Quantitative Easing Explained

My Dad sent me this. Nice video explaining the FED.

California on ‘verge of system failure’

Canada’s Globe and Mail had an article in today’s paper titled, ;California on ‘verge of system failure’. It had a couple of interesting points that I believe nobody could argue with:

  • stress of economic downturn uncovered many underlying issues with the state
  • Prop 13 had a lot of implications nobody bothered to address for over 30 years.
  • California is un-governorable
  • California is screwed
  • Many people want a federal bailout of California

    And, some quotes of dubious value:

    If you want good schools, you have to pay for them,” she [Jean Ross] said. “Cutting taxes doesn’t raise revenue.”

    Something like 66% of LAUSD students don’t graduate. source. And that survey was before the budget crisis. I think it goes beyond raising revenue.

    Americans have been “brainwashed” into believing they pay a lot of taxes, Prof. Dreier added. In fact, they are among the least-taxed people in the Western “World, particularly if they’re wealthy, he said.”

    Hmm…let’s see if that is true. Let’s take a person who makes $120,000USD in California with someone who makes Eur 96657 (the Euro equivalent at the time this was written). Since the individual is single and makes over Eur70,000, they are exempt from joining the German public health insurance scheme. Instead they pay half and their employer pays half of the private health insurance, we’re saying Eur 3600 total for health insurance.


    Annual Gross Pay $120,000.00
    Annual Gross Pay € 96,657.24
    Federal Withholding $25,713.25
    Wage Tax € 31,525.00
    Social Security $6,621.60
    Solidarity Surcharge € 1,733.87
    Medicare $1,740.00
    9.95% Pension € 6,567.00
    California Tax $9727.17
    1.4% unemployment € 924.00
    CA SDI $1,026.48
    Privat Health Ins € 1,500.00
    Net Pay $75,171.50
    Net Pay € 54,407.37

    in USD $67,546.77

    Effective Tax Rate 37.36%


    OK, so Germans do pay about 11% more income taxes than Californians. (If Health Ins. is excluded, it’s about 10% more). Germany of course, has a 19% VAT, and higher taxes on gasoline, and alcohol, while Californians pay ~8.25% sales tax except in places like Oakland where it is 9.75%. If the American owned a house in this example, his/her taxes would be substantially less due to the ability to write off mortage interest. We could go on and on but you get the picture.

    So does California have a high speed rail network? authobahn? Oktoberfest? More importantly, can California raise taxes on the wealthy by 70% so that a Californian has the same tax burden as a German and call it a day? Well, a lot California’s economy is based upon services, and construction, home sales, mortgages, and sales tax, which is why it is in such dire straits right now. The German economy is based upon skilled manufacturing and export of goods. If you raise income taxes, sales tax receipts will go down. Many upper middle class people will flee California (think it can’t happen? It did in the ’90s). The service economy would shrink permanently. And, then, the high-school dropouts and illegals that make up a substantial fraction of the economic work force in California would do what exactly in a high-tech skillled manufacturing based economy?

    Disclaimer: I am not an attorney nor an accountant. Nothing in this blog is intended to give legal or tax advice.
    income tax calculators from paycheck city and here

  • Great Moments in BP History

    August 19, 1953 Operation Ajax

    March 23, 2005 – Texas City refinery explosion

    March 2, 2006 – Prudhoe Bay oil spill

    April 20, 2010 – offshore oil well explosion