2008 Financial Thread

[Kiwon]

LL2,

Do America a favor and vote the pandering demagogue Dick Durbin out of office.

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Truth In Politics: Illinois Gas Prices And Taxes

CHICAGO (CBS) ― Tired of seeing the price at the pump jump every time you need to buy gasoline? Well, the record-high price of gasoline in the Chicago area is linked to a record-high rate of taxation: nearly 20 percent of the Chicago price.

As CBS 2 Political Editor Mike Flannery reports, tax refugees wait in long lines on Indianapolis Boulevard in Northwest Indiana. They jockey for position at a pump, lured by prices that are 20 cents a gallon or more cheaper than just a few blocks away back in Illinois.

"It was $4.20. I can come over here and get it for $3.93," said Tikvah Wadley, one of the many fleeing Illinois taxes.

Illinois Sen. Dick Durbin complained to oil company bosses at a hearing on Capitol Hill about Chicago having the highest gasoline prices in the United States. Largely ignored was the role taxes are playing -- an astounding 10 levels of taxation.

"Does it trouble any of you when you see what you're doing to us?" Durbin asked..

In the city, Motor Fuel Taxes originally for building roads currently go to the Feds, Illinois, Cook County and Chicago. The 9.25 percent sales tax is split among Illinois, Chicago and Cook County's share of the state sales tax; a county home rule tax; RTA transit tax and a Chicago home rule levy.

The watchdog Civic Federation says that on a $4 gallon of gas, the total tax is 79.2 cents. That compares to 77 cents in Los Angeles and 65 cents in New York City.

"Every time the price of gas goes up, the tax goes up with it," said one motorist.

And that, of course, is exactly the point for the politicians. Gov. Blagojevich, for example, is counting on the high price of gasoline to bring at least an extra $220 million in the State Treasury in the fiscal year that begins this July. Most of that will be used to balance the way-out-of-balance budget.

http://cbs2chicago.com/politics/gas.prices.taxes.2.729939.html

[Freak Out]

June 1, 2008

It’s Not So Easy Being Less Rich
By CHRISTINE HAUGHNEY

NANCY CHEMTOB, a divorce lawyer in Manhattan, has found that her days have become crammed seeing clients, all worried about how an economic downturn will affect their marriages.

They seem to have nothing to fret about: their net worths range from $5 million to $1 billion. A blip in the markets shouldn’t send their chateau-size Park Avenue co-ops to foreclosure or exile them to Payless Shoes.

But Ms. Chemtob’s clients are concerned all the same, she said, because their incomes have shrunk, say, to $2 million a year from $8 million, and they know that their 2008 bonus checks are likely to be much less impressive.

One of her clients recently confessed that his net worth had decreased to $8 million from more than $20 million, and he thinks that his wife will leave him. He has hidden their fall in fortune by taking on debt to pay for her extravagant clothes and vacations.

“I literally had to sit there and tell him that he had to tell his wife that she had to stop spending,” she said. “He was actually scared she would leave him because their financial situation changed so drastically.”

The wealthy don’t generally speak publicly about their finances, in good times or bad. It’s in poor taste, for one, and their employers could fire them for talking even a little. But people who provide services to the wealthy — lawyers, art advisers, personal trainers and hairstylists — say they are getting an earful about their clients’ financial anxieties.

Interviews with the people who actually see the bank statements, like divorce lawyers and lenders, say their clients are definitely living on less than they did a year ago, regardless of how expansive the definition of “less” may be. Hairstylists and private jet rental companies say the wealthy are cutting back on luxuries like $350 highlights and $10,000-an-hour jet rentals. Even nutritionists and personal trainers notice a problem. The wealthy are eating more and gaining weight because of the stress.

These financial problems — if they can be called that — will hardly elicit tears from the rest of us. But in those gilded living rooms, there is a quiet nervousness about keeping up appearances.

“Even if they’re not in danger of not paying their mortgage, there’s still a psychological change,” said Chris Del Gatto, chief executive of Circa, which has watched its business jump by 50 percent in the last year as wealthy clients sell their spare diamonds and Rolexes. “The economy is an issue even for people who don’t need the money.”

