New York: The Cheap Vacation Destination

Is the sun setting on America's Greatness?

Inquiring minds are shaking their collective head this evening at the revelation that New York has actually become a ‘cheap’ vacation spot for Ireland:

It’s that time of the year again, when Irish couples, friends and families descend upon New York in their droves for what one woman recently told the Irish Voice is a shopping spree in “Bargain Apple.”

Despite the devastating recession in a country that has made international headlines for the financial mess it finds itself in, some Irish people are still finding extra change in their pockets to make a trip to New York for their holiday shopping.

Why? Because merchandise is cheaper here:

The Coll sisters were on a mission to buy as much designer labels as possible.

“I just put away a Guess bag and wallet that’s $180. At home you’d pay about 200 sterling for the bag alone,” said Noreen.

Agnes, nodding her head in agreement, said she would be making a stop at the Tommy Hilfiger section of the store to purchase her designer labels too.

“Again, the price of Tommy Hilfiger here is so much cheaper than home, so that’s where we are heading next,” she said.

This is why high tax rates don’t work as planned. People will get on a jet and go thousands of miles to get what they want. This is an example of how free markets work.

This is why the Bush tax cuts need to be made permanent.

And why raising California’s taxes won’t work.

Family’s Fall From Affluence…Sad Tale

True wealth is a puzzle and it can't be gift but must be conquered.

Inquiring minds are upon the Adirondacks tonight as the NYTimes reports on an incredibly sad but all too often story these days of a family who lost its fortune. They pretty much had it all:

…the life that Mr. Martin and his family enjoyed until recently at their Adirondacks waterfront camp at Tupper Lake, N.Y. Their garage held three stylish cars, including a yellow Aston Martin; they owned three horses, one that cost $173,000; and Mr. Martin treated his wife, Kate, to a birthday weekend at the Waldorf-Astoria, with dinner at the “21” Club and a $7,000 mink coat.

That luxurious world was fueled by a check Mr. Martin received in 1998 for $14 million, his share of the $600 million sale of Martin Media, an outdoor advertising business begun by his father in California in the 1950s. After taxes, he kept about $10 million.

And it’s much different now:

Nick Martin teaches grape growing and winemaking each Saturday to a class of seven students in a simple metal building here at a satellite campus of Highland Community College.

… he drives 14 miles in an 11-year-old Ford Explorer to a sparsely furnished tract house that he rents for $900 a month on a dead-end street in McFarland [Kansas], a smaller town. Just across the backyard is a shed that a neighbor uses to make cartridges for shooting the prairie dogs that infest the adjacent fields.

It is an old story…the offspring of a successful businessman cashes out to gain the riches contained in the family business and the money slipps through their fingers faster than they ever imagined. Poor financial decisions on top of the pounding recession pummeled the value of their real estate and new financial investments, rendering their properties unaffordable.

The bad financial decisions? Just click on the link. It is astounding the poor decisions. The biggest mistake was that the family thought $10 million is enough for a family to live an extravegant lifestyle. It is a common mistake.

$10 million equals $500,000 per year if you make 5% on the fortune. Yes, a great annual income. But way short of what is needed to not worry about what is spent. And if the family (which usually happens) spends large sums right away, then the annual salary decreases quickly. Spend $1 million (nice house, luxury car, sports car) and now you are down to $450,000 per year.

To see how a bad financial year can hurt this scenario please click on this link for the graph:

Video Proof of CALPERS Fraud

Time For a Feel Good Story: Secret Santa’s ID Revealed

Inquiring minds are smiling tonight because of a great human interest story from Rita Braver of CBSNews about a Great Depression-era Secret Santa:

“And then inside this were stuffed a couple of hundred letters,” Gup said. “They were all from the same week in December of 1933. They were all addressed to someone named Mr. B. Virdot.”

The letters were a portal into the Great Depression and its impact on Individual lives and on the life of a community – Canton, Ohio, Gup’s home town . . .

“I am 14 years old, and I’m writing this because I need clothing. And sometimes we run out of food . . . “

“Christmas will not mean much to our family this year, as my business, bank, real estate, insurance policies are all swept away . . . ”

“When our rent, gas, coal and just the cheapest of food is bought. We have nothing left . . . “

Gup also found what prompted the letters: A small advertisement in the local paper, the Canton Repository, offering small gifts to struggling families:

So they will be able to spend a merry and joyful Christmas. The writer pledges that their identity will never be revealed. Please write B. Virdot. General Delivery, Canton, Ohio.“

You really need to read the entire article. It is one of the most touching stories in recent memory and shows how much good one person can do.

What a blessed man.

