[SK in CV]

[quote=markmax33]Obviously you can’t see it, you haven’t seen an economy with less GOV intervention. Your company is anecdotal and I’m glad to see it’s doing well. You absoloutely did say lower in the thread that business owners are the 1% and that with less GOV regulation they wouldn’t give money back to the people. I offer you that if you lower regulation you will remove barriers of entry and start up costs for small businesses and it will make the market more competitive for good talent. Unemployment is one example but you must look at the big picture and the whole philosophy. Until you can really expand it out you won’t understand it.[/quote]

Eh. I’ve been in business and advising business for more 30 years. You have no way of knowing what I’ve seen or not seen.

I never said that business owners are part of the 1% (that was another poster), sometimes it’s true, sometimes it’s not. Nor did I address regulations related to passing on savings. You may be confusing me with you, you’re the one obsessed with government regulation. I just deal with it.

I would certainly agree with you that if regulations are minimized, that barriers to starting small businesses will also be minimized. But having dealt with payrolls for literally hundreds of small businesses, I can tell you with absolute certainty, nobody didn’t go into business because of the cost of unemployment insurance. FICA or workers comp insurance? Maybe. But unemployment? No chance. It’s like someone not buying a $25,000 car because of the cost of oil. Not gas. Oil. Not oil changes at $30 apiece. The cost of the oil that goes into those oil changes. That’s about how insignificant unemployment insurance is.

And I do understand it. It’s my job. It’s what I’ve been paid to do for the last 35 years.

[SK in CV]

[quote=markmax33]
Another SK educational announcement:

1. The small business is what drives growth in the United States.
2. The small businesses are NOT the 1% as you described.
3. Without GOV intervention and draining money from the economy, more small businesses would survive and be able to compete with large businesses. The increased competition would allow good employees to change jobs from one employer to another for a higher salary THUS increasing salaries from the saved monies from taxes. Your argument is becoming more true, as more burdens are put into place on the small businesses in America by lobbyists from the large businesses. This means the small guys can’t compete and only the big guys have a piece of the pie and YOU have no bargaining chip to increase your salary.

Wake up SK.[/quote]

I’m sure that makes sense to you. I have no idea how it’s the least bit related to the topic or the least bit responsive to anything I’ve said.

But for what it’s worth, I agree with you on point 1. I agree with you on point 2, although I never described small business as part of the 1%. And as to point 3….well..I don’t know what your point is and much of it makes no sense at all. And I help run a small business whose only clients are big business, and whose biggest competition is big business and we’ve enjoyed average growth of over 150% per year growth over the last 5 years. And I see neither government intervention nor any money drain in my industry.

[SK in CV]

[quote=patientrenter][quote=SK in CV]…..If the cost of employer paid unemployment insurance went away, you would not get a raise.[/quote]

SK, you understand basic economics, right? Imagine that supply and demand chart that you were shown on the first day you were introduced to economics. Now imagine that the ‘good’ is labor, and that the demand for labor is shifted up, because the total cost of labor has been reduced. Will pay (the price of labor) go up or down?

In competitive markets, this is what happens. Although we have notable examples of con-competitive markets (bankers and CEOs), most markets in the US are reasonably competitive.

Don’t try to make ideology out of everything. Sometimes the facts are just the facts.[/quote]

LOL! Do you even know what the word ideology means?

I work in the real world. I can’t afford ideologies.

If the cost of an employer’s payroll burden goes down, it does nothing to demand. It does nothing to supply. It doesn’t mean you will demand more or work for less. And in this case, we’re talking about pennies. Employees aren’t getting those pennies.

[SK in CV]

[quote=GH]Not true. My last job they indicated employee overhead was around 33% (unemployment, SS, Insurance, Health etc). They told me they would love to give me what I asked but with all the overhead they could not.

[/quote]

I can’t dispute what your employer told you. At my company, taxes and other employee benefits cost 22% of base salaries, and about 6% of additional compensation. Most of that is employer paid medical insurance and paid time off. Unemployment makes up less than .3%. Just to be clear, that is less than 3/10ths of 1%. On a payroll of over $12M, it is less than $25K a year. Workers comp insurance costs more than unemployment insurance (and that’s with an extraordinarily low worker’s comp classification and rate). If the cost of employer paid unemployment insurance went away, you would not get a raise.

