Sunday, December 30, 2012

IRS should create a new tax itemization form (1040-GUN)

Chicago has a total ban on firearms.

Yet, so far in 2012, 500 homicides were committed with about 95% of them being committed using firearms.

Surely gun rights promoters would say that banning guns within the city limits has had no effect on homicide rates. Perhaps they are right, but only because the US has too many divergent laws on gun permitting, trading, and licensing.

Also, there are no limits on the number of guns a person can have or trade. 'Divide and conquer' appears to me the motto of the gun rights activists.

The same people who support gun rights as a fundamental human right must realize that anybody from Indiana, Iowa, Wisconsin, and other surrounding communities can legally buy guns, without many limits on the quantity or type.

So, if, say, I lived in Wisconsin, close to Chicago, and were perfectly able to buy guns legally, I could buy 100 Beretta 9 MM guns at $450 each, file the serial number off, and then sell them to gangsters or psychos in Chicago for $700 each. Nobody would have a clue where the guns came from. I could easily make $25k, just like that. I do not live in Chicago and would not have any guns on me while I travel to Chicago. Police surely cannot be everywhere at the same time.

Certainly, -almost- all illegal guns everywhere on any American city street started up as legal guns. So, gun ownership illegality is 100% derived from perfectly legal gun ownership. Legal gun ownership is the source of all homicides committed by firearms.

Then, what is the point of a firearm ban in a locality surrounded by other localities with free flowing firearms? It is totally pointless. A localized firearm ban would work only if all localities would have the same symmetrical bans. This would imply a national ban, and, given the US realities, that cannot happen.

I think the only viable solution to addressing divergent gun laws across localities would be to make gun and ammunition ownership be direct object of taxation.

Each gun owner should declare the guns and ammunition they own, by type, and be assessed a federal excise tax depending in gun/ammo type, caliber, customization, etc. We do that for our home(s), retirement accounts, car(s), pet(s), boat(s), RV(s) ownership, etc.

The IRS should create a new 1040-GUN form to allow for itemization of all the guns and ammunition. 

Where I live I have to pay $25/year to 'license' a single pet. Why can't we legislate the need to pay a yearly gun licensing fee as a source of quasi fiscal revenue  to the federal government?

Thursday, December 27, 2012

Manifest against the current political gridlock

As if this would have not been expected, the US Congress cannot seem to agree with the Senate and the White House on a common solution for averting the fiscal cliff. Partisan interests dominate the public interest and if you are not outraged by this then you are either a political mollusk or a house plant.

Only a month ago we have elected a president with a solid mandate to solve our nations' problems.

Yet the Congress seems to be accountable to interest that do not coincide with the public's choice for executive leadership. In spite of this political stalemate and in light of the ominous economic implications of inaction on solving the fiscal cliff people seem to be passive and indifferent.

Where is the public outrage? Why aren't people going on the streets to stage large protests just like in the 1960s? Where is this public lethargy coming from? How is it that we have become the most indifferent nation to political gridlocks?

How can we allow the government to be in a perpetual state of conflict with itself and with the public that elected it? I am mystified and sad to see how political processes that exist to elect and support the government are completely ignored and even used against the public's interest.

Case in point: the fiscal cliff. If the government does nothing about its consequences most of the public will be worse off while the executive and the legislative bodies of our government will suffer no immediate consequences. They have 2 or 4 or 6 years to deal with the political consequences but we will have to deal with the economic consequences immediately. We will pay higher taxes immediately. We will have less of everything including debt but this is of no consequence during the next several months.

Monday, December 24, 2012

The Nature of Credit (III)

Please read this article and you will realize that the Fed has an amazing amount of power.

In addition, this article also shows that the government uses the Fed's powers to shift economic perceptions in ways that are not only dubious but also dangerous. Our perceptions of inflation (high) are different than  government's (low). In the end, we cannot be both right at the same time.

To bridge this gap the government and the Fed are keeping the flow of credit at very high rates while calculating a CPI below reality. No matter what we do as individuals, we will have the invisible hand of inflation gap rob us of our own wealth and see it being transferred to cover the government incompetence.

Sunday, December 23, 2012

Lazy Bones - Cabernet Franc Vintage 2011 Paso Robles

I purchased a few bottles of 2011 Cabernet franc -Lazy Bones- and I just like its freshness.

If you are into red wines I would recommend this Cabernet franc as a staple wine to have around.

It has robust flavors and it rolls very gently in your mouth. I had a bottle with a rack of lamb and roasted root vegetables. Delicious, luscious, and with plenty of blueberries.

