Archive for September, 2008
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Jimmy Stewart Singing Easy to Love
Eddy Elfenbein, September 20th, 2008 at 9:43 amSince it’s Saturday, I figure we all need a break from the financial mayhem, so here’s Jimmy Stewart singing “Easy to Love” to Eleanor Powell in the 1936 movie Born To Dance.
Jimmy Stewart used to make fun of his singing, but I think he does a really nice job. He has an innocent charm that’s just so perfect. BTW, this is the original version with the lyric “so sweet to waken with/so nice to sit down to eggs and bacon with.”
I think we all know what THAT means! Bowmp chicka bowmp bowmp….
Since the Hays Code was still fairly new, Cole Porter changed the offending lyric to “so worth the yearning for/so swell to keep ev’ry homefire burning for….” -
Swedish Prostitutes Want to Pay Taxes
Eddy Elfenbein, September 20th, 2008 at 12:32 amMore and more Swedish prostitutes want to pay taxes in order to receive the social welfare benefits that come with doing so.
“So far this year I’ve spoken with several women who want to make things right,” said Pia Blank Thörnroos, a legal expert with Sweden’s Tax Authority, to the Göteborgs-Posten (GP) newspaper.
While it remains against the law to purchase sex in Sweden, selling sex is perfectly legal according to Sweden’s unique prostitution law, which came into force in 1999.
Moreover, prostitution has been considered a business activity in Sweden since 1982 and as a result proceeds from the sale of sex subject to taxation just like any other form of income.
“You have to keep track of all your income and expenses; all compensation should be accounted for,” explained Blank Thörnroos.
“One should really have accounting records. And in actuality [customers] should write out a receipt, because the transaction is considered a private operation which is subject to value added tax. But customers’ names need not be on the receipt.”
Income recorded on prostitutes’ tax returns gives them the right to sick-leave pay, parental leave benefits, and a pension.
“It’s important to pay taxes if you want to live a normal life,” said ‘Lisa’, a prostitute who spoke with the newspaper.I’m not sure “Lisa” understands the irony of her statement.
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Warren Buffett Made $7 Billion on Friday
Eddy Elfenbein, September 19th, 2008 at 10:07 pmShares of Berkshire Hathaway (BRKA) gapped up $18,990 on Friday which is an increase of 14.8%. Given that Warren Buffett owns 350,000 shares, that increased his wealth by about $6.7 billion. (Buffett also owns two million shares of Class B stock which increased by $345 yesterday, but that only added $700 million to his fortune.)
The Class A shares jumped up about $10,000 starting at 3:57, which means Buffett made over $3.5 billion in about three minutes.
And I thought I did well on my MS buy! -
The Decline and Fall of the Roman Economy
Eddy Elfenbein, September 19th, 2008 at 9:43 pmHistorians have long debated what caused the downfall of the Roman Empire. What about its tax policies?
As early as the rule of Nero (54-68 A.D.) there is evidence that the demand for revenue led to debasement of the coinage. Revenue was needed to pay the increasing costs of defense and a growing bureaucracy. However, rather than raise taxes, Nero and subsequent emperors preferred to debase the currency by reducing the precious metal content of coins. This was, of course, a form of taxation; in this case, a tax on cash balances (Bailey 1956).
Throughout most of the Empire, the basic units of Roman coinage were the gold aureus, the silver denarius, and the copper or bronze sesterce. [8] The aureus was minted at 40-42 to the pound, the denarius at 84 to the pound, and a sesterce was equivalent to one-quarter of a denarius. Twenty-five denarii equaled one aureus and the denarius was considered the basic coin and unit of account.
The aureus did not circulate widely. Consequently, debasement was mainly limited to the denarius. Nero reduced the silver content of the denarius to 90 percent and slightly reduced the size of the aureus in order to maintain the 25 to 1 ratio. Trajan (98-117 A.D.) reduced the silver content to 85 percent, but was able to maintain the ratio because of a large influx of gold. In fact, some historians suggest that he deliberately devalued the denarius precisely in order to maintain the historic ratio. Debasement continued under the reign of Marcus Aurelius (161-180 A.D.), who reduced the silver content of the denarius to 75 percent, further reduced by Septimius Severus to 50 percent. By the middle of the third century A.D., the denarius had a silver content of just 5 percent.
