If a picture is worth a thousand words then this one sent to me from a friend says it all. When we pass along this much debt to our children, how can we expect them to earn a quality education and to prosper?
The best things we can do to leave a prosperous future for the next generation is to 1) manage our personal budget and finances in a responsible way, and 2) hold all public agencies to the same standard.
By the way, the national debt is now estimated to be
The storm over Wall Street pay was back in full force this week as major banks announced multi-million dollar bonuses for their senior managers. This morning's Wall Street Journal trumpets the headline "Goldman Bows on CEO Pay" and goes on to explain that the venerable Goldman Sachs is showing restraint in only paying its CEO and his four top lieutenants bonuses of $9 million each for their efforts in 2009. Yikes! If this is restraint, someone restrain me--PLEASE!
Nearly a year ago I wrote my first article (Why banks need to become like utility companies) on the need to reinstate Glass-Steagall rules which separate risky investment banking from bread and butter consumer/commercial banking. I also noted in my November article (Is Congress ignoring golf advice from Tiger Woods?) that the idea was being pushed by Paul Volcker, the legendary Fed Chairman, but largely being ignored by Congress.
Today, President Obama held a news conference announcing his push to ban banks from investing their own money in risky hedge funds, private equity and the like. He also wants to limit the size of banks so our financial system is no longer forced to bail out banks that are "too big to fail" without cratering the economy and banking system. He casually refers to his proposal as the "Volcker rule." It's simple, straightorward and it makes a lot of sense. It's worth watching the 3-minute video clip of the news conference below from the Wall Street Journal.
The attacks on this proposal were immediate. Opposers say it's political, divisive, self-destructive, anti-business and retalitory against banks. Whatever agenda drives these comments, the fact is that banks operated just fine between 1933 and 1998 when Glass-Steagall was in effect. Many banking regulations evolved over that period of time, but the inherent safety of commercial/consumer banking remained intact.
You might argue my point by bringing up the savings and loan crisis of the 1990's, but S&L's were regulated separately from banks, and their collapse came on the heels of their own deregulation, lax accounting rules and an expansion of risky business practices. Indeed, we should look at both the S&L crisis and the recent banking crisis as justification for heeding Mr. Volcker's advice.
Paul Volcker has never hinted of any political aspirations, and at age 82, I doubt he does. I applaud this move by the administration and hope it leads to real changes to protect the global economy from future collapses. Keeping the banking system healthy benefits everyone - liberals and conservatives, rich and poor, corporations and non-profits.
In my last post on Roth conversions, I assumed the taxes for the conversion would be paid out of the IRA. An astute reader then asked how it would look if taxes were paid from savings outside of the IRA. I thought it was a great question and I immediately went to work looking for an answer.
The Feds have set a nasty but subtle trap for high income IRA investors and if you aren't careful, it could end up costing you hundreds of thousands of dollars.
In 2006, President George W. Bush signed the Tax Increase Prevention and Reconciliation Act. Among other things, this law liberalized the rules for converting traditional IRA's to Roth IRA's in 2010. In the past, such conversions were subject to strict income limits, but as of January 1, those limits have been eliminated. To further sweeten the deal, those who convert now have two years to pay the taxes associated with conversion instead of the previous one year.
The problem with these more liberal rules is that converting from a traditional IRA to a Roth IRA is a seriously bad idea for most people. The following example will help illustrate what I mean.
Saturday, February 6, 2010 at 9:21PM | 
If a picture is worth a thousand words then this one sent to me from a friend says it all. When we pass along this much debt to our children, how can we expect them to earn a quality education and to prosper?
