Personal Finance 

On the 2008 Presidential Election

Last night was a historic night.

However, it’s historic not just because Barack Obama, the first African American nominee of a major political party, was elected President, thought that certainly was historic, or because the margin of victory was so great, there have been bigger.

It was because we saw what hard work and dedication in America can accomplish. So many people, my parents included, come to America seeking a better life for themselves and their children. My dad bought a one way ticket from Taiwan to the United States to go to college. He could have stayed in Taiwan and been quite comfortable. He could speak his native tongue, live where he grew up, worked with people he’s known his entire life, but this was America. The land of opportunity.

Many people point to Barack Obama’s achievements as inspiration that the American dream is still alive, to which I cannot disagree. However, I argue that John McCain’s ascension to the Republican Presidential nominee is equally impressive. Age discrimination is very real in this country, though less offensive to many for a variety of reasons, and we were not far from electing the oldest President of the United States. John McCain was a tireless public servant, a hard working American, and no one can doubt his patriotism – and he was rewarded with the Republican nomination. It did upset me to see him upset last night, you almost never want to see someone of his caliber of character see defeat in that way (McCain’s brief bio on Wikipedia).

Barack Obama’s story is pretty well known (Wikipedia has a quick recap of that) so I won’t rehash it but the fact that he was the Democratic nominee is also impressive. I thought his acceptance speech was clear – this was only the chance to begin the work, not the work itself. It contained all the usual political stuff but I thought the story about Ann Nixon Cooper was very touching. You can read the transcript of the speech here and listen to it here (I’m sure video will be available later if you search for it).

Hard work still pays off in America, that was something we lost faith in for the last few years. Now it’s time to build on it.


I Voted for Barack Obama

I voted for Barack Obama.

I walked into the polling location, sign in, voted, and walked out in what felt like five minutes. Then my wife and I headed over to Chik-fil-a where we thought they were giving away sandwiches (the one near us wasn’t!). We ate there anyway because Chick-fil-a is a good place and then snagged our free coffee’s from Starbucks across the street. Not a bad voting experience!

Now, I hope you all won’t mind if I share a few thoughts about my decision. I share some of the same feelings about him as Marc Andreessen, who is pretty well known in Silicon Valley and, among other things, helped create Mosaic. Here are some of my other thoughts about him, the Election, John McCain, etc. I don’t write much about politics, I know it’s a heated topic and I try not to play with fire too much, but this is pretty much a brain dump and feel free to share your own in the comments.

There are two things I feel the next President has to do:

  • Improve our standing in the world – The wars in Iraq and Afghanistan, how the Bush administration justified it (great and scary Frontline doc about it), and everything else have really knocked the United States down a peg or two or ten. I believe Barack Obama has both the charisma and the humility to improve how the world sees us.
  • Reduce our reliance on fossil fuels, especially foreign oil, and reduce our impact on the environment – Obama has said that our approach to finding alternative sources of energy should mirror that of Kennedy’s approach to landing on the moon, I really think we do need a goal like that. It’s unfortunate that so much of politics is dominated by groups with a huge stake in maintaining our reliance on fossil fuels (coal industry is huge in the swing states of PA and OH, Detroit automakers are detrimentally tied to gas guzzlers, Big Oil needs no explanation).

I don’t think McCain or Obama will be able to cut taxes, the economic conditions are such that cutting taxes is near impossible. Taxes will go up and they will have to go up. I bet we’ll see the Social Security maximum raised, some brackets shifting upwards (less so for the lower brackets), and some tax cuts permitted to sunset. It’s like elder Bush and his famous “Read my lips, no new taxes” line that he had to renege on – the realities of the environment will dominate any promises.

As for the big focus on “wealth redistribution?” We’ve been doing it for years, it’s called the progressive tax system. While it seems like you’re punishing success and being a bit socialist, the alternative is far worse. Imagine a nation where there is an upper class and a very large lower class with few economic opportunities, filled with anger, desperation, and despair, and with very few options. Not pretty huh? America is still the land of opportunity, even if success is taxed a little more.

The funny part is how the Bush’s tax cuts, coupled with ridiculous spending, redistributed wealth from the poor to the rich. It was a little sleight of hand though The cuts lowered taxes on the rich (no one upset by that huh?)by lowering capital gains. Lowering capital gains is a huge coup for anyone who was rich because they were more likely invested in things that give capital gains (stock market, real estate). If you were in the top tax bracket of 35%, long term capital gains is a mere 15%… that’s a 20% discount! This also had the effect of making the stock market more appealing, which boosts share prices, which makes everyone feel richer.

