US Finance Review

Mitt Romney’s Tax Plan Takes More from the Poor

As Mitt Romney’s chances of winning the Republican nomination to become their candidate to beat Obama, it seems only fitting to take a look at his plans for the country if he should indeed become president.

More Savings and Investing

In September Romney released a 160-page document showcasing his “plan for jobs and economic growth.” There are some basically good ideas within, such as encouraging more savings and investments among Americans. One of his suggestions is to build the US’s position in the world as a major technological force.

The plan also includes increasing the tax burden on America’s poorest 125 million citizens, while cutting taxes for the richest Americans.

Tax Cuts for All, with a Twist

Romney’s intention is to make permanent the tax cuts which former President George Bush initiated, which reduced taxes for almost everyone who paid income taxes. But that is just the beginning.

Romney is also seeking to reduce benefits from the child tax credit and the earned income tax credit as well as ending the American Opportunity tax credit for college tuition, which, on average will cost the poorest fifth of taxpayers an additional $157 in 2015, as compared to the current tax policy. This means that the poorest families, who have either children at home or children in college, will pay more.

Poorest Pay More

The Tax Policy Center, whose previous analysis has been praised by both Democrats and Republicans, analyzed Romney’s tax plan to come up with the figure of $157. They also believe that the second poorest group will pay $82 more, on average.

Richest Pay Less

Americans on the higher end of the spectrum will pay fewer taxes, however. According to the Tax Policy Center the top 60 percent of America’s taxpayers will pay less, while the top tenth of one percent would save, on average $464,000.

There are several more changes in the tax policy which will affect not just America’s richest, but the middle class as well. For a thorough examination of the plan go to Romney’s tax policy statement itself.

Facebook Going Public in Frenzy of Expectation

Everyone knows Facebook, as a company, is different. Its unique abilities and exponential growth have changed the way we communicate, socialize, and some say, even think. It is not surprising that the driving force behind this startlingly innovative enterprise is a man who marches to a different drummer, Mark Zuckerberg.

Person of the Century?

The most common adjective used to describe this feisty entrepreneur is “cocky;” coming in a close second is of course is “billionaire.” But as the revolutionary visionary who, at age 26 Time Magazine named “Person of the Year,” Zuckerberg can get away with wearing hoodies to business conventions, and more.

Waiting with Baited Breath

Therefore, as he approaches the moment many in the business and investment world have been waiting for, the IPO launch of Facebook, Zuckerberg’s actions are being scrutinized for some uncommon step making the usually staid initial public offering event into an exciting adventure.

Analysts believe the company could file to sell their stock on the open market as early as this Wednesday. The buzz surrounding the event is deafening; it is being compared to the unprecedented excitement stirred up when Google went public in 2004, and maybe even as exciting as the wild and crazy 1990s.

Users Investing, too?

One thing stock watchers are looking out for is a kind of surprise move by a large percentage of Facebook’s 800 million users to get in on the action since, after all, Facebook is, if it is anything at all, about personal connections.

"Pandemonium is what I expect in terms of demand for this stock," says Scott Sweet, senior managing partner at IPO Boutique, an advisory firm. "I don't think Wall Street would want to anger Facebook users."

Analysts believe that Facebook’s goal is to raise up to $10 billion. That number will put the value of the company at $75 billion to $100 billon, making it one of the largest IPOs ever. Three to four months usually pass before the stock starts trading, after the initial filing.

The next three months is sure to be memorable, for Facebook users, investors, and bystanders on the sidelines.

SEC Inspector General Kotz Stepping Down

The Securities and Exchange Commission will soon need to look for a new inspector general as David Kotz will be leaving his position at the end of January to start working for a private investigative service.

Helping Whistleblowers

Kotz, age 45, will join Gryphon Strategies as a managing director in their office in Washington, DC. At Gryphon he will investigate corporate fraud and will help witnesses and whistleblowers who are trying to expose fraud.

Before joining the SEC in December, 2007 Kotz was the inspector general of the Peace Corps.

Tough Inspector

Kotz is known for his hard-hitting, aggressive style and has sometimes been criticized for creating a culture of fear at the SEC by his overly contentious tactics. Last December it was reported that at least two employees at the SEC had filed formal complaints concerning Kotz, saying he had bullied witnesses and stretched or twisted the facts to help build his case against them.

“I am tremendously proud of the accomplishments of my office and the agency over the past four years,” Kotz said. “The reports we have issued have not only been significant to the agency, Congress and the investing public, but they have also directly resulted in a transformation of many of the divisions and offices of the commission.”

