude - how much relatively small changes in the top two income tax rates would affect the economy and job creation.

First some stuff that, if read closely, confirms income concentration. Nice start, but the Secret Language of Newspapers is already getting in the way. Then he gets into "Many economists".
Strip out the he said/she said - as Ohlemacher doesn't even try - and you find that there is no evidence that a change in the top tax rate will affect anything. Nada, zip, squat. Ohlemacher more or less concedes this - with an estimate that the effect will be 1/14th  of the total if everything bounces back. A litttle later, Ohlemacher moves into the shallow end of tax policy:

Qualified dividends, which are now taxed at a top rate of 15 percent, would be taxed as ordinary income for top earners, or at a top rate of 39.6 percent.
That, some business owners complain, would leave them with less money to hire new workers or keep the ones they have.
"We're trying to encourage people to go out and hire and take risks," said Brian Reardon, executive director of the S Corporation Association. "If you are reducing the marginal value, you are reducing the incentives for folks to take that risk."
An S corporations is a common business structure in which profits flow directly to shareholders who report the income on their individual tax returns.
Business owners note that they often pay taxes on profits they don't necessarily receive. For example, if you borrow money to start or expand your business, you can use some of your profits to repay the loan, but only the interest portion of the loan payment is tax deductible.
When business owners use profits to buy new equipment or make other upgrades, it often takes several years to write off the cost of those upgrades, depending on depreciation rules.

This sounds like it follows smoothly, but actually takes some sharp bends. Dividend tax rates are utterly irrelevant to S-Corporations. Their distributive share is taxed based on the underlying income, and owner/officers are paid taxable/deductible salaries similar to other employees. One thing about S-Corps: They have a unique loophole in Medicare taxes. Unless it's paid in salary, the owners income is not subject to FICA or Medicare tax. There was some noise about this earlier this year when Newt Gingrich's tas returns came out. There have been several attempts to close this loophole, but it seems the S-Corpation Association is bulletproof. It even survived the new Medicare surtax untouched.

This stuff about startup expenses is 100% hooey. Sure, the expenses you incur before you start a business are amortized undet Sec. 197 over the first 15 years of the business. How are you going to earn over $400,000 in a business you haven't even started?

Now we get to the stenography.

Dan McGregor, chairman of McGregor Metalworking Companies in Springfield, Ohio, said he and the other six shareholders in the business are looking at a tax increase of $250,000 to $300,000 next year under Obama's plan.
Under Obama's plan to increase the top two income tax rates, a taxpayer would have to have an income of around $4 million - depending on how it's structured - to face a tax increase of $250,000.
McGregor's company, which has 365 employees at five locations, does about $80 million a year in sales, McGregor said. Each year, a portion of the profits are distributed to shareholders, along with money to pay taxes. The rest, he said, is invested back into the company.
If taxes go up, distributions to shareholders must go up to pay the higher taxes, leaving less money to reinvest in the business, McGregor said.
"I feel a $40,000 reduction is the loss of one job, so if it's a $200,000 tax increase, that's five jobs," McGregor said.

First, for an S-Corporation, 3% is the increase - we covered the Medicare surtax loophole already. So that tax increase implies profits of about $9,000,000, or $25,000 per employee. That's profits - because all the shareholders/officers salaries are deductions. So he's saying he could afford to give everybody in the company a $25,000 raise! But he won't, because it's more important that the McGregor family each gets their million bucks a head distribution. It's a very old company. If they need more capital to expand, they can raise or borrow it. Also, accelerated depreciation means that if they really were plowing everything back in, the deductions would pile up.

Is this one of those places where things are so expensive that a million bucks a year is just getting by?

In Springfield, the median house price is under $60,000.

We've all heard about these "typical small businessmen" who turn out to be spokesmen for some wingnut front group. Is Dan McGregor? Hard to tell right now. I will note that he seems to be in charge of something called "Christian Mentoring"

Not sure what that has to do with this other Christ, who said:

Sell your possessions and give to charity; make yourselves purses which do not wear out, an unfailing treasure in heaven, where no thief comes near, nor moth destroys."

