Private equity, taxes, and NPR

Morning Edition ran a piece this morning on tax rates on private equity carry interest. For this not familiar with the term, carry interest is the percentage of investment profits the firms partners keep, typically 20%.

While I'm a fan on NPR, sometimes even NPR falls into the trap of letting the people they are talking prattle on fact free without challenging them. Morning Edition let Representative Eric Cantor prattle on about how the attempt to close this tax loop hole is the first to raising the capital gains tax. Rep Cantor had zero evidence for this claim.

My objection to the taxation of the carry as a capital gain is that the partners of these have zero capital at risk. Modifying the tax code to restrict the capital gains rate to situations where the party claiming rate has capital at risk is an both fair and sensible. I don't support the efforts for a special private equity tax. Private equity managers should be taxed like everyone else.

The point was also made that firms would try to avoid paying tax on the carry as regular income by giving managers shares of stock in the companies they acquire. Fine with me. If the managers don't pay full market value on the stock at acquisition, that's a taxable event at regular income rates. They may do well both from a tax efficiency and an investment point of view with this strategy but they now have capital risk since they would be outright owners of shares.

Another Bush Press Conference

Our idiot presidnet had another press conference today. He surprised by giving the first question to Helen Thomas but then proceeded to answer with same tired talking point he'd been using in his prepared statement. Bush doesn't even appear to have the mental capacity to realize Iraq has descended into sectarian strife and there's nothing that we can do to end it.

According to Bush Al Queda has the attention span of my cat and since we are distracting them in Iraq, the equivalent of a shink object to my cat, they can't possibly launch attacks in the US.

Best question though was whether Bush was "disappoiinted" in the advisor who had leaked Plame's name. He essentially said no and blamed the prosecutor which was a non-sequitor in relation to the questiion. I likled this question because it got to the heart of matter. Bush believed the leak was acceptable conduct. In Bush's world anything that furthers his agenda is acceptable.
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Why I can't stand the right

Salon's Blog Report gives me more exposure than I need to right wing blogs. Every once in awhile a post there catches my eye. Today the Blog Report had
a really sorry rationalization for why Senator David Vitter hiring hookers is ok:

The right typically preaches about the goodness of leading a moral life - they don’t claim to be immune to the temptations of immorality, just that your life is more fulfilling pesonally, professionally, and spiritually if you don’t succumb to them.

This quote embodies everything I can't stand about the right. In the fantasy land of the right, what somebody says is much more important than what they do. Vitter claiming to upload family values is much more significant than his activities with prostitutes. Morality is about saying the right things and condemning others who don't verbally endorse the correct positions.

What I despise about people like Vitter is that their mission in life is to use the coercive power of the government to control how other people live. Vitter is a very vocal supporter of amending the Constitution to ban gay marriage. Apparently, he doesn't believe in respecting laws since hiring prostitutes is illegal outside of Nevada but using the most important legal document in the land to enshrine discrimination against gays and lesbians is the number issue facing America according to Vitter.

I personally do not even care this lowlife was illegally hiring prostitutes as the laws against prostitution are unacceptable abridgment of personal liberty to me. However, his cheating on his wife makes him a lowlife. What makes him absolute scum is his lying about it. In his campaign for the Senate, he repeatably emphasized he'd upload of Louisiana values. Every statement to this effect was a bald face lie as last time I looked nobody claimed cavorting with hookers were Louisiana's values.

This is the key difference between the right-wing and sane, reality based people. In reality, talk is cheap. On the right, talk is everything. In the bizzaro right-wing land, lying, cheating and whoring are ok if you claim to endorse a certain brand of morality without ever walking the walk.

A rebellion against wedding insanity

Lavish and ridiculously expensive weddings have become common place. Couples routinely spend on an reckless amount of money in comparison to their income and resources on trying to pretend they are royalty for a day. Thus I read with interest, Salon's article on wedding dress destruction.

A bride destroying her dress while being photographed looks to me like a backlash against the Cinderella wedding. While it seems like a wasteful thing to do, "preserving" a wedding gown really is not more useful. Of course, it would have been less wasteful to have simperer less lavish wedding to begin with but the culture isn't there yet.

Crime Pays

One sad truth of life in America, particularly California, is that property crime pays for criminals. They rarely get caught and when they do they get paltry punishment and go right back to their lying, cheating and stealing ways. A story in the SF Chronicle this morning tells of how a victim of identity theft chased down the criminal who stolen from her.

