Conservative Economics

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Subject: IRAs

An Individual Retirement Arrangement (or IRA) is a retirement plan account that provides some tax advantages for retirement savings in the United States. (Wikipedia Jan 2010)

Baby Boomers

The productivity vs. population debate

Will she buy his shares?

The ‘Baby Boomer Bomb’ refers to the expected effect of the retirement of the Baby Boomer generation on capital markets, particularly equities. In 2006, this issue was debated at the Milken Institute, and two solutions to the problem examined: Boomers being ’saved’ by productivity and technology; and, alternatively, by selling their financial assets to the next generation.

Corporate Governance

Execs pocket billions with Jobs Creation Act

The Perfect Crime

In 2004, the US Congress passed the “American Jobs Creation Act” which allowed a US company to elect, for one taxable year, an 85% dividends-received deduction with respect to qualifying cash dividends from its foreign subsidiaries, when such dividends were in excess of a base period amount and were reinvested in the US pursuant to a ‘domestic reinvestment plan’.

Corporate executives took advantage of this tax break to fatten up their option pay, while cutting dividends to shareholders.

Investor demographics

Most US households do not have IRAs

IRA report

Despite tax benefits and a generation of strenuous marketing efforts, over half of US households do not have Individual Retirement Accounts (IRAs).

In fact, 29% of US households have neither IRAs or employer-sponsored retirement plans. IRAs owners are typically middle-aged, married, college educated, and employed — and with much higher incomes than people that don’t have IRA savings.

Americans between 50 and 64 years without formal retirement savings have median total financial assets of only $2,500.

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Featured articles on inside pages

Stock buybacks

Buybacks + options + hedge funds

Stock buyback programs are a legalized form of market manipulation, sanctioned under SEC Rule 10b-18 and that serve to drive up the price of a company's stock and to give false value to executive stock options.
More ...

Securities Analysis

Intrinsic value

The target of classical security analysis is 'intrinsic value', a fuzzy concept defined as the value justified by the facts. Now, there may be too many 'facts' while prices exceed 'intrinsic value'. More ...

US Politics

President Obama and the Lincoln Bible

The Crash of 2008 put Barack Obama in the Oval Office and was the culmination of two secular financial trends. Americans now have an untested, inexperienced leader, with strange radical friends and a leftist deficit spending agenda. More ...

US equities

Stocks surge on spurious earnings

In Q1 2009, stock buybacks came back, driving up equity prices and sparking a rally by dominating a thin market. These equity repurchases were financed from depreciation reserves and bond issues. More ...

US Bonds

The collapse of the dollar and US bonds?

The extreme spending of the Obama government, combined with irresponsible bank lending policies promoted by Barney Frank and Chris Dodd, portend rising interest rates, the collapse of the bond market, and the end of dollar supremacy. More ...

World Economy

Working off the US trade deficit

Foreigners hold $16.8 trillion in US financial assets as a result of selling more goods to Americans than they buy from them. Since the 'deficit' is in dollars, the US has no problem in 'paying it off'. More ...

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2011-01-07 16:03