(of the Hibbing Zimmermenschen. Heh indeedy)

Monday, December 10, 2012

30,000 Pageviews Ho-Hum

With a moderate amount of posting and a big step-up in marketing, the RuN has reached 30,000 pageviews a bit ahead of schedule.

Thanks as always to Kate Beckinsale, Balloon-Juice open threads, Roger Ailes, Susan of Texas, and those Krazy Kids on the University of California Board of Regents.

Let's review our missions:

Fighting the increase in University costs.
Preparing for the end of the cheap energy age.
Warning uselessly of environmental collapse.
Providing a few laughs & a lot of breasts.

Hokay...0.5 for 4.

soooo. Wonder Woman movie. Why?

Nice suit. But who is she in 2012?

Anyhow, I have a new candidate :

Sunday, December 09, 2012

AssDeans are Asses : Film at 11

One important thing to remember about having too many administrators : The more there are, the more time they have to do really stupid stuff.

UC has come up with a new logo for their system.

Not sure who stared at that annoyed loading circle, and instead of muttering profanity like everybody else thought : Let's steal this!

Opposition was immediate. A petition is up.

The reviews are in:

It looks like a flushing toilet.
The logo fails because its embodies an abstraction on top of an abstraction. One layer of abstraction is sufficient.

There are some efforts thrown in to explain the difference between a logo & a seal, and to note the the seal remains the same. They fail, because the logo sucks.
 I found a better one:

Anyhow, this all reminds me of when NBC pulled the same stunt.

That was 36 years ago, and the logo wasn't as bad. It just cost NBC $600,000 to develop & a million to buy off NETV. People still remember.

Saturday, December 08, 2012

Dead Zones

One of the quiet nightmares of the last 50 years has been the growth of ocean dead zones as a result (mostly) of nutrient runoff. A cycle starts that ends up with rot on the bottom and no oxygen in the water.

You know where this is going : Michigan. Not the lakes - although the Great Lakes have more than their share of problems.

The cultural dead zone : The Suburbs .
How did Michigan, of all places, get to a point where the elected government could stage a coup against their people and institute right-to-work evil? Because so many of them know absolutely nothing of labor history. From the Pullman riots to the relative peace of 1945-1970 was a long, sometimes bloody struggle.

And the history of it was just vanished. The plutocrats stood aside for a generation, while pumping out reams of propaganda. The means of transmission of folk history vanished with the public spaces and places where teens could interact with elders. Places that were systematically excluded from the antiseptic residential monocultures planted in the Auto Age. By 1980, peoples heads had been emptied enough that the White Folks litany could be pumped into a vacuum. The Class War was on, in secret. Victory has been complete. Even 30 years ago, could someone as clueless & odious as Willard Mitt Romney, with his constant denigrating of most of the population, his history of corporate evil, and his sheer cluelessness been allowed anywhere near a nomination? Maybe, but the stories that he ran on - the moochers, dependent, winks, nods, dog whistles & fables - would have at least drawn derision. Now? we are cursed with Very Serious People, who appear to have been raised in jars & don't even have scruples to lose to become pundits.

Corporate profits as a share of national income in red, wages in blue. See any improvement since 2009? This chart is almost enough to turn an O-Bot into a Firebagger. In any event, it's a call to action:

Wake up, and start knitting, all you zombies out there!

Also, too : The rest of the country, walking quietly down the chute.

Thursday, December 06, 2012

5 Dead in Boston

There have been 5 people killed riding their bikes in Boston in 2012, all in the last 6 months.

The latest was today. A 23 year old was moving too fast to avoid a truck making a right turn from the left lane.

In November, a 28 year old was hit by a bus.
In September, a woman was hit by a truck.
A bit before her, an older man hit by a pickup truck was the only case this year where the driver has been charged.