For a wine under $10 a bottle at Trader Joe's you cannot go wrong to use this wine as your regular table wine for a full month.

Friday, December 21, 2012

National Rifle Association raised again the stakes of absurdity

After the recent Newtown, CT massacre the NRA came out today and claimed that this tragedy could have prevented if some 'good guy' with a gun had been around at the time of the shooting.

All the children and adults killed last week have not even been buried yet and the NRA is positioning itself in a position of supremacy that suggests that the only answer to this type of crimes is a shared responsibility by an even more widespread gun ownership society.

What about a shared responsibility where nobody can get a gun except for very legitimate reasons (target shooting, with proper medical backgrounds, etc.)?

In addition, the NRA thinks that each school needs armed guards or police officers to prevent such tragedies. Or that we should just rely on acts of 'pure good randomness' to defeat 'pure bad randomness'. On average, we will do just fine, except that many innocent bystanders will be massacred in the crossfire, a crossfire of nonchalance and implicit criminal neglect.

We are not playing cards, the last I checked, to accept that we are neutral viewers of and not participants in our own lives.

How can the NRA justify that, eventually, good randomness cancels out bad randomness? Such a position is morally, intellectually, and politically wrong. We can protect children and adults from cigarette smoke but we can do nothing about guns and ammunition?

Let's just start by having the government tax each bullet sold with $10. Firearms should also be taxed at 100% when changing hands, including family member to family member transfers. In addition, for each firearm owned the owner needs to pay a yearly tax of $500.

We need to make guns and ammo so expensive to own and use that only a few people will actually be able to own guns and actually afford to burn $10 every time they shoot a bullet. 

There are about 300,000,000 firearms in the US in private hands and let's assume that the average federal tax per year per firearm is going to be $500. Simple math tells us that we will get about $150,000,000,000/year. That is $150 billion/year. Add in the $10 per bullet sold and we will reach about another $350 billion/year. In total we will collect more than a half a trillion/year in new taxes. If people decide to buy even more firearms we will make even more money for each gun purchased.

This is a very fair tax as if you do not want to own a gun or buy bullets you will pay $0 in additional federal taxes. If you surrender the firearms/bullets you already own to the government you will get an equivalent federal tax credit.

Thursday, December 20, 2012

COX Communications decided to credit my account with $5

So, after COX Communications lost all my e-mail messages older than 150 days and stopped delivering email message to my account with them for about 5 days it decided to credit my account with the incredible amount of $5. A one time credit.

Incredibly arrogant and shortsighted. COX Communication is the worst cable and internet services delivery company. Without any doubt.

Stay away from COX, if you can. If I could not use COX where I live I would never in a million years do business with them.
Now COX claims that I have not been paying for email services, in spite of the fact that I pay for internet alone about $65/mo. Not to speak of the fact that they advertise email access and account as one of the differentiating services compared to the competition.

Incredibly frustrating.

Here is the exact reply I got from their customer care team.

I am sorry for the issue you are experiencing with our webmail.

Please keep in mind you subscribe to access to the Internet and we offer the email as a complimentary service at no additional charge.

A $5.00 credit had been issued to your account and you will see this on the next statement. Teams across all levels of our organization remain intensely focused on the restoration efforts. Unfortunately, we do not expect services to be restored today. We do understand the impact this is having on our customers, which is why we have deployed every resource possible to working this issue. While we are focused on restoring email access as quickly as possible, the multiple components and processes that make up our email system require care, and some time, to bring them back online. We will provide additional updates on our website. We sincerely apologize for the inconvenience this is causing you.

Sunday, December 16, 2012

The Nature of Credit (II)

Credit is an amazing economic instrument.

Credit is the primary vehicle through which we communicate and translate economic values across times. An individual who has an excess of resources today can use them to either pay back expenses made in the past or to support other businesses who will pay them back in the future. Time can be traded just like any other goods or services.This is astounding.

It is astounding because, given credit and perfect rationality, the amount of economic activity at any given time should be always focused on the present. When this does not happen we have an economic crisis, be it depression, recession, or inflation.

So, if today I know that I have an excess of resources I should be able to pretty easily pay back past obligations and sustain the excess of resources for the future, via credit. My natural inclination would be to be in a perfect balance today as I know that, if current conditions persist, I can sustain the balance going forward.

If I make $1,000 this week and need to pay for my past loans $200 and save for future growth $200 then the $600 left over should be sufficient for living. If I save even more than $200 then I will have even less resources today but this implies that I am optimistic about the future.

Bring the government into this equation and we will see how they take away any and all incentives to save for the future while trying to decrease the value of my past loan obligations.