Not everyone was unhappy with Kotz’s assiduous style. He acquired more than a few friends in Congress after he wrote a 477-page report on the SEC’s failure to catch Madoff, which led the agency to be more insistent in using a new database to help keep track of tips from informants.

“David Kotz produced strong, conclusive reports, even as critics claimed he was too aggressive,” said Republican Senator Charles Grassley, who has been a big supporter of Kotz’s work. “An aggressive, independent inspector general is best for the agency in the long run, even if that’s uncomfortable for management.”

Disgruntled Honda Owner Suing in Small Claims Court

Heather Peters, disgruntled owner of hybrid Honda Civic, is taking the unusual step of suing the mega-company in small claims court instead of participating with thousands of others in a class action lawsuit, the more traditional way of getting justice from large corporations.

Peters is unhappy because she was told that her car would give her about 50 miles to the gallon and she gets nowhere near that figure. She says that if she had known that the hybrid would only get about 30 mpg she would not have bought the car.

There are several reasons Peter took her complaint to small claims: her chances of winning her claim are higher in small claims where “The judge will have a lot of discretion, and the evidentiary standards are relaxed in small-claims court,” according to Richard Cupp Jr., who is a teacher of product-liability law at Pepperdine University; she does not need to hire a lawyer- in some states lawyers are not even allowed; if she wins her payoff will be higher- in a class-action suit that Peters declined to join on behalf of hybrid Honda owners about the car’s fuel economy, a proposed settlement will give each of the thousands of participants and estimated $500 to $1,000 towards the purchase of a new Honda, and the trial lawyers will get about $8.5 million. Peters is suing Honda for $10,000, and if she wins, she gets the entire amount.

Peters has a website, DontSettleWithHonda.org, in which she encourages others to bring their complaints to small claims court. She said that over 500 people have contacted her, including a few Honda owners living in Australia, about how to proceed with their claims against Honda.

Consumer Confidence Seen Surging

Fueled by an optimistic job outlook, the Consumer Confidence Index was helped to climb to its highest level since last April, even approaching a post-recession high, according to the monthly survey taken by The Conference Board.

This was the second month in a row in which the Consumer Confidence Index rose, happily coinciding with a good holiday shopping season. Retailers attracted many shoppers with highly discounted prices to lure them into their shops.

Confidence seems to be rising in conjunction with a generally better outlook for the overall economy. A poll conducted by the Associated Press of three dozen private, corporate and academic economists predicts that there will be an increase in economic growth in 2012, as long as trouble in European economies does not interfere.

“This is encouraging. It’s good to be talking about improvement,” said Mark Vitner, an economist at Wells Fargo. “But there is still a lot of room for trouble.”

The Conference Board is a private research group. According to them the Consumer Confidence Index went up close to 10 points to 64.5 in December. This is an increase from the 55.2 figure of November. This level is not far from the highest post-recession figure of 72 which was attained last February.

Lynn Franco is the director of The Conference Board Consumer Research Center. She noted that last summer’s worry that a second recession was looming hurt consumer confidence then.

“While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes,” Franco said. “Have we rebounded from a summer lull or are we turning the corner?”

Stocks Rise 3 Percent on Good News from Federal Reserve

Tuesday’s market performed positively as fears of new US Federal Reserve capital proposals turned out to be misplaced.

Three Diverse Sectors Climbed

Investors fueled the rally with support for the banking sector, home-builders and networking companies, although analysts admit that the market’s upward climb was amplified by relatively low volume.

The stock market realized a 3% rise as the banking sector, which was already gaining points due to the US Federal Reserve’s new capital proposals ended up being not as bad as had been feared, inspired further support.

Banking

The happy stats for the banking sector are as follows: The KBW Banks index jumped 4.1%; JP Morgan Chase & Co jumped 5% to $32.22; and Wells Fargo & Co rallied 4.6% ending at $26.47 per share.

Matt McCormick, one of Cincinnati-based Bahl & Gaynor’s money managers commented that,

“Investors have been looking for clarity on the regulatory outlook, and I don’t think these rules are so strict that we should expect anything like significant dividend cuts.”

Home Builders

Gains were also realized based on positive figures for the housing figures: The Dow Jones home construction index climbed 6%, with the nation’s second largest home builder, Pultegroup, up 10%; and MDC Holding rising by 7.3%.

Networking

The diversified sectors which supported the impressive gain were completed by networking companies.

Ever since 1969 the S&P 500 has gone up by an average of 1.6% during the last five days and the first two days of the year, according to data from the Stock Trader’s Almanac. This fact is known as the Santa Claus rally.