A woman was hit by a bus in June :

They all seem to have come to Boston from far away - Taiwan, Ireland, Seattle. One of them - the oldest - never seems to appear in the story of his death. He has a name & an age, but nothing of his life was in the dozens of stories I searched.

Statistically, it's getting a bit safer to bike. More and more bikes, about the same number of accidents. If there is a point to this post, it's Slow Down.

Monday, December 03, 2012

Like I said, I'm usually hungry*

Before** Star Trek, there was a show with the exact same characters: Gunsmoke.

None of those are the characters with which we are concerned today. Today, we explore a man's man, Quint - the Worf of his day:

In 20 years, Gunsmoke changed with the times. A lot. The early black & white shorts were violent & hard. Later they went to color, got longer, got sillier. Quint was in the transition. Indians as the Enemy were stale by the early 60s, so the half breed Comanche got to be sympathetic, while dealing with the dopey kid of the week. (Gunsmoke villains were either hardened scumbags or dopey kids)

So maybe not the most interesting character. That would be Miss Kitty. How did they keep up the euphemism for 20 years about what was going on upstairs at the Long Branch?

I dunno. This is making no sense. Now we're all in a stupid fight about how to pronounce Zauberberg.

Avengers assemble!

*Which is not good for coherence. Bear with us.

**Also during & after - it ran 20 years

& if that made sense, hah!

Saturday, December 01, 2012

The REal Story of the New Member of the Nuclear Club

By now you know that the graph the AP ran proving that Iran was developing a bomb was not quite the threat it was presented to be. What my team of crack investigators and an undercover operative  has discovered is that this was a distraction planted by another country that is about to unviel their own weapons.

We would be happy to reveal everything. Unfortunately, we have incurred some expenses, so there will be a payment needed. You know the price.

Wednesday, November 28, 2012

Over the Fiscal Cliff with the AssPress

On a day when the AP embarrassed itself beyond measure with a bogus graph designed to scare us about Iranian nukes, is it piling on to point out that Ohlemacher's latest drivel on the budget is drivel?

Not until I get more hits than he gets newspapers! So lets take it line by bleeding line:

WASHINGTON (AP) — It's not just about taxes. There's another big obstacle to overcome as Congress and President Barack Obama work to skirt the fiscal cliff: deep divisions among Senate Democrats over whether to consider cuts to popular benefit programs like Medicare and Medicaid.
Much of the focus during negotiations seeking an alternative to $671 billion in automatic tax increases and spending cuts beginning in January has centered on whether Republicans would agree to raising taxes on the wealthy. Obama insists that tax increases on the wealthy must be part of any deal, even as White House officials concede that government benefit programs will have to be in the package too.

Move along, nothing to see here. A little dramatic language, but ho-hum.

But even if GOP lawmakers agree to raise taxes, there is no guarantee Democrats can come up with enough votes in the Senate to cut benefit programs — as Republicans are demanding.

Beep! This isn't about raising taxes - that's already law.  It's about whether to lower them. Reminder :THE FISCAL CLIFF IS A SET OF LAWS THAT REDUCE THE DEFICIT, THE PEOPLE MOST SCARED OF IT ARE THE SAME ONES THAT HAVE BEEN PLUGGING AUSTERITY. The second sentence makes no sense.  Let's continue. though leave out a few dull paragraphs because fair use, OK?

"Democrats like to pretend as though they're the great protectors of Social Security, Medicare and Medicaid," said Senate Republican Leader Mitch McConnell of Kentucky. "They make solemn pledges all the time about how they won't even entertain a discussion about reform. What they don't say is that ignoring these programs is the surest way to guarantee their collapse."

Shouldn't Stevorini mention whether McConnell was struck by a thunderbolt here? This is brazen hypocritical bushwah even by Senate Republican standards.For one thing - the Republicans have not proposed any Medicare changes for the Democrats to consider. When the Democrats have made cuts to giveaways to middlemen like Medicare C & D, or any other reforms, McConnell has screamed "The Democrats are cuttting Medicare!!"  But nope, Stevie lets it go.