Now, -if I have the same job- I still make $1,000 this week and government (via the central bank) decides that the value of credit should be less than it used to be (using quantitative easing, for instance).

So, I used to owe $200 for past loans and now they are worth $150 while the value of saving for the future also decreases by $50. So, I have $700 left to spend. What should I do with the extra $100? Well, if cost of living went up and state and local taxes went up I may end up with nothing more than I used to have before. All the federal government did was to make private businesses and sate/local governments charge more for the same goods and services. The net effect is 0 (at the very best). There are other cases where the net effect of the government actions is at most 0 and very few where the effects are greater than 0.

We are slaves to the central bank's actions and they have a very thin hit zone of success.

Another outcome to consider is listed below.

If I do not pay my $200 loan at all this will enable me to have more resources today but this also signals that the degree of risk in the economy is not well quantified. Higher risks imply higher returns and higher values of the credit costs. Contrary to expectations and economic theory, this has not happened at all. If I save more then I am not rational as the interest rates are too low.

So, I can either invest the money or spend it all.

The central bank is practically forcing us to take actions against or best individual interests. Think about it for a second. A government body not elected by us is telling us what is best for us... At least economically. If there are no economic freedoms then we have no other kinds of freedoms.

Credit is an amazing instrument until the government dilutes its value to almost nothing.


It's impossible to claim innocence

Friday's massacre in Newtown, CT where 20 children under the age of 7 and 6 adults were killed by a young adult shows with the precision of a metronome what lack of government regulations can do.

It is almost impossible to claim that the government could not have done anything about this when it is clear that the opposite is true. Mostly when these types of massacres occur at least 10 times a year.

Here are several ways the government could have made this massacre much more difficult to perpetrate (if not prevent it).

1. Access to guns. Most criminals and mentally challenged individuals get (buy or steal) their guns from other 'law abiding' citizens. Controlling guns at the source and imposing yearly checks on the storage of guns and ammunition in private hands could be a starting point;

2. Mental health. If anybody in a household gets diagnosed with a mental disorder all guns/ammo in the household need to be sold immediately;

3. Judicial clarity. Have the Supreme Court clarify the scope of the 2nd amendment so that stronger restrictions be placed on all guns already in private hands;

All 3 branches of the USG have failed to fulfill their main Constitutional duty: to allow to the 26 innocent victims of this infuriating event to seek 'life, liberty, and pursuit of happiness'. Their lives were taken away from them and the government cannot claim innocence.

It is impossible for the government to assert that it could not have done anything to prevent this event when these types of events happen with an alarming regularity.

Our government can muster the resources and the legal constructs to chase/kill/incarcerate/isolate terrorists away no matter where they are on the globe, but it cannot do anything to prevent these types of atrocities?

If Al-Qaeda would have been behind any of these types of awful mass shootings then the government would have created a new set of rules. Immediately and without recourse.Just like the 'Patriot' Act. Only the name is patriotic in that act, and yet the government has managed to make it the new law of the land rather quickly...

Cox Communications Sucks Again

Starting with yesterday I have not been able to access my Cox Communication e-mail account. Mind you, I am paying them +$65/mo for the Internet access they provide.

Here is what they promise. Yet, I cannot get to my e-mail account at all.


Logging in here will allow you to:

  • Access up to 10 email accounts with 2GB of storage space each
  • Compose new messages to contacts from your Address Book
  • Manage SpamBlocker and other advanced email tools
  • Search for current and saved messages
Learn more about Cox High Speed Internet.

And this is what the alert says.

Our teams are making progress in our email service restoration efforts. Through our investigation, we have isolated the cause of the failure to the email system platform which ultimately affected both the primary and secondary failover (back-up) systems. Currently, all incoming messages are queued in our system and we expect to deliver messages to customers on a rolling basis as we bring the systems back online. Teams across all levels of our organization remain intensely focused on the restoration efforts. Unfortunately, we do not expect services to be restored today. We do understand the impact this is having on our customers, which is why we have deployed every resource possible to working this issue. While we are focused on restoring email access as quickly as possible, the multiple components and processes that make up our email system require care, and some time, to bring them back online. Our next scheduled update is 3:00 pm, however we will update this alert with new information as we have it.

Need I say more than the fact that Cox is the worst 'utility providers' company I am dealing with?

I hate having to do business with this company but they are a virtual monopoly in this city.

Friday, December 14, 2012

Ode to atheism

Today's news about the 27 victims of an an unexplainable act of violence in Connecticut has made me be an even stronger believer than ever that I cannot be anything but an atheist.

