NBA Players are proposing a 53%-47% split of revenues while owners want a 50%-50% split. Each 1% is worth $40 million and since the contract is for 6 years, that $720 million. Not chump change. But, it also means a full season is worth $3 to $4 billion. Since the lock-out has already wiped out 15 games they have already lost more than the $720 million they are fighting over!! Positions will harden as losses mount.
Category Archives: 70 Words
Tax the Rich
The inheritance tax hurts the poor by encouraging the rich to overspend because they can’t leave it all to Junior. This tax-avoidance induced spending on jets, boats and lavish parties reduces the money available for new plant and equipment. Look, America already overconsumes. We shouldn’t pass tax increases that exacerbate this. So go ahead and tax the rich, but in a less harmful way.
Dodging Debt
Frank McCourt, embattled owner of the LA Dodgers is selling the club. By craftily splitting the sale of the team and the sale of the team’s media rights, he expects to net $1 billion. But, he has bills! The club is already carrying about $500 million of debt, it owes Major League Baseball $150 million and capital gains taxes will be about $150 million. He also owe his ex wife $131 million. Luckily, he only paid $421 million for the club in ’04.
Crushed by the Heat
Picking grapes at night results in better wine, lower energy costs and happier workers. High daytime temperatures (90 and up) change the sugar composition of grapes leading to possible uncontrolled fermentation due to wild yeast. To bring down the temperature, grapes are put through a cold bath or heat exchanger before being crushed. While that gives vintners more control, it costs money. Picking at night obviates this need and keeps workers from heat stroke.
Poor Granny
To put the absolutely dismal interest rates we are getting on savings into perspective think of it this way. The highest yielding 1-yr CD pays 1%. At that rate, it takes 70 years to double your money. By contrast at 5% it takes only 14 years. And, at 10%, it takes just 7 glorious years. Because rates are so low, investors speculate in gold, oil, copper, and other commodities while interest poor granny sits alone in the dark.
Stress Less, Pay More!
The Friday File: A recent article in the Journal of Marketing Research shows that relaxed shoppers pay up to 15% more for the same merchandise as less-relaxed ones. So if you hear soothing music, are offered a free cup of coffee, or cocktails and finger food, or evening shopping get nervous. The research also shows that when boyfriends and husbands are absent, shopping is more relaxed. I can hardly wait to go shopping with my girlfriend!
Politics of the VAT
Democrats fear a Value Added Tax because it is very regressive. (That means the poor pay more taxes as a proportion of their income than the rich). Republicans fear a VAT because it can easily raise lots of money — just look at Europe. But, once Republicans realize it is regressive and Democrats realize it will raise lots of money, it may suddenly be hailed as a rare bipartisan solution to our fiscal problems.
Luck for the Lady President
This past Sunday Argentines reelected president Cristina Kirchner. Like all good politicians lady luck has been with her. Argentina pulled out of its ’01 financial meltdown by; not paying its bills, devaluing its currency and defaulting on its debts. Miraculously, this worked (8% annual real GDP growth) because commodity prices began rising in late ’01 and have remained high ever since due to strong emerging market demand.
Italy is Next!
Greek PM Papandreou’s call for a referendum to approve additional financing has heightened fears that Greece will default. In response 10-yr Italian debt yields hit 6.33% a euro-era high and as much as 4.55% above super safe German bonds. Once the spread exceeds 4.5%, clearing houses can force investors who use Italian debt as collateral to make margin payments. In the recent past, all such requests have resulted in bail-outs. Italy, look out, Berlusconi, bye bye!
High on Hopium
Q3 GDP came in at 2.5%; best performance since Q4 ’10. But, after looking at the economic entrails the number is weaker than it looks. Consumer spending on utilities and healthcare is what drove spending, not discretionary items. Worse, spending rose only because savings rates fell from 5% to 4%. Savings is falling because personal disposable income fell 1.7% in Q3; a huge decline. I bet the GDP number will be revised down.