Interestingly, the continual debasements did not improve the Empire’s fiscal position. This is because of Gresham’s Law (“bad money drives out good”). People would hoard older, high silver content coins and pay their taxes in those with the least silver. Thus the government’s “real” revenues may have actually fallen. As Aurelio Bernardi explains:
At the beginning the debasement proved undoubtedly profitable for the state. Nevertheless, in the course of years, this expedient was abused and the [fn2]century of inflation which had been thus brought about was greatly to the disadvantage of the State’s finances. Prices were rising too rapidly and it became impossible to count on an immediate proportional increase in the fiscal revenue, because of the rigidity of the apparatus of tax collection. [9]
At first, the government could raise additional revenue from the sale of state property. Later, more unscrupulous emperors like Domitian (81-96 A.D.) would use trumped-up charges to confiscate the assets of the wealthy. They would also invent excuses to demand tribute from the provinces and the wealthy. Such tribute, called the aurum corinarium, was nominally voluntary and paid in gold to commemorate special occasions, such as the accession of a new emperor or a great military victory. Caracalla (198-217 A.D.) often reported such dubious “victories” as a way of raising revenue. Rostovtzeff (1957: 417) calls these levies “pure robbery.” -
This Isn’t a New Game
Eddy Elfenbein, September 19th, 2008 at 3:08 pmFrom 2006:
Enron’s fault was not having its former CEO as Treasury Secretary. -
Here’s the List
Eddy Elfenbein, September 19th, 2008 at 1:06 pmI got 799 stocks you can’t short right here.
Included on the list is National Atlantic Holdings (NAHC) which was bought out several weeks ago. -
Bush: “Anyone engaging in illegal financial transactions will be caught and persecuted.”
Eddy Elfenbein, September 19th, 2008 at 12:10 pmHere’s President Bush this morning (source White House website).
The Securities and Exchange Commission has issued new rules temporarily suspending the practice of short selling on the stocks of financial institutions. This is intended to prevent investors from intentionally driving down particular stocks for their own personal gain. The SEC is also requiring certain investors to disclose their short selling, and has launched rigorous enforcement actions to detect fraud and manipulation in the market. Anyone engaging in illegal financial transactions will be caught and persecuted [sic].
No we’re talking! Let’s make the shorts use separate water fountains. -
New Rule
Eddy Elfenbein, September 19th, 2008 at 11:02 amDon’t invade Russia in the winter, and don’t conduct a short raid on Goldman Sachs when the former CEO is the Treasury Secretary.
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The Short Selling Ban
Eddy Elfenbein, September 19th, 2008 at 10:56 amFrom the WSJ:
The Securities and Exchange Commission on Friday launched an aggressive assault against short-sellers, saying it would temporarily prevent investors from making bets on stock declines in an attempt to stem some of the worst stock-market slides in years.
The SEC, which had convened a late-night commission meeting Thursday to consider several items, said in a statement early Friday morning it is halting short selling on 799 financial stocks. The ban, which is effective immediately, is set to last for 10 days, but could be extended for up to 30 days.
“The Commission is committed to using every weapon in its arsenal to combat market manipulation that threatens investors and capital markets,” SEC Chairman Christopher Cox said. “The emergency order temporarily banning short selling of financial stocks will restore equilibrium to markets. This action, which would not be necessary in a well-functioning market, is temporary in nature and part of the comprehensive set of steps being taken by the Federal Reserve, the Treasury, and the Congress.”
The SEC announced other temporary measures, including a requirement for large institutional money managers to report short positions in certain stocks. It also eased restrictions on corporate stock buy backs, saying that will give companies greater flexibility to buy their own shares and help restore liquidity at a time “of unusual and extraordinary market volatility.”
In short selling, traders borrow shares of stock and sell them, hoping the price of the shares declines and they can profit by buying them back at a lower price. Short sellers have become scapegoats for the big declines in the share prices of weakened companies including Lehman Brothers Holdings Inc. and American International Group Inc., though it is unclear whether they were the cause of the declines.The cause of the decline? So it’s just a coincidence that shorts ganged up on lousy stocks. Funny how they’re not shorting Donaldson (DCI).
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Just a Reminder
Eddy Elfenbein, September 19th, 2008 at 10:05 amI know today is a busy day for everyone, but If I need to remind you: Arrrgh!
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