We are simple mammals that have evolved the way we are and manage to maintain our society 'normal' by the simple law of large numbers. We developed and embraced the concept of God to substitute for our inability to accept that we are finite.

Scientifically and statistically speaking we exist by pure coincidence and if events like today's can happen then so can we.

No God in any universe can be used to justify what happened today in Connecticut. Never.

Adam Lanza, the alleged perpetrator of this crime, was a human being who killed other humans using technology and laws accepted as 'modern' in this country.

We cannot allow a repeat of this type of tragedy. We need to use human powers (laws, government, justice, and society artifacts) to stop anybody from ever doing what Adam Lanza did today.

Using divinity to justify Adam's actions should be left for the weak amongst us. It is time for us, The People, to fix the gun laws in America and drastically restrict gun ownership.

Another tragic government failure

Today, 20 innocent children and adults were massacred by a young man in Connecticut. Our tears cannot bring these children back and nobody's tears can console their parents.

This is an example of complete and utter government failure. Innocent children being murdered mercilessly by an armed man should not happen in a civilized society. Never and under no circumstances.

The government should protect the weakest among us. Anybody daring to claim that we have the constitutional right to carry guns in this country and that this is a purely 'isolated' incident are at least insane. This could have been prevented if guns would have been much harder to come by.

Guns do not kill people but people with guns can kill people (including children) at a much faster rate than with almost any other kind of weapon.

Rules about the health and state of mind of anybody who has guns need to be much stricter and much better enforced. Also, rules about the sales of guns need to be changed and new rules about the storage of guns in private hands need to be created. The sooner the better.

Currently, in Chicago, one cannot have a gun, but in the suburbs anybody can buy a gun which then can be sold to thugs in Chicago. NRA and other gun rights advocates claim that Chicago is a clear example of the failure of gun control regulations. Can you believe that? Anybody can drive to Iowa or Indiana and buy a gun and return to Chicago and kill innocent victims at will.

We need new rules for gun ownership and we need them now as the type of massacre that happened today can be repeated at any time and almost by anybody.

Thursday, December 13, 2012

The Fed is the Most Powerful Branch of the US Government

As we all know so well, we have 3 basic constitutional powers: legislative, executive, and judiciary.  Only 2 of them, legislative and executive (within limits), can affect the economy in very direct ways.

Regulations, national budget, taxes, incentives, subsidies, exemptions, and foreign policy are but a few of the ways the government affects us in very tangible ways.

The judiciary power cannot do too much about the economy as the courts are simple post facto arbiters.

The poor state of our economy is causing ripple effects in our lives, from employment opportunities, healthcare decisions, housing, and transportation to political choices and wealth distribution.

As of now, we cannot make decisions on next year's budget as we are not sure what the tax rates are going to be and we do not know that because 2 branches of our government have failed to perform their constitutional duties. It is bizarre that even though there are so many uncertain components in economic planning the ones we need to worry the most about elate to the government actions (or lack thereof).

The legislative and executive branches of our government have failed to perform their jobs and have been failing persistently over the past several years. The leaders of these government branches cannot agree whether they should say 'Hi' or 'Hello' when they meet and we pay the consequences. 

Under the massive clouds of uncertainty on the functioning of the legislative and executive branches, one branch of the government, not even sanctioned by the US Constitution, has emerged more powerful than ever.

That branch is the Federal Reserve System (The Fed). The Fed is the most powerful branch of the US government and without Fed's actions over the past 5 years the US would have literally sunk into an extraordinarily deep recession and, quite possibly, into a depression. Is this branch controlled by the people? No. Is it accountable to the people? Very indirectly and ineffectively.

The Fed has the full power and capability to create economic crises, to favor political specific parties over other parties, to massively influence credit availability and size (the blood of capitalism), and the ability to affect international trade via currency and exchange rates manipulation.

The Fed is a government within the government. It has control over the health of the banking system (legislative power), controls the monetary mass and credit (executive), and recommends sanctions when banks do not do what they are expected to do (judicial).

The actual processes the Fed uses to perform its actions are semi-occult and based on questionable science that imply that governments 'live forever' and, consequently, the money supply can be infinite under some specific conditions.

Wednesday, December 12, 2012

The fiscal cliff looms closer and closer

Up to this date nothing has changed in solving the fiscal mess before the end of the year. Nothing.

The only indirect 'beneficiary' of this Congressional inaction is, again, the Federal Reserve Bank.

Today, Ben Bernanke announced that the Fed will extend its powers and buy even more treasury bonds. So, the Fed continues to build its massive power under the careless eyes of the US Congress.