There's a growing consensus among Senate Democrats and the White House that Social Security should be exempt from any deficit-reduction package. But some centrist Democrats in the Senate argue that fellow Democrats must be willing to consider cuts to Medicare and Medicaid in order to get concessions from Republicans on taxes.
"It has to be both — a significant revenue increase as well as spending cuts," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee.
Sen. Kent Conrad, D-N.D., who is retiring as chairman of the Senate Budget Committee, said rising health care costs in Medicare and Medicaid are helping to drive future spending, making them an essential part of a long-term deficit-reduction package.

Mentioning that Baucus wife supports the family as a corporate lobbyist, which is where Conrad is about to cash in, might be a little more significant than the code word "centrist", no?

There follows a bunch of paragraphs designed to put a sleeper on anybody who's waded this deep, followed by Lady Macbeth, appearing as a hero:

"There hasn't been the slightest suggestion about what they're going to do about the real problems, and that's entitlements," said Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. "There's a certain cockiness that I've seen that is really astounding to me since we're basically in the same position we were before" the election.

Thunderbolts are too good for this clown. Does Ohlemacher mention Medicare Part D, or the Medicare surtax, or the simple fact that despite all the garbage Hatch has pushed, the Democrats have, in fact solidified the program, even as Hatch & McConnell undermined it?

Of course not. Once again, reading an Associated Press think piece leaves you significantly worse informed than if you'd left it alone.

Sunday, November 25, 2012

The money it's about

Sportswriters like to remind their readers that when somebody says "It's not about the money", they're usually lying. Occasionally, a veteran hungry for a ring will sign for somewhat less than they could get elsewhere to have a shot/be with their friends/get away from some idiots, etc, but those cases are pretty rare.

Likewise, when you read about principles in legislative battles, you're getting the banal prolefeed.

Our go-to guy for banal prolefeed, Stephen Ohlemacher, has produced a characteristically useless roundup of what we're supposed to think is at stake in the current & endless budget struggles. No numbers, lots of conventional wisdom. Same old same old about Erskine-Bowles.

Lawmakers and the White House are working in a postelection session of Congress to reduce the sudden jolt of higher taxes and spending cuts and lay a framework for addressing the nation's long-term financial problems. But the two political parties are struggling to find common ground, especially on taxes and widely popular benefit programs such as Social Security and Medicare.

So careful. So balanced. So useless. And this unspeakable tripe:

It's a familiar refrain — almost everyone acknowledges that money has to be cut, no one wants it to be theirs

There are a lot of reasons that coverage of budget issues is so bad. Innumerate reporters and editors. Owners and advertisers with thumbs on the scale. Class warfare so ugly that most people simply refuse to believe in it.

Another one is that economic discussion in the US is always about encouraging growth. For a lot of reasons I've talked myself blue about - energy, land, water, climate, developing nations taking sotheir share - growth is just about done. So we're down to fighting over shares. Between inequality, waste, and sheer deliberate cussedness, there's a huge amount of room in the US to make most people's life one heluva lot easier without growth. So that sort of thing is called SOCIALISM, and discussion - even about simple stuff, like drug prices, is verboten.

Alas, the macro that has been taught in the US since the first course has been about growth.  And still, there is complete denial of even the possibility that the party's over - Oooh! We'll make technological progress! Energy is most critical in transit. How is progress running in transportation? The last B-52 came off the line in 1962. The Air Force plans on retiring their B-52s by 2040.

And so, down to details of what's being fought over:

Medicare surtax - 3.8% on investment and 0.9% on earned income over $200,000 is about $20 billion a year, but hits a limited target, $40,000 or more on very rich people. If you're that rich, it isn't going to affect your consumption.