I am a little concerned about how Democrats will control both the Legislative and Executive branches, but I’m OK with it for now. I do like the idea of checks and balances. The bail out bill was four pages long when it was first introduced, thankfully a Democrat legislature and a Republican executive existed to slow it down and put a little framing around it. While I often complain about the slowness of government, in this case I’m glad things weren’t rushed. While having a single party control both branches is a little disconcerting, I’ve come to terms with that.

As for Joe the Plumber? Comedy. Pure comedy. I don’t know how the nation was convinced that someone earning $250K was somehow considered a “regular Joe.” If you make $250,000 (if it’s a business, that’s $250,000 profit), I’d say you’re doing pretty good.

Finally, I have the utmost respect for John McCain. I liked him far more before he adopted his strategy to appear closer to Bush to appeal to the Republican base (something I learned in Choice 2008, another great Frontline doc) but that’s part of the political game. I don’t fault him for his involvement in the Keating Five scandal and I think he’d make a fine President if he were elected.

If you haven’t voted yet, please go and vote.


Did You Vote Yet?

I Voted - American Flag

That simple question is enough to get a lot of people to vote.

So, I’m curious, did you vote yet? If so, and you are so bold, for whom did you vote for?

This afternoon I’ll post mine if you post yours. 🙂

(As of this posting, I have not yet voted, but I will soon; I’ll remove this sentence once I’ve voted)

(Photo: orangejack)

 Personal Finance 

Don’t Vote (Just Kidding!)

Happy Election Day! Today is Election Day in the United States, where citizens can cast their vote for the person they feel is best fit to be the next President of the United States. You should celebrate your right to vote, one of the rights afforded to you as a citizen and protected every single day by our naton’s bravest sons and daughters, by going to the polls and casting your vote.

Or you could skip it. (watch the video!)

(If you vote today, you can get a free tall brewed coffee from Starbucks for free… or a scoop of Ben & Jerry’s – see? carrot and stick!)


Barack Obama vs. John McCain Dance Off

To help prepare you for the awesomeness that is Election Day on Tuesday, I think that the next President should, at the very least, win a dance off.

Who do you think is the winner? Statistics has shown that in a head to head dance off, the dance off winner often goes on to win the election 78.5% of the time. That, and 90% of statistics are made up.

Have a great weekend!


Frontline: The Choice 2008

FrontlineFrontline is a part of PBS and an example of phenomenal investigative journalism. If you haven’t seen any of their shows before, you should check them out when you have a chance. I’ve seen numerous shows and the recent ones that really stand out are (you could spend days watching their stuff):

  • Bush’s War: A discussion about the decision to go into Iraq following the attacks on September 11th, 2001. It offers a tremendous amount of insight into the decision making process and is actually quite scary. [March 24th, 2008]
  • Affluenza: “Affluenza is a one-hour television special that explores the high social and environmental costs of materialism and overconsumption.”
  • CARRIER: This is a great series that explores life aboard the USS Nimitz, one of our nation’s amazing aircraft carriers.

Frontline: The Choice 2008

Frontline However, today I wanted to highlight one particular episode: The Choice 2008, aired Oct 14th, 2008. It follows the political growth of both candidates from the very beginning and gives a very balanced perspective on both. It’s non-partisan, takes no sides, and merely presents the facts as they’ve learned them. I recommend watching the full program, rather than the individual pieces on either candidate, because it tracks both men chronologically; showing what each did during the same time period.

Some things I took away from the show were how much planning and politicking goes on. Barack Obama had a two year plan to position himself such that his political peak would occur for this election. Barack Obama leveraged his opposition to the war, which was aided by the fact that he wasn’t in Congress when it was voted on, as much as possible. John McCain absolutely hated President Bush following the 2000 election in which Karl Rove, spreading lies about McCain possibly fathering a half-black baby out of wed-lock, absolutely destroyed him in the Republican Presidential primaries. McCain, who had then alienated the Republican’s conservative base, decided he had to align himself with Bush, despite hating him, to regain that base. That’s part of the reason why he now faces charges that he’s just like President Bush (voting with him 90% of the time).