Escondido-Area Home Containing Explosives

Inquiring minds are shaking their heads after reading about the mystery surrounding an Escondido-area home containing explosives. Authorities are trying to determine the how and why a Serbian emigre obtained large quantities of explosive ingredients in his house:

Authorities are trying to piece together how — and why — a 54-year-old Serbian emigre acquired large quantities of explosive ingredients that could be used to make the kind of bombs favored by terrorists, including insurgents trying to kill U.S. troops in Iraq and Afghanistan.

The work of a squad of local, state and federal explosives experts is being made more difficult because the one-story, stucco house in a leafy Escondido-area neighborhood where the material was found is considered too dangerous to reenter.

George Djura Jakubec lived alone in the house for less than three years and had ringed it with security cameras. Neighbors said he kept to himself and was pretty much unknown to them. Mr. Jakubec is a naturalized U.S. citizen and faces 26 bomb-making charges and two counts of bank robbery, all felonies. But apparently Mr. Jakubec knows the drill…he is on probation for a 2009 burglary conviction when arrested last week and remains in jail in lieu of $5-million bail.

Iceland: Let the Banks Fail

Banking is the one business that any rich person can start...because the only inventory needed is money.

Inquiring minds are wondering how much proof people need before they realize that banks and bankers need not be protected after reading “Iceland Is No Ireland…“. As Iceland’s President Olafur Grimsson said his country is better off than Ireland because it let the banks fail two years ago and because the krona was devalued:

“The difference is that in Iceland we allowed the banks to fail,” Grimsson said in an interview with Bloomberg Television’s Mark Barton today. “These were private banks and we didn’t pump money into them in order to keep them going; the state did not shoulder the responsibility of the failed private banks.”

As Ireland’s Prime Minister Brian Cowen discussed an 85 billion-euro ($112 billion) bailout with the European Union and International Monetary Fund, Mr. Grimsson decided to donate two cents:

“Iceland is faring much better than anybody expected,” Grimsson said. The Icelandic state’s liability on foreign depositor claims stemming from Icesave accounts at failed Landsbanki Islands hf should be put to a national referendum, he said.

“How far can we ask ordinary people — farmers and fishermen and teachers and doctors and nurses — to shoulder the responsibility of failed private banks,” said Grimsson. “That question, which has been at the core of the Icesave issue, will now be the burning issue in many European countries.”

Iceland is relying on a $4.6 billion IMF-led loan to rebuild its economy but Grimsson said the government may not need the entire amount.

Michael Derks, chief strategist in London at foreign-exchange firm FXPro, wrote:

“The taxpayer has no realistic prospect of being able to save their banks, such is the magnitude of their bad loans and their extraordinary dependence on central bank support. Both junior and senior bondholders in these insolvent banks need to suffer huge haircuts.”

“Forcing bond holders to “share the burden,” may help the euro region remain intact.”

That kind of says it all, doesn’t it?

Bankruptcy: Answer for Troubled States?

Jerry Brown (left) walking in a fog and people running away...what else in new?

Inquiring minds are reading Michael Barone’s new article on Real Clear Politics about how bankruptcy is a very clear option for certain states…but not before issuing a dire warning from a Democrat:

We won’t be able to say we weren’t warned. Continued huge federal budget deficits will eventually mean huge increases in government borrowing costs, Erskine Bowles, co-chairman of Barack Obama’s deficit reduction commission, predicted this month. “The markets will come. They will be swift, and they will be severe, and this country will never be the same.”

Bowles is talking about what the business press calls bond market vigilantes. People with capital are currently willing to loan money to the federal government, by buying U.S. bonds at low interest rates. That’s because interest rates are generally low and because Treasury bonds are regarded as the safest investment in the world.

But what if they aren’t? What if investors suddenly perceive a higher risk and demand a higher return? That’s what Bowles is talking about, and there are signs it may be starting to happen. The Federal Reserve’s second round of quantitative easing — QE2 — was intended to lower the interest rate on long-term bonds. Instead, the rate has been going up.

Don’t you just love it…Democrats are now free market supply-siders! Now that they have spent all levels of government into oblivion, they frear the markets.

Mr. Barone goes on to mention California’s crisis:

California Gov. Arnold Schwarzenegger came to Washington earlier this year to get $7 billion for his state government, which resorted to paying off vendors with scrip and delaying state income tax refunds. Illinois seems to be in even worse shape. A recent credit rating showed it weaker than Iceland and only slightly stronger than Iraq.

It’s no mystery why these state governments — and those of New York and New Jersey, as well — are in such bad fiscal shape. These are the parts of America where the public employee unions have been calling the shots, insisting on expanded payrolls, ever higher pay, hugely generous fringe benefits and utterly unsustainable pension promises.

The prospect is that the bond market will quit financing California and Illinois long before the federal government. It may already be happening. Earlier this month, California could sell only $6 billion of $10 billion revenue anticipation notes it put on the market.