Social security privatization - This was the Great White Whale of financial advisors who can't do arithmetic. Get their hands on the biggest post of money, ever! Trouble was , when it got turned into legislation, there was one big mutual fund. Pretty soon it would control every corporation in the US. Tiger by the tail?

(Sure, it's absurdly literal, but any excuse to post Buck Owens is good enough for me)

So they content themselves with trying to steal the trust fund. Not getting far. In fact, with the payroll tax reduction in the last 2 years, general revenues have been transferred over to Social Security. Is that a good thing? It's over $90 billion a year, something like $1000/family over 90 million families, so that's been nice. Long term, though,it may increase the chance that Social Security gets thought of as a welfare program, which would make it vulnerable.

Medicare vouchers vs real insurance - the last 2 Republican budgets have had this trillion dollar elevation of theory over reality. The US, based on what we get & what we spend on health care, compared to what everybody else does, overspends by $1 trillion a year. It kills us on competitiveness as surely as it kills thousands of people every year.

The Democratic alternative takes a few steps in the right direction. The infamous $719 billion Medicare cuts are from the waste. Medical loss ratio minimums (which should get raised) are a pretty direct attack on the waste of insurance administration.
Preexisting conditions coverage, and dozens of other provisions of PPACA cut the fear factor. Do we hear about the real reasons for opposition?

Public education funding is another thing getting fought over. Not just university - now the scammers are moving in on secondary schools. Charter schools are big business, and truly scummy.

It's no accident that Charlie Pierce & Keith Olberman came out of sports reporting.

Friday, November 23, 2012

No lessons, no hugging (CRM,HPQ)

Soothsayers, mentalists and table knockeers have run the same scams for thousands of years, so maybe I should be less surprised that the exact same foolishness from the tech bubble is making a comeback.

To start with the one that everybody's already picking the bones of, Hewlett-Packard got suckered by a software firm called Autonomy. As John Hempton tells it, this one was pretty basic fraud:

There are lots of things to note - but I will limit myself to the simple (which I put in the Santangels presentation).

Sales were $870 million.

Receiveables were $330 million - which is four and a half months of receiveables.

Deferred revenue is $177 million - just over half of receiveables.

This is really perverse for a software company. Software companies sell stuff that is barely tangible - they sell it up front and for cash. They have very few receiveables.

They do however have an obligation to service that software for a long time after they sell it - so the unearned income is relatively large (usually a multiple of receiveables).

Autonomy was booking as income lots of cash it had not received (which is why the receiveables were large) and not booking any obligation to provide future services for that income.


One interesting thing about this is how many people missed:
HP Chief Executive Meg Whitman, who was a director at the company at the time of the deal, said the board had relied on accounting firm Deloitte for vetting Autonomy's financials and that KPMG was subsequently hired to audit Deloitte.
HP had many other advisers as well: boutique investment bank Perella Weinberg Partners to serve as its lead adviser, along with Barclays. The company's legal advisers included Gibson, Dunn & Crutcher; Freshfields Bruckhaus Deringer; Drinker Biddle & Reath; and Skadden, Arps, Slate, Meagher & Flom, which advised the board.
On Autonomy's side of the table were Frank Quattrone's Qatalyst Partners, which specializes in tech deals, as well as UBS, Goldman Sachs, Citigroup, JPMorgan Chase and Bank of America. Slaughter & May and Morgan Lewis served as Autonomy's legal advisers on the deal.

& a little sting in the tail:

Multiple sources with knowledge of the HP-Autonomy transaction added that the big-name banks on Autonomy's side were brought in days before the final agreement was struck. These sources said the banks were brought on as favors for their long relationships with the companies, in a little-scrutinized Wall Street practice of crediting -- and paying -- investment banks that actually have little do with the deal.