[SK in CV]

[quote=threadkiller]Yes what I was interested in finding out is the ratio between shares outstanding and shares issued. Would it not be true that when BofA issues $400 million in shares it would dilute the existing shares. They don’t even pay a dividend so in effect that would be bad for the share holder. Now it might help their books look better which might help their execs get bonuses, the same execs that wanted to charge a fee and are no doubt looking into other ways to milk money. Anyway I digress because I believe that mergers and acquisitions are on the horizon and I think that a company with less outstanding stock might be a take over target.[/quote]

Simple answer, no, it would not necessarily be true that when BofA issues $400 million in shares it would substantially dilute the value of existing shares. I don’t know what their current status is with regards to shares issued and outstanding, but let’s assume for a moment that they need to raise $400 million. and that they have sufficient treasury stock to sell. For each $ that they sell, their net worth goes up by a $, the only difference would be their cost to sell the shares. If it’s treasury stock, that cost is very low. If they need to sell new shares, involving a public offering, that cost is higher.

That said, stock offerings subsequent to initial public offerings are much less expensive than IPO’s. Gross value should still go up something close to cash raised. Value per share should only minimally be affected. So the only difference between selling treasury shares, and a new public offering of stock is the transaction cost.

All of this, however, ignores market perception. Typically (and there are exceptions to this), the need to raise capital has an adverse affect on share value. And that would be irrespective of whether capital is raised through the sale of treasury stock or issuance of new stock. The best time for a company to sell stock is when they don’t need to.

[SK in CV]

[quote=markmax33]

NOT! Anything your employer pays comes out of his pocket just like your paycheck. It’s money he could have paid you instead of wasting it 50% of it in Washington before it rolled back into your pocket. He could have reinvested it in your retirement, or hired new employees and lowered your workload. It is a federal mandate as well:

http://www.edd.ca.gov/Unemployment/Federal_Unemployment_Insurance_Extensions.htm

Why do people agree to these federal programs that give 50% returns on the dollar for a “Safety Net” that is sinking out economy in debt![/quote]

Nice link. But there is nothing in there to substantiate 50% overhead. And you just repeated the same uninformed crap. It’s NOT primarily funded out of Washington, it’s a state program. Stick your fingers in your ears all you want when you’re told facts that don’t conform to your ideology. It doesn’t change the facts. Your 50% return model doesn’t work. Every government program is not the same. Just like some Ron Paul advocates can make better arguments than others.

And sdrealtor is right. If employers didn’t pay it, you wouldn’t get it. They would.

[SK in CV]

[quote=patientrenter][quote=SK in CV]…..And unemployment no more comes out of your salary than your employer’s rent does. Or software licenses for your company computer. Your employer pays those things in order to have employees. A salary burden just like unemployment taxes. And neither is it paid in on your behalf…..[/quote]

We (at my company) have to reduce employee pay by the cost of mandatory contributions. Everyone else I know does the same. It’s not a political plot, it’s just straightforward economics. All this splitting of contributions between employees and employers is just for show, to make the amounts feel smaller.

I don’t begrudge having my net pay reduced for these transfer payments to others. I am amused how people fall for the not-very-subtle sleight of hand involved.[/quote]

Huh? You do what? Who is everyone else? Unemployment insurance is not split. Never has been. I think you should check again. The likelihood that your net pay is reduced by unemployment insurance paid by your employer is nil.

[SK in CV]

[quote=markmax33]If my company pays it on my behalf it still comes out of my salary no matter what hocus pocus you believe. The money the employer and the GOV pays into these programs is such a waste. 50% is probably blown in DC paying the heads of the programs out $140k salaries before it ever gets out to the people. I don’t like 50% returns on the dollar. Some of us have a network of friends to rely on in tough times and a good nest egg, some of us most not have friends.[/quote]

Well this should make you happy markmax. While there is a supplemental federal unemployment program (which costs employers a max of $56 per year per employee), unemployment is primarily a state program. You know, right where you like the programs. Administrative costs aren’t zero, but they’re pretty low.

And unemployment no more comes out of your salary than your employer’s rent does. Or software licenses for your company computer. Your employer pays those things in order to have employees. A salary burden just like unemployment taxes. And neither is it paid in on your behalf.

