It has been so long since I have written anything here that I almost forgot the username for this blog.

Earlier today, I read The Market Ticker about credit cards attempting to add new annual fees for people who pay off their bills every month without conducting a certain number of transactions.

Once I read the article that Denninger linked, it was even worse than I thought because one of the examples of "good" credit cards was an offer that I received last week. Essentially Fidelity says they are giving you 2% cash back. The fine print on that says you get $0 in cash back until you have conducted $2500 worth of transactions.

While fees and interest rates have gone up to keep credit card companies a float, the rewards programs have gone way down. The other week, I was reading a blog set up by Discover Card so people could talk about how much they enjoyed their 5% cash back program that you have to opt-in to every three months. While there, I learned that the 5% rewards will be cut to 2% as of next year, and you get some very low cash back on other purchases. I had missed that earlier this year they had increased their cash-out amount from $20 to $50. The Discover Card blog was very educational and made me realize that I was not a particularly satisfied customer.

Anyway, this is just a warning to everyone else to look at your credit card bills and re-read the fine print because changes are going on before the new credit rules that Congress passed take effect.

Here are more details on the changes to Discover Card and the CARD act that is going into effect. If you are a person who does carry a balance on your card, these changes will likely be good for you.

When I woke up this morning, everyone seemed upset about AIG giving out retention bonuses that will keep the best and brightest from walking away from a zombie a corporation.

Forbes released its list of billionaires which got a lot of people upset because a Mexican drug lord by the name of Joaquin "El Chapo" Guzman Loera joined its list. How do you estimate the wealth of a drug lord? Other interesting things about the list of billionaires is that it shrank to 793 from last year's 1125 after last year's financial crisis. Russia was particularly hard hit because of its dependence on oil for its wealth. The number of billionaires under 40 shrank from 50 to 18. Last year's youngest billionaire, the 24-year-old founder of social-networking website Facebook, Mark Zuckerberg, did not make this year's list.

Here is a long article about AIG being a black hole. If in accounting, black means that you are profitable and red means you are not, should it be a red hole?

I found this article interesting. It is about Laura Pendergest-Holt who was arrested for lying about Stanford. What I find most interesting is that she was at the Mississippi University for Women and graduated in 1995. I interacted with some of the students at the university at the time, and they seemed like a strange sad lot, girls who had to settle for Social Clubs because they couldn't have sororities. I am not sure if this was because the college was so small or because it was historically a women's college (accepting men since 1983(?))

Okay, I understand that most of the financial bloggers are male and as such they will do (foolish), manly things. One thing that has been bothering me for a while has been the comparison of the behavior of the government or the actions in the economy to rape. Both Karl Denninger and Mish Shedlock have done this in the past couple of days. This is both highly offensive and intellectually lazy. Seriously guys, there should be a Godwin's law for rape.

In having an online discussion, if you have to resort to comparing your opponent or his ideas to Hitler you lose. If you have to compare something to slavery or rape you also lose. It is not that hard. In no way is the economic collapse or anything the government does comparable to rape. We are not talking about the acts of specific government employees or political officials here.

Here is Shedlock misusing rape.

Denninger is a repeat offender.
Here, here, and most offensively here.

In the last one, Denninger is asking "Are you tired of your children being raped?" Maybe I find this most offensive because recently I had to learn about all the potential negative consequences of children being raped. Recently, there was a study about the brains of victims of abuse physically changing. The test was conducted on the brains of various people who had committed suicide. Children who have been raped may experience eneuresis or encopresis in addition to various other psychological issues. In short, nothing that Denninger is talking about merits this type of comparison.

This cartoon explains why the market reacted to Tim Geithner's economic plan the way it did.

In other words, I agree with commonreader. The DABA Girls are fake.

I should have written this when everyone was getting laid off a month or two ago.

1. You should organize your spices and your socks.
2. Eat healthier.
3. You should watch many seasons of Law and Order.
4. You should get some form of exercise.

Today, the dentist was telling me that it seemed that most people were laid off in the past couple of months, and things are starting to look up. I hope she is right.

This TNR attack on Laffer was interesting.

That fateful night, Wanniski and Laffer were laboring with little success to explain the new theory to Cheney. Laffer pulled out a cocktail napkin and drew a parabola-shaped curve on it. The premise of the curve was simple. If the government sets a tax rate of zero, it will receive no revenue. And, if the government sets a tax rate of 100 percent, the government will also receive zero tax revenue, since nobody will have any reason to earn any income. Between these two points--zero taxes and zero revenue, 100 percent taxes and zero revenue--Laffer's curve drew an arc. The arc suggested that at higher levels of taxation, reducing the tax rate would produce more revenue for the government.

