Building Good Credit

Most people grapple with at least some anxiety over whether using a credit card to build credit is worth the risk of being possessed by the plastic spending demon, and turning into this girl. 

This Consumerist article helps lay out the pros and cons of buying on credit, and what to do if yours is already so bad you can't even get a credit card. Which is pretty damn bad. 

Before you sign up for anything though, read this WSJ article so you know who to avoid. (I'll give you a hint:  Citigroup Inc., J.P. Morgan Chase & Co. and Discover.)

Banks, Bail-Outs, and Bogus Bonuses

From Democracy Now!:

Report: Bailed-Out Banks Paid Out $1.6B in Excessive Bonuses

A new government report has accused Goldman Sachs, Bank of America, AIG, JPMorgan Chase and other financial institutions of giving out nearly $1.6 billion in unwarranted bonuses immediately after accepting billions of dollars from the taxpayer-funded bailout. The report will be released today by Kenneth Feinberg, the Obama administration’s special master for executive compensation. While the report criticizes the excessive bonuses, Feinberg has no authority to recoup the $1.6 billion. Meanwhile, Wall Street firms are expected to give out another round of large bonuses this year. Goldman Sachs is on pace to hand out an average of $544,000 per worker in salary and bonuses. At JPMorgan Chase, the average worker will take home $400,000, and at Morgan Stanley, $262,000.

Lebron-onomics

Every city that stood a chance to sign the Great Lebron James worked itself into a tizzy last month attempting to lure the King of basketball. 


To justify the cash they spent on courting James, some cities even released economic studies that made grand (and at times bizarre) claims as to how much the baller of all ballers could stimulate each city's local economy.


Crain's Chicago Business claimed that Lebron could bring $2 billion to the windy city, and And in this nifty PowerPoint presentation the Knicks (via marketing consultant Interbrand) went to great lengths to project James' potential long-term earnings in New York as compared to other cities.  


After the decision, Forbes.com's sports blog broke down the cash consequences that a Lebron-ified team would have had for the Heat, the Cavaliers, and the Knicks, respectively. One of the most interesting points Forbes' Patrick Rishe noted was the difference in ticket prices that was observed for the various teams before and after James' final decision: after Lebron signed, Miami Heat season tickets on the secondary market increased from $3200 to $8200 overnight; meanwhile, Cavs season tickets are now averaging $935, about 1/3 of what they were with LeBron. Most interestingly, the day before the announcement, average Knicks season ticket prices had jumped up 33% just on speculation that LeBron would sign with the Knicks.  How bout that New York cockiness?

The Ultimate Deal

According to The Consumerist, it's a buyer's market for burial plots.

The site's Chris Morran writes:

"Sure, it's maybe a bit morbid to think about buying your cemetery plot now, when you're so young and healthy and, you know, breathing. But burial expenses are, well, expensive; that's why you see all those ads for "life insurance" advertised to old people on daytime TV. So if you're looking now to save a bit of cash for you or your loved ones' eternal resting places, you might want to consider snapping up your patch of ground now.”

Tax Holidays, Unemployment Extensions, and Small-Biz Write-offs

Which of these ideas to aid recovery sounds best?

Payroll tax holidays:

To stimulate the economy now with no long-term increase in government debt, Congress could temporarily exempt a portion of wages from the Social Security taxes imposed on workers; those exempted wages would not be credited in computing that worker’s future retirement benefits. This way, the Keynesians would get their stimulus, and the deficit hawks could sleep better at night.

This would mean that a 40-year-old earning $50,000 and paying annual Social Security taxes of about $3,000 could see those taxes cut to about $2,000. The added $1,000 in his paycheck, along with similar amounts for other workers, could be a huge stimulus to the economy. Meanwhile, the later (post-retirement) cost of a temporary $1,000 tax cut would be spread over many years, meaning an annual pension reduction of only $100 or less.

Automatic Unemployment Benefit Extensions

In the 1970s, Congress worked on a system which had an automatic trigger built-in: whenever unemployment reached a certain point at a national or a state level, benefits were extended by 13 weeks.

The costs of these benefits were shared by the states, which paid them out of their regular unemployment insurance accounts, and the federal government, which increased taxes by about $8 per worker.

That trigger has ceased to exist, through a series of gradual alterations to the law. Reinstating it would ease the burden on states with high unemployment, and ease the anxiety of the unemployed Americans who now must wait and worry each time congress debates a new extensions.

Tax Write-offs

To get small businesses moving again, we should allow themto speed up the rate at which they can write off depreciating assets.Doing so would save employers money and spur entrepreneurialrisk-taking, without increasing the national debt.

-from the New York Times Opinion Page

Don't Hate Us Cause We're Apathetic

Despite facing a job market that could make a bilingual Harvard valedictorian soil her madras pants, a full 41% percent of job seekers this year turned down job offers. That's the same percentage that said "thanks, but no thanks" in 2007, when the economy was booming.

This peculiar statistic has been attributed to the large number of recent college grads who have recently entered the job market, and to the special breed of self-confidence that has flourished among their generation.

This NY Times article blames the strange sense of entitlement among the kids of Gen Y - aka the "why worry?" generation - on "parents who overstoked their self-esteem, teachers who granted undeserved A’s and sports coaches who bestowed trophies on any player who showed up."

But perhaps these well-educated (and, importantly, well-informed) college grads are just no longer willing to settle for the shitty hand their counterparts have played in years past. Maybe they are sick of employers taking advantage of a competitive market to expand the (already obnoxious) phenomenon of unpaid internships beyond part-time, supplemental learning experiences into full-time, full-responsibility, unpaid jobs.

I say right on, Gen Y. You may be hyperactive and cocky, but you sure know how to stick it to the man.

But stop having your Moms call work to negotiate your salary. That is just not cool.

Flat is the New Up

In this year's slow but sure economic recovery, the average profit for merger and acquisition deals is a big fat zero. But that flat line is a welcome sight when compared to the slower relative recoveries of the last two recessions.

As to why these deals aren't yet posting profits, this New York Times article explains:

"The trouble is that even though the United States economy has stopped contracting, big risks still weigh on the animal spirits of executives. Job growth is anemic and credit markets have had renewed volatility in the wake of Europe’s sovereign debt crisis. Such market turmoil may have played a role in scuttling Prudential’s bid for the American International Group’s Asian insurance business, and a $15 billion leveraged buyout of Fidelity National Information Services."