Just read this article and prepare to be amazed as the Fed has officially become the most powerful American institution. They own, after all, most of the US debt and they claim that they ask for nothing in return. Can you believe that?

Sunday, December 9, 2012

The nature of credit (I)

The nature of credit is such that people who save money (by not spending more than what they make) make it available to people who need it for starting or running a business and to people who are impatient and want to own 'stuff' beyond their means.

It is pretty simple: you have extra money and deposit it at a bank. You trust the bank to use your money wisely. If the bank grants loans to people/companies that pay it back on time, plus interest, then all is dandy and good. If banks cannot get their money back from borrowers -and this is persistent- then we have a problem.

When banks and individuals collude on asset perception and think simultaneously that the assets' values they endorse are 'stable' at unrealistic levels then everybody suffers the consequences. All banks lose money at the same time and this cannot be sustained over long periods of time.

When you bring the government and the central bank into this equation then entire nations and even the world economy suffer. The central banks interject in the value of credit equations by totally arbitrarily asserting that the magnitude of risk components in credit is almost zero. How can risks decrease when asset prices decline? Yet central banks want us to believe that the cost of credit should actually be very low as the risks are very low and/or returns should be very constant (i.e. low). Really?

The stock market and individuals' earnings disagree. Wages are expected to grow as companies are expected to make profits at some historical rates greater than 3-8%.  So, how can the Fed rationalize holding the interest rates at 0.25%/year? It makes no sense, as the ratio of bad performing credit to performing is about 10%.

Under these conflicting conditions, credit cannot be cheap when uncertainty on taxation is at historical levels. The consequence is that the economy remains paralyzed. Business, individuals, and asset traders are not sure about who is right in this economy. The central bank cannot be right as they have a poor record. Private banks and financial institutions have had a poor record too. The government has had a very poor record as well.

Individuals cannot all be wrong in insular cases but they can be wrong in groups.

Credit should be expensive and tax rates should be high and neither is true. How can this be conducive to real economic growth? We are in a check-mate situation, with the government and central bankers holding most of the high value cards. Individuals and business need to chip away at getting out of the current state on their own. The government and the banking system cannot be trusted and the value of credit has been usurped. I will get back to this topic, no doubt.

Summit Saga IPA (great beer)

If you have a chance, this winter, try the IPA from Summit Breweries.

It is an amazingly tasty and optimistic beer. It has an uplifting undertone and it makes me dream of exotic places, such as Caledonia or Fiji. The beer complements heavy dishes, like chicken parmigiano and even Philly cheese steaks.

Tuesday, December 4, 2012

I Hate Cox Communications

Cox Communications (CC) is my cable and satellite provider. For cable TV (+digital receiver) and internet I pay -with taxes and all- about $157/mo. For internet alone I pay about $55/mo.

A few days ago Cox sent the following message to me.

It has the subject line 'Important Notice Regarding Your Cox Email'.

COX Business(R)
Dear Valued Customer,

We are writing to notify you that Cox recently experienced a technical disruption to our email services.  While email services have been restored, some of your emails older than 150 days cannot be recovered to our servers.

We value you as our customer, and apologize for any inconvenience this may have caused.   If you have any questions regarding this matter, please contact us at 877-897-2470.


Cox Communications

Needless to say, this is infuriating. I am paying Cox for access to an email account that is not public. In addition to restricting the size of my e-mail box to 2 GB now Cox has decided that I cannot keep messages for more than 150 days. 

Many e-mail providers are totally free and you get to have at least 10 GB of space but a company that I pay money for this basic service cannot fulfill its obligations. To add salt to injury they pretend in their communication that it is not even their fault.

I contacted Cox customer service to try to have my e-mail box restored and they told me that there is nothing they can do to recover my messages. Amazing. This is one of the reasons I thoroughly hate Cox Communications.

Cox Communications is arrogant, behaves like a de-facto monopoly, and restricts -via monopoly pricing- the free flow of information in this country.

Sunday, December 2, 2012

Shock Top - Belgian White (forget about it)

Whatever you do, do not buy Shock Top (Belgian White) beer.

It is supposed to be a Belgian style beer with citrus peels and coriander. It is not. In my mental catalog, it will be registered as 'just a beer' and claims to the contrary are pure marketing and shrewdness.

Shock Top is a washed-out beer without consistent and clear flavors. I chilled a six pack overnight and was expecting a beer with mystery and weight. It is a beer with a strong sour after taste and with very few detectable flavors of either citrus peels or coriander.

Believe it or not, I would drink Stella Artois over Shock Top (Belgian White) any day of the week.