At that moment, there were a few points that Cheney might have made in response. First, he could have noted that the Laffer Curve was not, strictly speaking, correct. Yes, a zero tax rate would obviously produce zero revenue, but the assumption that a 100-percent tax rate would also produce zero revenue was, just as obviously, false. Surely Cheney was familiar with communist states such as the Soviet Union, with its 100 percent tax rate. The Soviet revenue scheme may not have represented the cutting edge in economic efficiency, but it nonetheless managed to collect enough revenue to maintain an enormous military, enslave Eastern Europe, fund ambitious projects such as Sputnik, and so on. Second, Cheney could have pointed out that, even if the Laffer Curve was correct in theory, there was no evidence that the U.S. income tax was on the downward slope of the curve--that is, that rates were then high enough that tax cuts would produce higher revenue.

Well, the economic news has been completely depressing. I know so many people who do not have jobs or are about to lose theirs right now. After the large layoff at Citi the other day, I asked a friend if he was still safe.

I tried to explain to a friend that I lost more money in the stock market than I made this year.
She thought I meant that I lost more money in stocks than I made in stocks. I meant that I lost more money in the stock market than I made while working my day job for six months. Of course they are not realized losses until I actually sell but ouch!

There doesn't appear to be much of a way to stop it than move to cash, but when the revolution hyperinflation comes...

She was explaining to me her plan to move to NYC because it has more jobs. NYC has a lot of people who just lost their jobs. The city tax just went up to cover the city budget.

I was trying to convince her to apply for jobs and move once she had a new one. She was hoping that living near friends will make her better.

This video on credit default swaps from a senior editor of the NPR show Market Place is quite good.

Market Place is one of my favorite NPR shows. It is a half hour look at the day's market, and the show is based in California so it seems a little more edgy than a lot of NPR.

This was my favorite article about the financial crisis today. It had so many delicious quotes. The following are just a couple of them:

She just expressed most clearly and loudly a view that was, in retrospect, far more seditious to the financial order than, say, Eliot Spitzer’s campaign against Wall Street corruption. If mere scandal could have destroyed the big Wall Street investment banks, they’d have vanished long ago. This woman wasn’t saying that Wall Street bankers were corrupt. She was saying they were stupid. These people whose job it was to allocate capital apparently didn’t even know how to manage their own.

...

“The single greatest line I ever wrote as an analyst,” says Eisman, “was after Lomas said they were hedged.” He recited the line from memory: “ ‘The Lomas Financial Corp. is a perfectly hedged financial institution: It loses money in every conceivable interest-rate environment.’ I enjoyed writing that sentence more than any sentence I ever wrote.”

There has been a lot of buzz around this article in the Washington Post this morning. It is about how banks are getting a huge new tax break while the government is already shoveling money into them as fast as it can.

The rumors I have read about the Obama cabinet include Larry Summers, Timothy Geithner, and Paul Volcker as possibilities for Secretary of the Treasury. Jason Furman has been mentioned as a potential Director of the National Economic Council or National Bureau of Economic Research. Auston Goolsbee has been mentioned as a possibility for the Chairman of the Council of Economic Advisors. Dan Tarullo is a possibility for U.S. Trade Representative. Reuters briefly describes all of these people here and confirms most of the possibilities above.

Earlier this year, I wrote about what I want in a retirement account. Today, Roger Nusbaum wrote about companies that offer only limited options in the retirement account and potential ways to constructively deal with the situation. He suggested petitioning the company for better offerings and only putting in what will get matched and investing the rest of the money in some other way.

I found this passage about something that has been bugging me for a few days now:

Mark Thoma, an economics professor at the University of Oregon, experienced similar frustrations with the business coverage after the 2004 presidential election. Specifically, he was dissatisfied with much of the rhetoric from the pundits opining on government economic policy.

"It was probably two issues in particular," he told me in a phone interview recently. "There was the whole 'tax cuts increase revenue' idea that I think a lot of people were getting fooled by, and also I was a little disappointed with a lot of the discussions on Social Security and how it would affect solvency and those sorts of issues."

I know that taxing behavior discourages it. For example, having that added tax on the 401k is supposed to discourage people from withdrawing their money early. It seems like the cut in taxes and the generation of more revenue may have been correlated but not necessarily causal. If the economy is booming, aren't you going to generate more revenue? Would a higher capital gains tax have discouraged some of the house flippers? If not, why not? If so, would that have been a bad thing?

Nouriel Roubini is leaning towards deflation. He is getting a lot of clout lately for predicting some of what has happened in 2006. I am not sure why though. Were his predictions more specific than some of the other ones? Was he the first economist with any academic clout to say something? I don't get it.

Or is it looking like the Obama administration will put Paul Volcker into Bernanke's position?

Thailand is bartering rice for oil with Iran because Iran is having a hard time getting credit. Here is an article from the Financial Times about it.