It’s good stuff, definitely something you should watch before November 4th.


Stock Market: John McCain Will Not Be President

John McCain Not Happy With Stock MarketThat’s the proclamation of the stock market in a resounding fashion.

I always find it entertaining when pundits draw ridiculous correlation relationships between the stock market and [insert something popular at the time]. This time, it’s the winner of the Presidential election in November and the performance of the stock market three months beforehand.

What’s fun is that the CNBC article, Who’s the Next President? The Stock Market Might Know, was written on August 26th – predating all the thick of the market turmoil. The largest single day drop of 777.68 in the Dow didn’t occur until September 29th, almost a month later. The second largest single day drop of 733.08 in the Dow didn’t occur until the 15th of October! (though we did see the single largest point gain on Oct. 13th, a gain of 936.42 in between).

So, you might be wondering how the recent changes in the market have affected the chances of our candidates?

According to the article, an up market in the three months prior to an election signaled victory for the incumbent party 80% of the time, since 1928. At the time the article was written, the S&P 500 was up about 2%. As of Monday’s close, Oct. 20th, the S&P had fallen from it’s August 1st close of 1,269.42 to 985.40. -22.4%!!! Incumbents aren’t looking too good here.

“A poor stock market performance usually anticipates and/or accompanies a weak economy—and that usually leads to the ouster of the ruling party and its president (think Herbert Hoover, Jimmy Carter and George H.W. Bush).” – Heh, talk is of a recession, a bad recession in part caused by a freezing of the credit markets in a manner not seen in quite some time.

The article goes on to discuss a few other fun frivolous statistics like this one:

Since 1833, the Dow Jones Industrial Average has posted an average gain of 6.7 percent in presidential election years, with 20 up years and 14 down ones.| Even if the Dow does turn around and close higher than its 13,264.82 opening level in 2008, history shows it will be an inferior gain to the year before-election year category, when the blue-chip index has gained an average of 10.6 percent and notched 32 up years.

I’m not going out on a limb when I say the chances of the Dow closing above 13,264.82 this year is nil, I think we’re looking at one of those times when we’re in the minority of all those statistics 🙂


McCain & Obama Propose IRA & 401(k) Rule Changes

With the recent cratering of the stock market, both Presidential nominees have proposed changes to IRA and 401(k)s that would allow for both early withdrawals, up to certain limits, and suspension of the required minimum distribution rules. Jeremy at GenXFinance hated the idea but I think offering the option, especially since we are headed towards certain stagflation (inflation for the trailing 12 months before August 2008 was a staggering 5.9% and unemployment was rising). People are going to be strapped. Offering the option of the lesser of two evils is better than forcing people to take drastic measures.

Here are the proposals:

McCain: “Temporarily suspend mandatory annual withdrawals. Current rules require investors to start selling stocks at age 70½. Allow savers who are younger than 59½ to withdraw up to $50,000 at the lowest tax rate of 10 percent in 2008 and 2009.”

Obama: “Temporarily suspend mandatory annual withdrawals from Individual Retirement Accounts and 401(k)s. Current rules require investors to start selling stocks at age 70½. Exempt withdrawals made up to the required minimum amount from taxation. Allow savers to withdraw 15 percent, up to a maximum of $10,000, without paying a penalty as the law currently requires for withdrawals before age 59½. These withdrawals are subject to normal taxes.”

(You can read all of their economic & tax proposals at the New York Times)

I think the suspension of required minimum distributions is crucial and I’m glad the candidates both agree on that. It’ll be the biggest help to those nearing retirement because they won’t be forced to liquidate those stocks that have lost value.

As for the second piece, of the two, I prefer Obama’s proposal because it offers 15%/$10,000 (rather than $50,000) and it is subject to normal taxes as opposed to 10%. McCain’s proposal of dropping the tax rate on withdrawals to 10% is too attractive. All of my 401(k) contributions were done in the 25% tax bracket, I’d have a huge incentive to withdraw my money because I’d immediately see gains because I would only pay 10%, not 25%. (should either proposal ever become law, I wouldn’t withdraw money unless I absolutely needed it though)

Don’t get me wrong, I still think withdrawing funds from your retirement account is a huge mistake. But people will be in trouble and they will either turn towards credit cards and dangerous loans, or they will withdraw the money anyway and simply be left with less of it. It’s truly the lesser of two evils.

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