Read this….

The job cuts are part of a restructuring plan by EarthLink to reduce operating costs and boost efficiency. As part of the plan, EarthLink will also close offices Florida, Tennessee, Pennsylvania, and California. The company will move its remaining operations to its Atlanta, Ga. facility.

Now read this from later on in the same article…

The company also announced Tuesday its board of directors voted to authorize the purchase of an additional $200 million of its outstanding shares of common stock. EarthLink now has $270 million available to repurchase its stock.

This is rewarding sellers of Earthlink stock at the expense of those who hang on to their Earthlink stock. Given that Earthlink is already having a tough time of it, it would make more sense for them to hang on to the money. When credit gets tight, you want to have cash on hand.

Look at this chart over at Calculated Risk. The ARM are really going to hit hard next year.

Pennsylvania Income Tax rate is this….

Pennsylvania has a flat tax rate of 3.07 percent on individual income, with no personal exemptions.

County, municipal and school district taxes also are collected. Those rates can be found at the Department of Community and Economic Development Web site.

Pennsylvanians who live on a modest income may qualify for the state’s Tax Forgiveness Credit.

New York State Income Tax is this….

New York collects state income taxes using a progressive, five-bracket system.

For single taxpayers:
— 4% on the first $8,000 of taxable income
— 4.5% on taxable income between $8,001 and $11,000
— 5.25% on taxable income between $11,001 and $13,000
— 5.9% on taxable income between $13,001 and $20,000
— 6.85% on taxable income of $20,001 and above.

For married persons filing joint returns, the rates remain the same but the income brackets are doubled.

New York City has its own tax rates and brackets. The state’s earned income credit has increased to 30 percent of the federal credit. The credit helps taxpayers offset increases in living expenses and Social Security taxes, reduces taxes owed and in some cases can even provide a refund to filers who do not owe any tax. File Form IT-215, Claim for Earned Income Credit.

Obviously, Pennsylvanian income taxes are far lower then they are in New York. But the really disgusting thing is how ridicules the income brackets are in New York State. I mean, I can see making below 20, 000 a different tax bracket. But making between $8 grand and 11 grand a separate tax bracket? Simply absurd.

Information taken from this site.

According to this comment over at Calculated Risk, they were charging $17,500 just for the permits to build a house out in an unnamed small city in California. If a new home sold for $200,000 the permit costs would still make up almost 10% of the cost. And that does not count the cost of the labor necessary to obtain those permits (I don’t mean building to code, I mean filling out all the paperwork). Nor does this count all the other tax’s that the builders pay, including a capital gains tax if applicable.

It must be admitted that most new houses in California sell for far more then $200,000. In fact, I would be surprised to hear of new house in California that did not sell for at least $400,000. So permit costs are a far smaller as percentage of total cost then the above example makes it seem.

But the fact that the government puts up such high barriers to entry means that you will never see a builder make a cheap house.

I have my share of disagreements with Martin Hutchinson. For one thing, I don’t share his fondness for the gold standard. But I do share his convection that the recent fed action was fundamentally unjust.

Progess is always much slower than desired. I don’t feel I have much to report on when I say that we have used the new process for checking claims this week. None of the pickers liked it at all. Some were obviously rebellious. Technically, they have every right to be; I am not anyone’s supervisor. Click Here to continue reading.

The Fed cut made me furious, but this made me smile. So did this.

h/t Yves Smith

Felix Salmon thinks that the fact that Goldman Sachs is bailing out one of their own hedge funds to the tune of 3 billion dollars (admittedly, only about 2 billion of that was their own money) is a sign that smart money smells an opportunity. Is he right?

I will grant you that Goldman Sachs fits the definition of smart money. But I have to wonder if it is wise to take their pronouncement that “We are investing not because we have to, but because we want to” at face value. As this article in the Economist points out…

This makes sense. After all, prime brokers provide the finance that allows hedge funds to gear up their returns and lend them the stocks so they can sell individual shares short (ie, gamble that their prices will fall). And monitoring is made all the easier because three investment banks—Goldman Sachs, Morgan Stanley and Bear Stearns—dominate prime brokerage. The trio act as brokers for about 60% of hedge-fund assets.

But this is where the paradox appears. Hedge funds are supposed to be dispersing risk. But if their chief financiers are just three Wall Street banks, is this dispersion more apparent than real? Could banks have shown risk out of the front door by selling loans, only to let it return through the back door of prime broking? Take credit insurance. Banks that own corporate bonds may use the swaps market to hedge against a company defaulting. But if the other side of the swap is taken by a hedge fund whose finances are dependent on loans from that same bank, has risk really been transferred?

Maybe I am being too cynical, but it seems to me that Goldman Sachs has every incentive to make sure this system keeps working. Goldman could easily survive the fallout if its alpha fund went down. But could they survive the fallout of all the quant funds going down? At the rate losses were occurring (Alpha fund was down 13 percent in one week) they might have figured that they had to do whatever it took to stop the rot.

For a long time, I have been worried about how many companies were borrowing money to buy back their own shares. So I enjoyed this fake letter/rant immensely.