The story is a compelling narrative but ending is enough to make one sick. The criminal had eight prior fraud convictions. Even though the vicitm's bank has videotape of the criminal illegally and fraudulently withdrawing money from the victims bank account, this scum-bag thief ended up with almost no punishment:

On June 6, she pleaded guilty to one felony count of using another person's identification fraudulently. She was sentenced by Superior Court Judge Harold Kahn to the 44 days she had already served in county jail and three years' probation.

The probation part of the sentence is a joke since the thief was already on probation when she committed her new crimes. I'm starting to think Paris Hilton is getting unfair treatment since a felony violation of probation nets common criminal time served and more probation.

One of the basic parts of the social contract is that the government is obligated to protect citizens from crime. In California and probably other states as well, we have a revolving door justice system that puts criminals right back on the street to commit more crimes. I bet this thief is already back stealing from other people. The government failure to protect the citizens is abrogation of its most basic responsibilities.

One of the principle causes from this soft of crime disaster is the drug war. Our prisons and jails are full of drug offenders. Mother Jones has a great report on our exploding incarceration which is driven by drug crimes. The drug prohibition makes all of us less safe since the resources we would have used to fight real crime are diverted to this pointless waste.

Anti-drug zealots like to claim drug use drives crime but this is only true because the illegal drugs are expensive. If drugs were to be legalized, prices would fall dramatically. The police and the prison system could then go back to fighting real crime.

The failure of CA government to protect its citizens is my biggest area of disagreement with the Democratic party. I hate to repeat any Republican talking point but Democrats really are too lenient on crime. Republicans are not much better since their obsession with the War of Drugs won't leave enough resources fight crime that actually harms upstanding citizens. I can only hope my fellow citizens will wake up and realize the drug war is hurting them every day. Even if you are not ripped off by criminals who should be in jail, you are paying higher insurance rates.

An honor for me

The Beltway Blogroll at the National Journal lists me in the same post, titled Let The Online Voter Manipulation Begin, as Markos Moulitsas and Chris Bowers. The post itself is complaining about suggested tactics for the 2008 campaign. My suggestion over at MyDD was to start the Google Bombing early.

I'm quite pleased to see that I'm mentioned in the same post as two influential member of the blogosphere.

Disgusting Coal Subsidies

The coal industries attempt to give massive subsidies for liquid coal technology is just sickening.

Watch Al Gore call this boondongle a "Horrible Mistake":



I've been really pleased to see Gore on various programs promoting his new book, "The Assult on Reason" I haven't had time to read the book yet due to my rather heavy reading load but seeing him call the Bush adminstration to task has been great.

I was quite dismayed to see Senator Barack Obama co-sponsering this disaster of a bill. I haven't been much of an Obama fan and have been leaning towards Edwards for a while now. However, that any top-tier Democratic Presidential candidate is co-sponsoring a bill that will be a carbon disaster is a disappointment. I don't believe this sequestering fairy tale either. Sequestering technology doesn't exsist and wishing it did doesn't make it so.

I hope Gore runs in 2008. While I'm confident Edwards would be an outstanding president, Gore is best person to both fix the global warmining mess and restore America to sanity after 8 disasterous years of Bush Jr. That Bush beat got close enough to steal the election in 2000 from Gore still boggles my mind. We had the oppurtunity to elect a great a leader and we got an incompetitent fool whose running the country like King Lear.

The Gold Standard

Ron Paul is getting a lot of attention since he's the only Republican presidential candidate who is for ending the war in Iraq. After hearing him in the first Republican debate, I decided to do some checkin up on Ron Paul. While I agree with him on leaving Iraq, turns out he's got some nutty positions. Paul is a strong advocate of returning to the gold standard.

That anyone wanted to return to the gold standard was a shock to me much less a member of political establishment who is taken seriously. For those who don't know, the gold standard requires backing the currency with a fixed amount of gold. Prior to 1971, it was $35 an ounce. The gold standard has the major problem that money supply is no longer on the control of the government but rather subject to how much gold is mined and then turned over to the government in exchange for dollars. A gold standard almost implies fixed foreign exchange rates since if the gold to dollar exchange rate is too low, those who poses gold will sell their gold for British Pounds, Euros, Japanese Yen or whatever currency can be traded for more dollars than the official gold rate.

To fix this problem requires either re-valuations which would be most devaluations or restricting covertablity. That gold was officially $35/ounce in 1971 and is over $650/ounce today tells you something about the devaluations that would have had to occur to stay on the gold standard. Some would argue that inflation is the problem but go look up the GDP deflator and for 1971-2007 and it's anywhere near 20x.