THEIR spouses could leave them when they discover that their net worth has collapsed to eight figures from nine. Friends and business associates could avoid them as they pass their lunchtime tables at Barney’s or the Four Seasons. And these snubs could trickle down to their children.

“They fear their kids won’t get invited to the right birthday parties,” said Michele Kleier, an Upper East Side-based real estate broker. “If they have to give up things that are invisible, they’re O.K. as long as they don’t have give up things visible to the outside world.”

So New York’s very wealthy are addressing their distress in discreet and often awkward ways. They try to move their $165 sessions with personal trainers to a time slot that they know is already taken. They agree to tour multimillion-dollar apartments and then say the spaces don’t match their specifications. They apply for a line of credit before art auctions, supposedly to buy a painting or a sculpture, but use that borrowed money to pay other debts.

“Most people won’t go to their banker and say: ‘You know I’m in desperate trouble. I need funds,’ ” said Andy Augenblick, president of Emigrant Bank Fine Art Finance, which allows clients to borrow against art collections worth more than $2 million. Mr. Augenblick said that the number of requests for these types of loans is five times higher than a year ago. He said that while these borrowers claim that they don’t need the money, their latest financial statements show that their net worth has withered in the past year.

Other wealthy clients are cutting luxuries that they think their friends and relatives won’t notice, according to Mr. Del Gatto of Circa. At Circa’s midtown offices, he said, the seven consultation rooms have been busy with customers selling their precious gems. Some older couples, he said, are selling estate jewelry to help support their children who have lost Wall Street jobs. Bankers are paring down their collections of Patek Philippe watches. Wives from Greenwich and Scarsdale are selling 2-carat to 35-carat single-stone diamond rings. One recent client explained to Mr. Del Gatto that she was selling $2 million in diamonds she rarely wore, because her friends wouldn’t notice that they were gone.

“She said, ‘If I sold my Bentley or my important art, they would notice,’ ” he said. “That we hear, in differing examples, every day.”

Art consultants find that the very wealthy are more receptive to parting with their precious works. Cassie Rosenthal, an owner of the Chelsea gallery Goff & Rosenthal, said that since the subprime crisis hit in the fall, and especially since the new year, some collectors are willing to sell pieces that were off limits in the past. She said that when the deals close quickly, they’re happy.

“Most people will just sort of say: ‘Will you sell this for me? When you can get me payment?’ ” Ms. Rosenthal said. “It’s more about the urgency of getting paid.”

Justin Sullivan, managing director of Regent Jet, which leases private airplanes, said most clients in real estate and on Wall Street are switching to chartered jets over private jets, and cutting their flight budgets by about 25 percent. One New York real estate developer cut his budget to less than $250,000 a year from $1.5 million a year.

“A year ago, he would have only flown Gulfstreams,” Mr. Sullivan said. “Now it’s moving to the point where he’s flying Beech jets and Learjets.”

Some wealthy New Yorkers are even cutting back on relatively smaller things. At J Sisters, a midtown Manhattan salon where celebrities like Naomi Campbell and Gwyneth Paltrow mingle with Wall Street clients, stylists and colorists say they hear about money worries all day. On a spring afternoon, a half-dozen hairstylists to the very wealthy talked about how customers are stretching their $350 highlights and $150 haircuts to every eight weeks instead of six weeks. Some women are cutting out highlights entirely, saying they would “rather be brunettes.”

Jean-François Pilon, a stylist at J Sisters, has seen many women come less frequently and tip less generously. During the subprime crisis last summer, and the collapse of Bear Stearns last March, he said, many clients tried to stretch out their visits. He interprets these changes in behavior as signs that they need to watch their spending.

“You pick up on it very quickly,” he said. “People don’t beg.”

The drop in wealth has also exposed other personal problems, like bad marriages. Money — which bought jewelry or extravagant vacations — helped smooth over many of these difficulties, said Kenneth Mueller, a psychotherapist in the East Village who works with many Wall Street bankers and real estate developers. Now, he said, his clients “catastrophize” smaller bonuses or shriveling stock portfolios. “You have to remind them that there’s something that has always been there,” he said. “All the money helped mask the anxiety.”