So, moving along, we have a company called They have sales of $3 billion and a market cap of $22 billion. Their sales are increasing rapidly, margin high, so Cowabunga, right? Welllll - no. They actually lost money last year. Sales & marketing expense is rising even faster than revenue, and is now 52% of revenue. The company is picking & choosing expenses to claim profitability. I was ready to rant about that, but Tim Travis beat me to it:

Another big reason for the disconnect between GAAP and non-GAAP numbers is CRM's absurd accounting practices of eliminating stock compensation as an expense in the non-GAAP figures. This would be relevant for bond investors where the ability to pay off debt is all that matters, but for stock analysts, it is impossible to deny that stock compensation is an expense, and CRM's extremely liberal utilization of stock compensation is one of the worst examples that I have ever seen. Every quarter, shareholders are finding their ownership stakes reduced, and the reason why this doesn't cause outrage among the masses is that the stock has performed very well. Unimpressively, non-GAAP operating margins were 10% in the quarter, and while there were some charges that impacted results, CRM's farcical non-GAAP accounting doesn't even make the company look highly profitable on its "imaginary" basis.

I do have to admit they seem to have booked a proper amount of deferred revenue - so whatever is under the hood, it's not Autonomy. What is keeping it up? There are some hints about "institutional investors". There is certainly nothing obvious from the financials that would support the price. I'm going to file this away & keep a watch on. If anybody looks like they're going to acquire it....

Thursday, November 22, 2012

The War on Christmas never ends

The war on Christmas has always been a cold one. This may be the year the shooting finally breaks out. Certainly, the pro-Christmas forces have become more militarized.
Like the Wild Bunch, but without the dynamite in their saddlebags ready to explode, they ride out destroying all in their path.
This year, not content with the usual Christmas stuffing, they're out to promote Luke 2, 21-38.

This stuff is pernicious.

Not Luke Russert pernicious, I'll grant you, but still:

21 ¶ And when eight days were accomplished for the circumcising of the child, Lev. 12.3 his name was called JESUS, which was so named of the angel Lk. 1.31 before he was conceived in the womb.
22 ¶ And when the days of her purification according to the law of Moses were accomplished, they brought him to Jerusalem, to present him to the Lord;
23 (as it is written in the law of the Lord, Every male that openeth the womb shall be called holy to the Lord; Ex. 13.2, 12 )
24 and to offer a sacrifice according to that which is said in the law of the Lord, A pair of turtledoves, or two young pigeons. Lev. 12.6-8
25 And, behold, there was a man in Jerusalem, whose name was Simeon; and the same man was just and devout, waiting for the consolation of Israel: and the Holy Ghost was upon him.
26 And it was revealed unto him by the Holy Ghost, that he should not see death, before he had seen the Lord's Christ.
27 And he came by the Spirit into the temple: and when the parents brought in the child Jesus, to do for him after the custom of the law,
28 then took he him up in his arms, and blessed God, and said,
29 Lord, now lettest thou thy servant depart in peace,
according to thy word:
30 for mine eyes have seen thy salvation,
31 which thou hast prepared before the face of all people;
32 a light to lighten the Gentiles, Is. 42.6 ; 49.6
and the glory of thy people Israel.
33 ¶ And Joseph and his mother marveled at those things which were spoken of him.
34 And Simeon blessed them, and said unto Mary his mother, Behold, this child is set for the fall and rising again of many in Israel; and for a sign which shall be spoken against;
35 (yea, a sword shall pierce through thy own soul also;) that the thoughts of many hearts may be revealed.
36 ¶ And there was one Anna, a prophetess, the daughter of Phan'u-el, of the tribe of Asher: she was of a great age, and had lived with a husband seven years from her virginity;
37 and she was a widow of about fourscore and four years, which departed not from the temple, but served God with fastings and prayers night and day.
38 And she coming in that instant gave thanks likewise unto the Lord, and spake of him to all them that looked for redemption in Jerusalem.

Already, they're dragging in a  woman who's been a professional widow for 84 years? Going to get rough, I tell you true.
Gird up for battle, minions!