Since the early 1980's the federal reserve system has done as stellar job manging the money supply. Returning to gold would destroy the ability of the fed to manage the money supply. There's a strong arguement advanced by Milton Friedman that insufficient liquidity due to the money supply delflation from people taking their cash out of banks was what made the great depression so severe.

The link above links to a speech of Ron Paul where he goes on to say that the free floating dollar is essentially backed by oil rather gold because oil is priced in dollars and preserving this link is part of the movitivation for the Iraq war. His position is without merit. Yes, the US is running massive trade deficits but borrowing, mostly from foreigners, $2 billion a week to pay for war is not going to improve the dollar's position as a reserve currency. It is possible that by foreign central banks to splitting their official reserve assets between the dollar and euro will hamper the US's ability to continue to run such large balance of payments deficits. Switching to gold is not the answer since it would abruptly force the trade decifit down leading to economic havoc here and abroad. Gold would flow rapidly out of the country since the dollars leaving today would become gold. The money supply would shrink and ugly deflatiohn would result. If you have any debt, including a mortage, you are not going to like deflation.

While I'm happy that Paul is bringing attention to ending the war, if our media was competitent, the issue of Paul's support the anachoristic gold standard should have been brought forward and it has not been.

A War Without End?

With Congressional Democrats apparently capitulating to Bush over the war funding bill, there appears to be no end in sight to the Iraq war occupation. Unless Bush decides to start drawing down next year, I don't see how Bush's "win" today doesn't hand the White House to the Democrats in 2008. It's going to be next to impossible for any Republican to win in 2008 with 100,000 or more troops still on the ground considering all their candidates with the exception of Ron Paul have delcared their unconditional support of the war.

Perhaps the Republican politcos will twist Bush's arm into a temporary reduction in troop levels before the election. Bush could then declare "Mission Accomplished" a second time but I doubt this trick will work. If the Republicans do pull a rabbit of a hat, the war won't end until 2012 at least.

The real reason tech companies don't the like immigration bill

The H1-B system is boon to tech companies. It's the modern indentured servitude since if H1-B holders quit their jobs and they get deported. Oracle and its bethren are whining about the proposed point system claiming it won't get them the workers they need but their real objection is that they won't get captive workers.

There's an easy and economically sound way to test the hypothesis that H1-B's have extra value because they chain workers to their jobs: auction all the H1-Bs. A treasure-style modified dutch auction would not only raise government revenue but also give us the true value of this visas to employers. If such a plan were proposed I suspect US industry would whine even more than European celluar providers did over the spectrum auctions. Business doesn't really want government to run like a business since they would start having to pay market price for all the favors government now provides them.

Press Conference Wakeup

Woke up to Bush's press conference this morning. I hate press conference mornings since my alarm is just turning on NPR and I'm half wake listening that fool Bush talking. I'm probably on about equal intellectual footing with Bush for the first 5 minutes as I wake up.

My summary is of the press conference is Bush claimed "Do what I say about Iraq or you and your children are going to die" Specifically talking about the reporters childern dying at the hands of terrorists was in particularly poor taste. All Bush has left is some ludicrious claim that pulling out of Iraq in going to lead deaths here. Unfortunately no one asks him why he assumes Al Queda is like a moth to the flame of Iraq and it couldn't both launch attacks in Iraq and here simultaneously. Or better yet reporters ought to ask Bush why he has so little confidence in his own "Home Security" measures that he believe the US can't stop terrorist plots here. Guess the TSA taking away my water bottle really hasn't made anyone safer.

Odius Pundit of the Day

I felt sick after read reading this Jonah Goldberg's awful drivel about how unfair Scooter Libby's conviction is and how the Wilsons have benefited from the scandal. Mia Culpa has a good point that the LA Times is just much a "wanker" for publishing this crap.

Goldberg clearly thinks the federal laws that make it crime to lie to the FBI and Grand Juries are unfair. He really should be true to his convictions and call for repeal those laws so everybody gets to the tell the FBI whatever lie is conveinent for them. Or perhaps what he really wants is a blanket exception to the law for members of Republican administrations. Of course, Goldberg thought purjury was a serious offense during the Clinton administration. But in Goldberg's twisted mind, there are different laws for Democrats and Republicans.

On free speech (a response to Roundhead)

I was surprised to see that a fellow Salon.com reads came over to my blog and posted a response to my comments on Salon in response to Amanda Marcotte article Why I had to quit the John Edwards campaign. In my comments, I took exception to claim that other reader's offense to Marcotte's comments about the Holy Spirit were justification for the threats of violence she received.