The very wealthy can’t hide anything from their nutritionists and personal trainers, because they see the weight gain. Heather Bauer, a dietitian who works with many Wall Street executives who pay $600 to $800 a month for her services, says her clients have been eating and drinking more in the last six months. She sees results of this indulging each time they step on a scale, and in their journals that record what they’ve eaten.

ONE Wall Street executive, Ms. Bauer said, snacks on nuts in her office all day to manage the stress of potentially losing her position, while another confesses to inhaling four bowls of cereal at 10 p.m. Even their sex lives are suffering, Ms. Bauer said, because of the stress or because the weight gain makes them feel unattractive.

Her clients blame the economy for their out-of-control waistlines.

“The number one concern that they have is the state of the financial market,” she said. “There definitely is a correlation between the stock market and weight gain.”

Clay Burwell, a personal trainer to many Wall Street executives, said that his clients were also feeling the toll. A year of eating more, drinking more and working longer hours has started to hurt their health.

“They come into the gym with a dark storm cloud over their head,” he said. “They look like hell.”

[the_idle_threat]

Beech Jets and Learjets instead of Gulfstreams? Oh I cry for you!!!

OK, so which is it? Is the income gap between rich and poor widening(as we argued about weeks ago), or are the rich losing income in the millions of dollars (which would dramatically narrow the gap)?

Of course, the REAL question is: Why should people give a shit either way? People need to take care of their own houses, and stop looking in the neighbors' windows.

[bobblehead]

The standard of living for every american rises every year, rich and poor alike. Punishing a rich person will in no way help poor people. As far as the gap goes, in real dollars of course the rich are increasing the spread, but in terms of percentages the poor have gained ground.

[GrnBay007]

People need to take care of their own houses, and stop looking in the neighbors' windows.

Yeah right! You've haven't seen the good looking guy that lives in my neighborhood!!!! :P

[MJZiggy]

You can get arrested for that...(unless, of course he likes it!)

[Kiwon]

ARBA has been looking good lately - $8.50 to $13.50

Check out the one-month chart: ARBA one-month chart

ARBA still looking good at $15.46

[Freak Out]

Holy fuck! No good cock suckers.

[Freak Out]

Nothing like working in the "Iranian risk premium" for about the hundredth time. Crooks.

[Scott Campbell]

Fugly day.

[oregonpackfan]

Today was a triple, bad economic day: the Dow went down 394 points, the price of a barrel of oil went up almost $11, and unemployment rose half a percentage point.

Dow falls 394.64 points on jobless rate, record oil
news-general-20080606-NEWS-MARKETS-STOCKS-DC

Traders work on the floor of the New York Stock Exchange
By Kristina Cooke, Reuters
1 hour ago
Loading... 225 Recommendations

NEW YORK — Stocks plunged on Friday, marking the Dow's worst day in 15 months, after the government said the May unemployment rate jumped the most in 22 years and oil prices shot to another record, renewing fears that the U.S. economy faces 1970s-style stagflation.

The one-two punch of those remarkable catalysts sent investors fleeing from stocks into the safety of government bonds on the worry that corporate profits will remain under siege for longer than currently forecast. The benchmark S&P 500 fell 2.8 percent for the week to close near a two-month low.

U.S. crude's dramatic $11 jump -- its biggest-ever one-day spike in dollar terms -- fueled concerns about inflation and consumers' spending power, a key driver of economic growth.

Oil thundered past the old high hit in late May on the dollar's weakness and tensions in the Middle East.

General Electric Co and other economic bellwethers slid after a Labor Department report showed the unemployment rate rose in May to 5.5 percent -- its highest level since October 2004 -- from April's jobless rate of 5.0 percent. The report also showed the economy shed jobs for a fifth straight month.

Analysts said a backdrop of slowing growth and rising price pressures, known as stagflation, could tie the hands of the Federal Reserve as it seeks to boost a sputtering economy.

"This is the worst economic environment," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York. "I don't see how this is not stagflation."