The general outlook for stocks was good as about 86% of stocks traded on the NYSE closed higher, while about 80% of NASDAQ stocks ended the day in positive territory.

Outlook for Mortgage Delinquency Optimistic

The Chicago-headquartered credit reporting agency TransUnion says that as long as the US economy continues without any more serious setbacks, the number of people with mortgages who are behind on their payments should go down impressively by next year’s end.
The percentage of people who are 60 days or more late on their mortgage payment, known as the delinquency rate, will most probably slightly increase to about 6 percent in the first quarter of 2012, announced TransUnion in its annual forecast for delinquency rates on Wednesday.
But by the end of 2012 that rate could further fall to only 5 percent, according to TransUnion. That is a large change from the high point at the end of 2009 when the delinquency rate reached 6.89 percent.
The prediction weighs a number of economic factors when forecasting the future of mortgage delinquency rates, including consumer confidence and an improved general economy. In addition, banks are most likely removing a large portion of pending foreclosures from their books this coming year, according to Charlie Wise, director of research and consulting for TransUnion.
There is still a large backlog of foreclosure in the computers of banks partly due to the robo-signing scandal earlier this year. In that event bank officials signed off on mortgage documents, often using computerized, automatic “robot” programs, without human intervention verifying that the mortgage requests were legitimate or if the borrowers could pay back their loans.

This issue blew up last year, forcing banks to backtrack and review foreclosures across the country, verifying that all the paper work was in order.
Because of this backlog the entire process was dragged out, leaving mortgages listed as delinquent longer than they should have been which caused a temporary rise in the delinquency rates.

“We have a long way to go to get back,” said Steven Chaouki, a TransUnion vice president.

Cyber Monday Huge Success for Retailers

Cyber Monday is the first day after Thanksgiving when employees are back in the office, where they make purchases for the holidays using their work computers. This year Monday proved to be an astounding success, with online sales reaching $1.251 billion. According to comScore Inc, an important web tracking firm, that number represents a 22 percent increase from last year’s Cyber Monday.

Another tracker, IBM Benchmark, said the increase was closer to 33 percent compared to the same day last year.

Department store and home goods retailers saw a huge surge in online business, with a 60 percent increase from last year for department stores and a 68 percent upward climb for home goods, as compared to Cyber Monday 2010.

Even last year Cyber Monday was worth over $1 billion in sales, the biggest online spending day in history. With the increase in the number of mobile devices with easy access to the internet, the expectation that Cyber Monday 2011 would top that mark was high.

“Cyber Monday was the biggest day of the year and the biggest day ever for online retailing in the U.S.,” said John Squire of IBM’s Smarter Commerce initiative.

Department stores such as Nordstrom, Macy’s and JC Penny have spent much time, effort and money on making their websites user friendly and reaching out to potential customers with online advertising and emails. It is clear these efforts have paid off well, according to Squire.

Transcendent Investment Management’s Web-Based Network

Since its inception in 2008, Transcendent Investment Management has managed real estate and several other asset investments, under the guidance of Jordan Kavana. The company’s first fund, Transcendent Investments Fund I, began with $35 million, and has grown significantly since then.

The company utilizes high absolute return investment opportunities in real estate, especially those with strong fundamental value, a favorable risk-return profile, and an identifiable exit. One of Transcendent’s primary advantages over other players in the industry is its unique technology-based system.

Transcendent’s personalized web-based network combines both technical and sophisticated data, allowing TIM to access numerous opportunities and market bases on an hourly basis. The system includes both private and public sources, which reveal transactions, transaction rates, slowing markets and more. With active investors, the technology enables data analysis and educated decision making.

Consumers Driving Economy Upwards

Retail sales have posted increases for the past five months in a row according to statistics released by the Commerce Department on Tuesday.

Overall retail purchases climbed by 0.5% from September to October, with a good showing in car sales. But even not including auto purchases sales increased the most since the month of March.

According to the report, consumers bought trucks, electronics and building supplies in larger amounts than in previous months. The good news is encouraging, bringing optimism about the coming quarter which is an important period for retail results. The report, taken together with recent news that wholesale prices have reached a plateau, and that US shoppers are spending a larger percentage of their money at Wal-Mart, is a bright light in what has been seen as a long, dragged out economic recovery.

“The consumer has to come through this holiday season if we are going to get back to more decent growth rates, and the early readings are those households have hit the stores quite strongly,” said Joel Naroff, chief economist at Naroff Economic Advisors.

The comeback in consumer spending is seen as the main fuel firing the growth in the economy, which grew by the annual rate of 2.5% in the third quarter of the year, from July through September. That was the best quarterly growth rate in a year.