I had been laboring under the delusion that the crowd that reads Salon were uniformly smart enough to get their facts straight. The key fact in this incidient is that Marcotte was NOT fired by the Edwards campaign. She quit the campaign both because she felt she was becoming a distraction to the Edwards campaign AND the threats made against her. Those who thought she got what she deserved uniformly overlooked the fact that Marcotte quite the campaign and were either implictly or explictly condoning the actions of the right wing virtual lynch mob.

Now we come to Roundhead's comments:

With regard to their free speech rights, they haven’t been violated. One of them is free to publish in Salon, and I wonder if that’s a liberty granted to her opponents?

The threats of the violence directed at Marcotte were certainly intended to discourage her from expressing herself. I'm glad these abominal actions did not discourage Marcotte from publishing in Salon. Her opponents are free to publish to anywhere that will have them and I most strongly condemn anyone who would threaten them. It is unfortunate they are enough to cause Marcotte to leave the Edward's campaign.

Roundhound goes on to ask me:

But since you are so enraged by about what you call “religious bigots”, I’m sure you were at the forefront of the campaign to ensure that certain cartoonists in Denmark to have the freedom to, as you put it, offend anyone they wish to?

I fully support the right of the Danish publication to publish those cartoons. In a society with freedom of expression, there is guarantee that someone will say something that offends you. Cheney constantly offends me with both with deceipt and his underhanded slanders against Democrats. People who claim I'm going the hell for not believing in the right God(s) really offend me. Even worse, are the intolerant bigots like Jerry Falwell and Pat Roberson who claimed 9/11 was God's retribution for America's tolerlance of gays. I happily accept that having to tolerate this odious speech is the price I pay for freedom of expression. Those who think certain types of speech offensive to them merits a special response either by the government or by lynch mobs, virtual or otherwise, are unpatriotic because they are undermining the ideals of this country.

Goodbye TurboTax

After using TurboTax for 10 years, I've had enough. This year's version is terrible. I tried to start my taxes this morning and had nothing but trouble:

• The automatic updates failed. Had to download the manual updater. Reviews on Amazon indicate this a common problem.
  
• When I tried to import some information from a brokerage, I got a "not available right now, try again later" message. I tried again and it worked. I think I mistyped my password the first time. The error messages should tell you the real problem.
  

• The basis calculation for mutual fund sales is completely broken. I had to enter it 3 different ways to get Turbo Tax to recognize the basis is not zero. The "Assist Me" option seemed like the easy one but it does not let you enter the data in the form you get it from brokerage. It insists on a date for each purchase lot which is a nightmare with reinvestments then it wants the average cost basis per share. My statement has average cost for the entire sale. It's easy to convert but I shouldn't have to when I plunked down $75 bucks for the program.

  Even after conversion, the actual tax form still showed 0 for the basis. I noticed this problem since TurboTax's mistake was causing the tax bill indicator to be way to large. It's disturbing that if the amount in question had been smaller, I might not have noticed and paid too much tax. So I tried enter it myself and if you tell TurboTax the shares were purchased on "multiple dates" and enter the information for costs, it still marks the basis as zero. I finally got it take the basis if said one date purchase datawhich would mean I was submitting bogus tax information. What's even more infuriating is that entering "various" for the dates doesn't work even though my understanding is that the IRS is fine with grouping multiple purchases into one sale if you respect the long term / short term boundary.
  

After all this I've lost confidence in TurboTax and am switching to TaxCut. The last think is I need is audit because I used piece of tax software that is very buggy. The good news is that TaxCut is much cheaper and I don't have spend half hour trying figure out which the zillion different additions I need like I do with TurboTax. I very glad TaxCut released a Mac version this year.

Carter Center Resignations

I admire President Carter's courage stand in his new book, Palestine: Peace Not Apartheid and am sadly not surprised that he has been unfairly attack for it.

The reason I'm not surprised about the attacks on Carter is that he has violated that the unwritten rule in America that that the state of Israel and it's government (whether a left or right government) is always rights and whatever hardships the Palestians suffer are their own fault. The brazeness of the hypocracy made clear in the CNN report about the resignations at the Carter center me caught suprise though:

The letter to Carter accused him of abandoning his "historic role of broker in favor of becoming an advocate for one side." Carter's book confused "opinion with fact, subjectivity with objectivity and force for change with partisan advocacy," the letter said.