Individual investors have been selling off state and local municipal bonds this month. Meredith Whitney, the financial expert who first spotted Citigroup’s overexposure to mortgage-backed securities, is now predicting a sell-off in the municipal bond market.

And when California comes calling on the new Congress, why would the new Republican majority leadership bail the state out? Even during a massive wave of change, California was swept by Democrats in statewide offices and didn’t pick up on congressional seat.

Politically, Republicans would be much better served to allow the Dems to stew in the pot of their own making. The fire is already stoked.

Please read the entire article. It is an important article for every Californian.

Now Its Italian “Students”

Inquiring minds are upon Europe as another country’s students (this time its Italy) are protesting. ANSA.IT is reporting:

A group of students unleashed mayhem at the Italian Senate on Wednesday when they managed to push through the building’s main entrance door before being ejected by police.

Clashes ensued in the area of the houses of parliament in central Rome following the raid by students protesting against education cuts.

Outside the Senate students let off smoke bombs and threw eggs at the building.

They then threw stones at, and clashed with, officers, who used batons to stop them reaching the area of the Lower House.

A member of the Senate staff had a dizzy spell, a police officer was injured and one student was detained.

These internationally coordinated attacks should be waking this country up. Does anyone seriously think these events are ‘grass roots’ activism? Socialists warned they were organizing these back at the start of this year.

Down 80%

Another Blue Monday for housing stats

Inquiring minds are looking at CNNMoney.com’s report on New Homes Sales for October…and baby, its cold out there:

New home sales dropped to an annual pace of just 283,000, according to the Commerce Department. That was down 8.1% from a slow September and 28.5% from 12 months ago when the annualized sales rate was at 430,000.

As bad as that news is, the data actually came back even much worse than expected:

Housing experts from Briefing.com had forecast a sales pace of 314,000.

“The new home market delivered another turkey of a performance last month,” said Mike Larson, a housing market analyst with Weiss Research. “Sales fell sharply across most of the country.”

Sales are off nearly 80% from the housing boom peak pace of 1.4 million, set in July 2005. Sales have remained near historic lows this year despite very attractive mortgage interest rates that slash the monthly costs of homeownership.

And just to pour salt in the wound…yes, the previous month’s data was revised downward:

The Commerce Department also revised August sales figures downward to 275,000, which represents the record low point for new homes sales since it started tracking figures in 1963.

Think of the population increase since that time to get a true handle on just how bad these numbers are…

50 Percent of Homes in Foreclosure

Inquiring minds are stunned at the new data reported in The Bay Citizen showing how many homes in a Richmond, CA zip code are in or at risk of foreclosure:

According to a city report issued last month, almost half of Richmond homes in the 94801 zip code are in foreclosure or were mortgaged at subprime rates and thus at risk for foreclosure.

“Do we really intend to throw that many people out of their homes?” asked Alving Herring, an organizer of the protest.

People are beginning to get a little heated:

As security guards looked on, 25 Richmond residents stood on the sidewalk, chanting “Wells Fargo, stop stealing our homes!” and holding signs that said “55,000 thefts and counting.”

That number comes from the bank’s admission last month that it produced improper foreclosure affidavits for that many homes. Depositions from bank employees have shown that signatures on the paperwork needed to push a house into foreclosure were sometimes rushed through without verifying information.

Hopefully the people are getting a little tired of the banks and their excuses.

Video Proof of CALPERS Fraud

Inquiring minds are nodding in agreement. CALPERS has been caught on tape.

So you don’t believe the dire predictions of the future of public pensions in the state of California?

Well, much has been written about The California Public Employees’ Retirement System (CalPERS) being underfunded by $500 billion due to massive investment losses over the last 5-10 years. One of the most understated and misunderstood issue is how one bad year can have disastrous effecto on the overall health of the fund. See graph below how one bad year lowers the effective multi-year rate of return:

Now we have video of a CalPERS Senior Pension Actuary (Kung-pei Hwang) describing how they intend to change basic assumptions in their financial model to hide the decline in their assets held for municipal, county, and state employee’s retirement.

Here is the link to the video proof.

Big Governement is reporting:

Through this statistical gimmickry, CalPERS can push the loss into later years and appear solvent today. Of course, at some point in the future it will need to raise funds from state and local governments to compensate for these losses. But for now, they seem content to hide the disastrous condition of their fund.

As you can hear Mr. Hwang say in his presentation to the Huntington Park City Council last week, “that means we will defer most of the loss to future years.” “This means the city will realize another increase in future years. I hate to bring bad news, but those are the facts.” Well, the fact is this bad news will hit budgets for all cities, counties and the state of California and not just Huntington Park. By playing with its financial model in this way, CalPERS is treating all California taxpayers like Madoff investors by cooking its actuarial books to Hide The Decline in its assets.

The 5:30 minute video is well worth the time.