Archive for July, 2010

Weekly Recap & Outlook – 07.30.10

Friday, July 30th, 2010

Tower Private Advisors

Recent posts


  • Market upate – resistance still = resistance
  • Two very important papers released
  • Most economic news supports the double-dip view–a view we don’t yet espouse  



Cool feature at the Financial Times website

Friday, July 30th, 2010

The Financial Times–FT for short–is one of the world’s best financial papers.  Were it not for the pink newsprint, which is just sort of wierd, I’d put it ahead of the Wall Street Journal.  Anyway, it has this cool feature that lets you get a quick graphical look at the condition of the states.  (We’ve been concerned with the state of the states, but have recently taken solace in the widespread recognition of the problem–something we’ve been watching since late 2005.)

Here’s a look at the FT feature.  It shows the states in a typical heat-map fashion, based on budget shortfalls for each state.  (You should be able to click on it to jump to the FT’s site.)  There’s also a tab that brings up credit ratings for each state.  Indiana’s AAA rating is a bit misleading, though, since the State has no general obligation debt; most of it is shifted to local municipalities, most of which are not rated AAA.

While I’ve highlighted Indiana since I’m ethnocentric, notice all the states in worse financial condition–solely on this measure–than the poster child for states-worse-than-Greece, California.  They include California-by-the-lake (Illinois), as well as bucolic Maine and hip–well, I think so–North Carolina (think Asheville or the Raleigh-Durham/Research Triangle).

According to Indiana’s Treasurer (see below), Indiana is the envy of other states.  It’s also, “unlike our neighboring states ,” which happen to include one of the nation’s worst quantitatively (Illinois) and one anecdotally (Michigan), “that are deferring their obligations, we’ve continued . . . in a businesslike and sound manner.”  But I have to forgive Mr. Mourdock’s financial liberties since he included a great Roy Rogers quote.


Taxes – I

Thursday, July 29th, 2010

When we meet with clients we often find ourselves at odds on the big picture items like inflation.  Most times it’s a matter of timing, not the big picture item, itself.  For example, we think inflation will be a big problem; just not for a while.  One area where we firmly agree is on the subject of taxes.  We both agree that they’re heading higher, and soon.

Here, then, in looking at the subject is the first of what should be several posts on the subject.  It looks at the current income tax structure and what it would revert to if the so-called Bush tax cuts* are allowed to expire.  While this is not particularly heavy lifting, I am using information from The Tax Foundation (  I have no idea which way this group leans, but it looks pretty non-partisan.

Presently, there are six income tax brackets.  They’re marginal income tax brackets in that they represent the tax paid on the next dollar of income.  Here are the brackets:

  1. 10%
  2. 15%
  3. 25%
  4. 28%
  5. 33%
  6. 35%

If the Bush tax cuts are allowed to expire the new tax brackets will look like this:

  1. 15% (10% bracket is eliminated)
  2. 28% (formerly 25%)
  3. 31% (formerly 28%)
  4. 36% (formerly 33%)
  5. 39.6% (formerly 35%) – this is apparently the only verbatim reversion the White House is clear on.

The long-term capital gains tax rate would go from 15% to 20%.

The tax rate on qualified dividends would rise from 15% to ordinary income tax rates.

*  According to Miller Tabak, the Bush tax cuts are generally considered to be those from two separate acts, the Economic Growth and Tax Relief Reconcilation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003.  There are 69 separate provisions that are set to expire.  You can see the entire list here.


Weekly Recap & Outlook – 07.23.10

Friday, July 23rd, 2010

Tower Private Advisors

Recent posts


  • Rally to resistance
  • Earnings
  • European bank stress tests
  • Deteriorating housing data (more…)

FDIC Insurance Coverage Update

Thursday, July 22nd, 2010

Yesterday, the FDIC announced that basic coverage (i.e. on regular deposit accounts) would be permanently increased to $250,000.  Until now, the increase from $100,000, which was instituted at the height of the financial crisis, had been temporary, expiring on December 31, 2013.

Here’s an excerpt from FDIC chief, Sheila Bair that was included with the FDIC”s press release.

With this permanent increase of deposit insurance coverage to $250,000, depositors with CDs above $100,000 but below $250,000 will no longer have to worry about losing coverage on those CDs maturing beyond 2013. We strongly encourage all bank depositors who have questions about their insurance coverage to go to our Web site at and use our Electronic Deposit Insurance Estimator (EDIE) or call our toll-free number at 1-877-ASK-FDIC. Insured deposits provide the comfort and peace of mind to depositors that their money is 100 percent safe – provided they keep their deposit balances within the insurance limits.

Click here for the entire press release.

Another measure taken in those dark days was to offer FDIC protection, with no limit on dollar amounts, on certain types of accounts, including low- to no-interest checking accounts.  That is set to expire at the end of the year, but there is the option to extend it.  In this era of safety nets and national nanny-ness, I’d say there are decent odds of it at least being renewed.

10:17 am update, courtesy of Gary Shearer

The Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Barack Obama today permanently raised the maximum deposit insurance amount to $250,000. In addition, the Act made this increase retroactive to January 1, 2008.

The provision making the law retroactive means that the $250,000 deposit insurance amount applies to banks that failed between January 1 and October 3, 2008. These insured institutions are:

Hume Bank, Hume, MO

ANB Financial, N.A., Bentonville, AR

IndyMac Bank, F.S.B., Pasadena, CA

First Priority Bank, Bradenton, FL

The Columbian Bank and Trust Company, Topeka, KS

Silver State Bank, Henderson, NV

This retroactive increase has reduced the number of uninsured depositors at these failed institutions from more than 10,000 to approximately 500.

That’s 9,500 depositors with uninsured deposits who now have insured deposits.  You are forgiven for wondering if that change had anything to do with making certain voters happy.