Those resigning perhaps aren't comfortable taking sides? Only if it is the wrong side. The very next paragraph:

"Israelis, through deed and public comment, have consistently spoken of a desire to live in peace and make territorial compromise to achieve this status. The Palestinian side has consistently resorted to acts of terror as a national expression and elected parties endorsing the use of terror, the rejection of territorial compromise and of Israel's right to exist. Palestinian leaders have had chances since 1947 to have their own state, including during your own presidency when they snubbed your efforts."

The only conclusion from the resignation letter is that Carter is only partisan because he's the wrong side and those nasty Palestians clearly deserve their lot.

Carter could have avoid this fight and looked the other way when he saw injustice. He must have known the critcism he'd endure. I admire him for taking this stand.

I won't be waiting for the iPhone

An iPhone without 3rd party apps will never be compelling to be, especially with the high price tag. Apple (or any other software producer) will never be able to satisfy all my needs exactly. I have numerous 3rd apps on my Palm and an iPhone for me would have to replace the palm to be worthwhile.

Not to mention that paying $500, for EDGE only phone and being stuck in the celluar data slow lane for 2 years does not look appealing either.

iPhone reaction

My first reaction to the iPhone is that $499 + 2 year contract seems awfully expensive. Figuring the contract provides a $200-$300 discount on the phone only (not that it's available), this is $750 cell phone. It's more expensive than a Mac mini.

I would love to see Apple's internal marketing positioning statements and market share projections. How many people are there who would pay $500 + 2 year contract for a cell phone? Although Steve mocked the Blackberry, it's entreneched with the business customers who buy $500 cell phones. The iPhone is not going to be able to match the Blackberry on access to enterprise email.

Perhaps like most phones, the discounts will appear after the first 6 months. I also wonder about the wisdom about hyping a product not available for 6 months.

I'm also curious to see how the virtual buttons work out. I tend hate them as I can't seem to accurately press any button that doesn't have tactile feedback.

Auld Lang Syne

Although Auld Lang Syne is practically synonymous with New Year's Eve, I wonder how many people have really listened to the lyrics of the song. The World Burns Club has a nice history and translation of the song (from Burns' Scottish). It's beautifully and poetic piece of work and although well know, quite under appreciated.

My favorite recording of the song is Johnny Cunningham and Susan McKeown's version on A Winter Talisman. Most versions are two upbeat for my taste. This one really captures the melancholy nature of the song.

Johnny Cunningham died in 2003. I reget never having seen him perform live.

Bad Santa vs It's a Wonderful Life

I watched Bad Santa for the first time on Christmas Eve. I had originally thought it would be too cyncical a movie for Christmas Eve but I had Tivo'ed the Comedy Central showing and when I started watching it, found the film oddly compelling.

It struck me that Bad Santa has certain similarities to It's a Wonderful Life. In both films, the main characters are on the verge of suicide and only do not carry out their plans due to interference of unexpected other characters. I detest It's a Wonderful Life. I've never seen the whole movie because I can not get passed the lunacy of Clarence, an incompetent angel, being sent to save anyone. It drives me crazy as incompetent angels make no theological sense since existence of Clarence as bumbling moron suggests either that a supposedly omnipotent detity can not get good help or that the omnipotent deity wants to ineffectually interfere with humanity. Neither alternative. makes any sense Additionally, It's a Wonderful Life has a saccharine sweet quality that makes me ill.

I ended up liking Bad Santa and it's a much better film than It's a Wonderful Life. I saw a bit in The Week that A Christmas Story is now the favorite Christmas movie of Generation X and it's my favorite as well. Ralphie's adventures are just as funny every Christmas. I can only hope that It's a Wonderful Life fades away in the oblivion it so richly deserves or at least Ralphie shoots Clarence's eye out.

Aluminum Finish on Powerbooks/MacBook Pro

I've come to the conclusion that aluminum exterior of the Powerbooks and MacBook Pro's scratches too easily. I accidently placed my Macbook Pro upside down one of those plastic airport security bins and I got several ugly scratches on the top of it. Sure, I should have placed it in the proper orientation so it sat on its rubber feet. My only excuse is that it was late, I was tired, and airport security annoying demands all laptops are removed from their bags.

My next purchase will likely be a Macbook. The Pro is from work and it's really too big for airplanes. My personal laptop is still a 12' Powerbook which I've managed to keep in pretty good shape except for some scratches on the underside. Though having to baby a laptop is kinda of annoying. It really seems like Mac laptops ought to be tougher. Guess I'll find out whether the plastic ones are better when I spring for Macbook,.