Sushi Money

I may finally get that motorcycle I’ve been thinking about for a few years. With the rising price of gas and threats to cut off oil from third-world nutcases, who knows how much it may cost us to drive a car in the future. Harley-Davidson anyone? And what does insurance cost on motorcycles these days? I just remember driving that old Honda CB-750K years ago… what a great machine, and it cost peanuts to drive. Something to be said about a short commute, and saving on time and fuel costs. A little different than how the WA state GOP chairman saves time by not counting votes… doh!

Speaking of saving time (and money), if I owned a Bank of America credit card I think I’d take a short walk to the shredder. Seems America’s largest bank has been indiscriminately hiking interest rates on consumer credit cards. A common theme for several credit card issuers, but usually an interest rate hike is tied to some marked change in a consumer’s risk profile, credit score, etc. But there’s a lot of consumer debt out there influencing the economy. When a company jack’s up rates without explanation however, I think I’d try and find a different credit card. Isn’t BofA the same company that issued credit cards to many consumers who didn’t ask for them? From the BusinessWeek article:

Adam Levin, CEO of Credit.com and former head of New Jersey’s Division of Consumer Affairs, says he is surprised Bank of America would risk bad public relations with its rate increases, given the congressional hearings in December. The bank risks alienating new customers and existing ones by being so brazen, he says, adding, “Either Bank of America has more financial troubles than it is willing to admit or it has a level of institutional arrogance that is unacceptable.”

The stock market action has been ugly lately as well. More uglier than most today was American International Group (AIG). One of my relatives has had an ownership interest in this stock for over 6 decades only to see the investment lose a third of its value in a few months. The stock has hit a five year low based on subprime and financial derivatives exposure. Lots of folks were concerned about the stock last year, but in December AIG came out and stated they viewed their risk exposure as “manageable”. Something’s very different today, and you can bet a lot of folks will be asking why. IBD indicated that “AIG’s independent auditor, PricewaterhouseCoopers, said the insurer had a “material weakness” in its internal controls over financial reporting and oversight.” Ouch.

Are we in a recession? Lot’s of folks think so (which brings out some good advice on how to Recession-proof Your Life). Most consumers seem to think the economy is terrible however, regardless of whether that’s reality or perception (after a while the difference doesn’t matter).

It looks like there may be more selling to go in the stock market. Is the market being influenced by the 2008 tax benefits for capital gains and dividends? Hard not to become more conservative, but sticking to the retirement plan is a must. With a Democratic congress and an election year bid for a new party, our future tax situation may be very different in the years to come.

For a closer look at how your income tax situation might look after the 2008 elections, Barron’s Taxing Vote article provokes quite a bit of thought. The implications for the market over the next several years are somewhat disheartening… all I see are a lot of folks selling while the selling’s good:

“Bottom line: Investors would be wise to start planning now for aggressive tax hikes. The new administration likely will try to pass new tax legislation in 2009, before the Bush tax cuts expire and before the 2010 mid-term elections. And some planners warn that capital gains levies could be retroactive for all of 2009, regardless of when the bills would be passed.”

But while we send money to the IRS for our 2007 tax liability, a lot of folks can look forward to getting a nice fat tax rebate check back in the mail in a few months. So… what part of the economy are you going to stimulate?! For many of us it will have something to do with gasoline or credit cards. Probably both, and a summer vacation to boot. I think we’re going to need it.

No comment - Post a comment

« Does eBay Know Where eBay is Headed? | The eBay Mess Continues »