The Dow Jones industrial average was a sea of red, tumbling 394.64 points, or 3.13 percent, to end at 12,209.81, its biggest drop since February 2007. The blue-chip Dow average was off 3.4 percent for the week. All 30 Dow components finished Friday's session lower.

Only 18 stocks in the Standard & Poor's 500 Index ended the day in the black. The S&P 500 slid 43.37 points, or 3.09 percent, to finish the day at 1,360.68.

The Nasdaq Composite Index lost 75.38 points, or 2.96 percent, to close at 2,474.56, down 1.9 percent for the week.

Both the S&P 500 and the Nasdaq dropped the most in four months on Friday.

Shares of GE, a diversified manufacturer, ranked among the top drags on the S&P 500, down 3.4 percent at $30.02 on the New York Stock Exchange. Exxon Mobil was the heaviest weight on the S&P, down 2.8 percent at $86.79 on the NYSE.

Plane maker Boeing's shares slid 5.4 percent to $73.16 on the NYSE and exerted the biggest drag on the Dow.

Financial services companies' shares were another big casualty, with insurer American International Group Inc down 6.8 percent to $33.93.

Shares of JPMorgan Chase & Co, the No. 3 U.S. bank, shed 4.8 percent to $40.09. The S&P financial index tumbled 5 percent.

Shares of consumer-oriented companies took a beating, with the S&P retail index down 4.3 percent. Shares of Wal-Mart Stores Inc slipped 2.4 percent to $58.37, giving up some of the gains notched on Thursday on a stronger-than-expected May sales report.

The surge in crude prices also hurt airline stocks, with UAL Corp down 14.5 percent at $8.64 on the Nasdaq. The airline index lost almost 7 percent.

The Dow Jones home builders index fell 6.8 percent to 294.49, its lowest since March.

Trading volume was modest on the New York Stock Exchange, with about 1.48 billion shares changing hands, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.21 billion shares traded, above last year's daily average of 2.17 billion.

Declining stocks trounced advancing ones by nearly 5 to 1 on the NYSE and 4 to 1 on the Nasdaq.

(Editing by Jan Paschal)

[the_idle_threat]

And yet we all survived.

[Joemailman]

And surviving is all we can hope for at this point until a new President takes over. This is now the lamest of lame duck administrations. Most Americans have long since lost confidence in this administration's ability to improve the economic health of the country. Hopefully the next administration will understand that policies that weaken the purchasing power of the middle class do not make for a strong economy in the long run, although they may improve profit margins in the short run. McCain is now trying to distance himself from the economic policies of the current administration. Whichever Presidential candidate can inspire confidence in their ability to change the sorry state of our economic situation will have the upper hand in the upcoming election.

[LL2]

Yahoo's down 22% in pre-market quotes.

Let the bloodbath and recriminations begin.

Yahoo and CEO Yang are a bunch of stupid fucks for not taking the latest Microsoft offer to be bought by a solid company. Google is going to crush Yahoo into a has been.

It's now beginning. Google is now going to make mega millions off of Yahoo without even buying them.

June 12, 2008, 8:07 pm
Yahoo and Google strike a deal
By Yi-Wyn Yen

Yahoo’s shares climbed slightly in after-hours trading on news that the company and Google struck an online advertising partnership.

The Internet portal announced it would begin using Google’s search advertising technology to help grow its profits. The news came just hours after Yahoo (YHOO) said its talks with Microsoft (MSFT) were over. The news that a Microsoft deal had reached a dead-end drove Yahoo’s stock down 12% in afternoon trading Thursday.

Yahoo inked a non-exclusive arrangement with Google (GOOG) to use its text-based ads on its own web properties as well as on its search results. Yahoo said the deal would generate an estimated $250 million to $450 million in operating cash flow in the first year.

[Kiwon]

I think Jerry Yang will be out soon. Shunning MSFT's deep pockets probably have done him in. The stock has been underperforming for so long.

Google used to be the search engine for Yahoo. Now the upstart is devouring the patriarch. The Yahoo! brand is being steadily diminished.