Maybe if you took the time to find out how programs work before you start with your knee jerk reactions which support your ideologies, you wouldn’t be so repeatedly wrong when you make such foolish assumptions.

[SK in CV]

Madmaxx, you don’t pay 3% of your paycheck to unemployment. Your employer pays it. And it’s not 3%, it’s a floating rate based on employer’s unemployment experience rate. And it’s not on all wages, in California and most other states, it’s only on the first $7K of annual wages.

I can’t deny that there is some abuse. I suspect the level of abuse is small. But it isn’t enough money to maintain the lifestyle compared to a full paycheck. With somewhere between 9 and 17% unemployment, it is among the most “common man” government program that exists.

[SK in CV]

You really think unemployed people are on vacation? I was recently unemployed for 10 months. Spent 2-3 hours every week day, usually weekends too, looking for work. Another 2-3 hours every day making phone calls and networking. I was fortunate my wife had full time employment, I got my $900 every two weeks for unemployment, and other than a $4,500 emergency dental bill, I didn’t have to take any money out of savings. If I wasn’t so fortunate to have a wife with a good paying job, I wouldn’t have been able to pay my more than $1,000 a month for medical insurance. And would have walked around in pain, popping 16 ibuprofen every day for more than 5 months because of two broken crowns.

I think I was a lot luckier than most. There is nothing about being unemployed that feels like the american dream.

[SK in CV]

There are probably some limitations, but as a practical matter, if the market will buy they can always issue more stock.

In the case of Groupon, i dont know the specific, but the sellers of the stock were probably the current owners, not the company itself. Which is often, but not always, the case with IPO’s. It’s very possible the company didn’t raise a dime. (As I said, I don’t know the specifics, it’s also possible that the entire proceeds went to the company.) Barring some sort of buyout, the next time the sellers want cash, they can sell shares on the open market. (Often there’s some sort of waiting period, 18 months, two years or something, where the original stockholders can’t sell shares.)

The alternative would be for the company to raise money by selling new shares. Number of shares goes up, market cap goes up by cash raised, value per share theoretically stays the same.

[SK in CV]

Isn’t a boxee box an old volvo?

[SK in CV]

[quote=markmax33]
Ron Paul was the first and only *current* candidate to say it. He is the only candidate that you can logically vote for. He was calling for the end of the FED longer than anyone in Congress, obviously because he’s been in there since the 1970s. You should stop attacking the man and give him credit and stop arguing semantics. I don’t mind fact checking, but discrediting over semantics is a waste of everyone’s time.[/quote]

I don’t know what “it” is, so I won’t comment. But I won’t vote for him. I like some of his ideas. Others not so much. Overall, I think he’s a wack job. But since he’s for legalizing pot, I wouldn’t mind lighting up with him. That would cool.

And mind you, I haven’t been discrediting him so much as you. Use the right words and it won’t waste anyone’s time.

[SK in CV]

[quote=markmax33]So in other words you are admitting Ron Paul was correct that the GOV GSEs were the ENABLERS and had a historic role in starting this whole mess. All Ron Paul predicted was that the GOV GSEs would have a role in a future housing bubble before ANYBODY else said it. To me it is clearly obvious that when he has predicted 90% of the things wrong in the country and there are videos, books, etc to prove it, he is the only man in Congress who can actually get a vote.

[/quote]

Uh…no. I’m not sure how you reached that conclusion. Maybe show your work. The nexus between the GSE’s initiating the sale of MBS’s in 1968 and the bubble crash in 2003-2011?

I’m reasonably sure that Ron Paul was not the first to say it. The conspiracy theorists, the Fed, the Trilateral Commission, the CFR, the Bilderberg Group. The evil bankers. Many have made the same claims he has over the years. And others have made the same claims I have, that Gramm Leach Bliley, the bill that repeales Glass Steagall would lead to disaster.

Senator Byron Dorgan had this to say on the Senate floor, before the bill was passed. You’ll like the first part.

