I apologize for the long hiatus from blogging. It came to be that my company announced that they were eliminating my department and I would be put on the street. That was really nice of them. So working class stiff was going to be a non-working class stiff. The good news was that they gave us nearly a years lead time before it was to happen. As soon as we found out, I went to work looking for a new job. And three months later...success! I spent nearly everyday working on my job search and finally hit pay dirt. I started with my new company about a month ago and am very happy there. All's well that ends well. Now I can get back to my life and do some blogging and other things.
I was thinking about all this Joe the Plumber baloney today. Let's say he really is a plumber who is going to buy the business, and he is so worried that he will be taxed more if he makes over $250,000. If he actually reports over $250,000 in a year, he should fire his accountant, because no self respecting business owner reports a lot of income. All he has to do is incorporate the business and then much, if not most, of what he owns can be purchased by the business and written off as business expenses. As long as he follows the rules, it is perfectly legal. The business buys his car which he uses as a company vehicle, and he writes it off as a business expense. Perfectly legal. When Joe takes a vacation, he mixes in a little bit of business and writes off most of the trip. Joe's business can buy football season tickets and Joe can take a customer of his from time to time to keep it legit. Joe's business can buy a yacht which Joe goes fishing on every weekend. He takes a few customers or employees out once in a while to keep it legit and the yacht is written off as a business expense. Once Joe goes big time, his business can buy a private jet, which of course Joe uses all the time. These business expenses just keep adding up. He can buy vacation homes in Aspen and Honolulu, and again, as long as he follows the rules, they can also be written off as business expenses. There is little reason for Joe to be buying any big ticket items himself(and thus have to pay himself a lot of money and expose himself to taxes) as they can all be justified as business expenses. The company I work for has a private jet, a megayacht, and a luxury skybox(that I know of, and I assume they have a lot more then that). Do you really think that the owner of my company paid himself a ton of money, paid the income taxes, and then bought that stuff? Of course not. They are all "owned" by the company and written off as business expenses. In the company I work for, even lower level management abuses this type of thing all the time. Forgot their lunch money? No problem, take a trainee to lunch, use your credit card, and bingo, it a business expense. Just submit your T and E report and get reimbursed. Feel like pounding beers after work but are a little short of cash? No problem. Invite your employees and bingo, it is a company night out! submit your T and E report and all the beer is free. The world series starts this week. I have a feeling there will be a lot of company nights out that night..lol. I won't worry about Joe the plumber and his tax problem too much. I have a feeling that regardless of how his business does, he won't be paying much in taxes.
I was on the treadmill at the gym today when they announced that Colin Powell is endorsing Obama for president. That is a good development for Obama. I usually don't put much stock in endorsements but Powell is a very well respected person in both parties. The endorsements keep piling up for Obama, which can only help. We need to get this election over with so that we can at least have some clarity to the political situation. It doesn't help to be in the middle of this financial crisis and have a president that nobody likes or will listen too. Once the new president is elected, that person can start talking and moving the country in a more positive direction. They also reported today that Obama raised $150 million last month, and McCain is complaining about it. Boo hoo. The Republicans have always resisted campaign finance reform because they assumed that they would always be better at fundraising then Democrats. They never figured on having to deal with someone like Obama. Maybe they should take a longer view next time the subject comes up. Lastly, I came across a nifty website called the Ripoff Report. I am starting to look for a new job and am cross checking some companies I have not heard of on this site. What an eye opener! I have put the link up top. If you have posted your resume on line and are getting calls, as I am, from companies that say you can make fantastic sums of money in your first year, you had better use that site.
So I am watching and reading the business news lately and the basic theme is that we are screwed no matter what we do for a while. The markets will be very volatile for some time and we shouldn't expect to get any decent returns anytime soon. Our homes are dropping in value so we will all be lucky to sell them for what we paid for them if we bought them anytime in the last five years or so. So the best thing to do they say is to pick safe investments, like money market funds and bonds, etc, however inflation is running higher than most of the returns they offer, so we still lose money. What a mess. It is amazing that just a couple of months ago the President and his men were telling us how the fundamentals of the economy were strong, and now they are telling us what a disaster this is. What a bunch of irresponsible jerks. They actually knew all along that the fundamentals were not strong. You can't run massive budget deficits, massive trade deficits, have a negative savings rate, and pretend that all is well. They were just hoping to get out of office before the crash happened. Oops, it didn't work out that way. Now Bush has solidified his spot as one of the worst presidents in US history. What an idiot. Trillions of dollars have been lost, retirements wrecked, careers extended, and our leadership couldn't care less. I used to be a Republican. Not any more.
With all the turmoil in the markets, we may have been tempted to just get out where we can(can't just dump the retirement accounts) and stop investing for a while. We decided that would be a really bad idea. We would have missed the big rally yesterday and would be kicking ourselves again. The pros always advise to stay invested all the time, and ride out the highs and lows. In the end we should be ok as long as we ratchet back the market exposure gradually as we approach retirement. It is tough to watch the markets every day not knowing what is going to happen, but there really is no other choice. Sticking our money under the mattress is simply a bad idea. Hang in there everyone!
So Congress has passed the bailout. Now they are already talking about the next bailout..that of the homeowners. Just when they get done with the first bailout they say it won't be good enough. They say we will have to bail out all the homeowners who are in trouble with their mortgages because unless we do that, the housing market will never recover. Wow, what a mess we are in. It is amazing that the govt was just telling us a couple of months ago that the economy was strong and resilient. Apparently not. We citizens are going to have to be a little smarter in the future and not buy all the baloney that the govt is feeding us. If it seems to good to be true, it probably is.
I was planning on writing a post about another topic, paying ourselves, but I decided not too. I am a little too distracted to do that today. I have been sitting at work for the last couple of days clicking on the internet news and finance sites compulsively(while doing my job) at regular intervals to find out what is going on in the world of finance. Banks are collapsing, the Dow is tanking, our retirement accounts are losing money...etc. It is one huge mess. I am fully aware of business cycles and how recessions come and go, but this seems different. In the past they seemed to be part of the normal course of things and while recessions were a drag, they were nothing to panic about. This one worries me more than the others because there seems to be no control at all over what is happening. The Treasury Dept reassures us every few days that things are fine and we are ready for the upswing, then another shoe drops. The Bear Stearns bailout was supposed to stop the free fall. It didn't. The Fannie and Freddie bailout was then supposed to fix the problem they said. It didn't. Now Lehman Brothers is gone and AIG is in trouble. AIG only needs $75 billion to right itself. Oh, is that all? Let me look under my couch for that..no worries. Geesh! I don't pretend to be smart enough to know where all this is leading, but I have real worries. I bet you do too.