Of course the Fed has an inherent conflict of interest. I think, if the Congress were thinking very clearly about the Federal Reserve Board, they would decide immediately that the Federal Reserve Board is not the locus of supervision of banks. The Federal Reserve Board is in charge of monetary policy. It is fundamentally a conflict of interest to be listening to the Fed about what is good for banks when they are involved in running the monetary policy of this country. If the Federal Reserve Board were, in my judgment, doing what it ought to be doing, it would be leading the charge, saying we need to regulate risky hedge funds because banks are involved in substantial risk on these hedge funds. Apparently hedge funds have become too big to fail. Then there needs to be some regulation.

snip

I wrote an article in 1994 for the Washington Monthly magazine and derivatives at that point were $35 trillion. You know something, today in this country banks are trading derivatives on their own proprietary accounts. They could just as well put a roulette wheel in the lobby. They could just as well call it a casino. Banks ought not be trading derivatives on their proprietary accounts. I have an amendment to prohibit that. I don’t suppose it would get more than a handful of votes, but I intend to offer it.

snip

We have folks outside who have worked on this very hard and who very much want this to happen. We have a lot of folks in here who are very compliant to say: Absolutely, let me be the lead singer. And here we are. We have this bill, which I will bet, in 5, 10, 15 years from now, we will be back thinking of this bill like we thought of the bill passed in the late 1970s and early 1980s, in which this Congress unhitched the savings and loans so some sleepy little Texas institution could gather brokered deposits from all around America and, like a giant rocket, become a huge enterprise. And guess what. With all the speculation in the S&Ls and brokered deposits and all the things that went with it that this Congress allowed, what did it cost the American taxpayer to bail out that bunch of failures? What did it cost? Hundreds of billions of dollars. I will bet one day somebody is going to look back at this and they are going to say: How on Earth could we have thought it made sense to allow the banking industry to concentrate, through merger and acquisition, to become bigger and bigger and bigger; far more firms in the category of too big to fail? How did we think that was going to help this country? Then to decide we shall fuse it with inherently risky enterprises, how did we think that was going to avoid the lessons of the past?

He said those words in 1999.

And Ron Paul? He voted no. He didn’t like it for similar reasons as Dorgan, though he was a little more focused (obsessed?) with the Fed role in supporting the de-regulation. Kind of interesting. A libertarian voting to KEEP regulations, not to deregulate. Good for him.

[SK in CV]

[quote=markmax33][quote=SK in CV][quote=markmax33]The $250,000 tax credit was certainly part of it, but if the private market had to own the mortgages and didn’t have the GOV to compete with and lead the way on MBS and encourage MBS’s through the GSEs, this wouldn’t have happened on this scale if at all. If interest rates could have floated up, instead of the FED slashing them and encouraging bad investing the $250,000 credit would have been a non-issue. I believe the second the $250,000 tax credit was issued that a flood of investors would have been trying to get credit and rates would have adjusted upward, thus stabalizing the market and balancing out the risk with the tax credit.[/quote]

Just to clarify, there was never a $250,000 tax credit. It’s a $250,000 exclusion. ($500,000 for a married couple.) And it replaced an unlimited exclusion for move-up sellers. And it happened way back in 1997. And it doesn’t and never did apply to investment property, only to primary residences. And beginning in june of 2004 and the end of 2006, the federal funds rate and the discount rate were raised 17 times.[/quote]

Are you implying that 17 times was enough and equal to what a normal market would have done in that period of time? Do you think the 12 idiots at the FED did the right thing? I offer you that a market works like a spring and that the artifically low rates in the early 2000s created a momentum that couldn’t be stopped in a reasonable amount of time by the 12 idiots at the FED. I offer you that the housing bubble would have stopped as soon as it started because a floating interest rate would be adjusting for risk instantaneously because that’s how markets work efficiently.[/quote]

No, I’m implying no such thing. See the bolded part of your comment. I’ll repeat it here. “If interest rates could have floated up, instead of the FED slashing them…” I wasn’t implying anything, just telling you that the fed did almost exactly as you suggested. They floated interest rates up over a 30 month period.

In hindsight, I think they should have jacked them up more and faster and earlier. I think congress should have acted. I think the Treasury department should have. I think the FDIC should have. I think the SEC should have. I think the GSE’s should never have tried to compete with the private money, there was no shortage of willing lenders and investors. I think the Attorney General of New York should have acted (and still should). I think the IRS should have acted. And probably 1/2 a dozen more federal agencies who had some jurisdiction and maybe every single state AG. But if I had said that before, it wouldn’t have been the least bit responsive to your comment.

[Author]

Posts