Tuesday, September 22, 2009


Is it just me that loves the system we have for our basic utilities in most parts of the country. The one where there is no competition so you are forced to endure whatever they deem is a good idea for service and charges ect. AmerenCIPS is a terrible offender in this reguard. There is no alternative company in this central Illinois town to choose from to compete for rates and services. They nickle and dime the customer to death as it is. Then come to find out, that if you are late a few times or get behind and have your service disconnected and reinstated, they tack on a deposit charge to your account. Ameren says the deposits are nothing new. If a customer is late paying their bill five times, they can expect a charge equal to twice their highest monthly bill in addition to the regular bill. A deposit can be triggered if you have a bad credit history. A deposit can also be triggered if the utility company thinks you've tampered with your meter. The last one really gets me, no proof required. They are judge and jury. Nothing like no way to defend yourself is there. The amount of these charges? It is equal to twice their highest monthly bill in addition to the regular bill. Ameren's reasoning: “We've incurred these costs, and we need to have some way to recover our costs in a relatively timely manner,” said Ameren UE spokesperson Mike Cleary. “So that's what deposits are intended to do." (quotes obtained from connectedmissouri.com, same company and situation) This is coming from a company that is providing one of the basic services that is a foundation of our current society. How bad are they hurting financially? 2008 saw Ameren with near record profit of $618 million. 2007 was $547 million. 2006 was $606 million. I am not against a company making a profit, in fact I strongly support it! That is the point of business. But for a core service company to make charges like this, increase rates as they do and claim the reasoning is that they are losing money, is preposterous. Especially since there is no competition or choice of provider to be made. (the financial information was obtained from CnnMoney.com)
These "deposits" therefore are attached the the customers that try to keep up on their bill as best as humanly possible. They manage to catch up and stay current but sometimes they get a bit behind. The addition of more financial burden to these people is not likely to help anyone at all. The ones that cost the company money on the other hand, the ones that skip out all together on the bill, get away with owing nothing, as is so often the case. So this leaves the honest struggling person to pay not only their bill, but the "deposit" as well. This deposit, by the way, is more like a charge anyway. If you are late or have any trouble with the account for the nest year or so, the deposit is charged off so your money is gone, money in the amount of your 2 most costly utility months no less. This is very similar to revolving credit cards burying you so that you never pay off all the fees and interest, with the exception that you do not have to have a credit card, but you do need electricity to do most functions in the modern world. Now are you not glad you are an honest struggling American that tries to do the right thing? This is another case that has become all to common, maybe even the American standard; make it so that the ones that struggle but manage to stay honest and right pay and lose the most.

In case you are not aware, Ameren is pushing for a $226 million rate hike this year as well, they did not have a large enough profit last year. Here is a link that everyone should look through, it is the Illinois Citizens Utility Board. The only way to even begin to influence things such as this is to have a united voice backed by large numbers of citizens. These companies and the government work for the people, it is about time that we start making that a reality.

Friday, September 4, 2009


Yep. One of the most hated subjects there is. They are a necessary part of a functioning society though. Here in the US it is time for a change. I believe it is time to once again do away with income tax completely. You do realize that this country did not have a full time federal income tax until the 1900's? It is far to easy to manipulate and evade and quite simply does not work fairly. I believe that the answer to a large portion of our financial challenge would be a federal sales tax. Yep, I said it and here are a few of the reasons I believe this is the way to go.
The under the table cash society that currently exists instantly is of no consequence. Illegal immigrants working for cash, will now pay taxes on the spending that they are doing here. The illicit substance trade, while not condoned, will be taxed when they spend that money on the goods they purchase.
The very wealthy people that hide their income in any one of a variety of ways will no longer benefit from doing so, they will be taxed at the same rate as anyone else when they go to spend all that hidden money.
A huge reason is this: While a person is earning, saving and investing, the person would have more money to save and invest with due to not losing 20%+ of their income before they ever get it. This would encourage investments and increase available funds to be spent. That in turn would increase the funds that the individual has for spending which in turn would enable the individual to spend more and thus increase the total tax gained from the individual all while being done at a lower taxation rate and the same income level.
The IRS and tax support entities would still be employed just in a different manner. There will need to be regulation and enforcement on the businesses to accurately collect and submit the taxes on sales. Also international sales and trade would have to be monitored and due taxes applied.
Items such as necessities and food would be taxed very lowly, and medical services and goods would be able to be tax free.
Implementation would be tricky of course, but any change will be challanging. For instance, I believe an exemption voucher type system would need to be implemented. The reason for this is say you have 100,000 dollars in savings. You should not have to pay taxes on this money, you were already taxed. So you should have a voucher system to exempt you from the federal sales tax for 100,000 dollars worth of spending.
Is the idea here perfect? Of course not, there is no perfect taxation system. This is much better, and by far more fair than what we have in place now. But it will take a major effort to affect any changes at this point. Just wanted to send some food for thought.

US government's money handling

I along with many other Americans believe that the powers that be in the current federal government are leading us into the worst financial situation this country has ever faced. Actually this stuation has been in the works for many many years. Unfortunately at this very point in time, the leaders are choosing to ignore the fact that we cannot even finance the bloat that is the government now and are attempting to fit in the greatest of expenses ever considered, national health care. I want to make clear that it is a great idea, and someday hopefully we will see it come to pass. But it just will not work now for numerous reasons.
By the way, the reason I started thinking about all of this is a letter I got from Social Security. The statement that you get listing your future benefits. On the front page 2nd column is a section called About Social Securities future. In essence it tells us that in 2017 they will be spending more than they take in and in 2041 the trust fund will be gone. Now we have been hearing about this for a long time, so much so that people in general just accept it. That we are so used to the idea of this fund failing is disturbing.
Now think about what the government has done so far this year. They have created a program called TARP, they have allegedly bailed out the auto industry, and they have completed the cash for clunkers deal. So we are closing in on the creation of a trillion dollars which has been used to bail out financial institutions that should have been allowed to fail, the money used to save the account holders and move them to well run institutions. It has been used to bail out the US auto industry which, as bad as it hurts to say it, should have been allowed to sink in their mismanagement as well. That is a large part of the very foundation of our competitive capitalism system, if I make bad business decisions and continue to do so, my business will fail and a more competitive, better managed and strong company will take its place. Finally that still did not appear to be enough, so we had the cash for clunkers, which I have blogged about before. All the while not requiring any of the jobs lost to overseas contractors to be brought back. Now that some of the number are coming back it looks like we did help the economy, in Korea. Now lets see how the next years worth of auto sales look. I think in the future when we look back on these times, it will be apparent that we would have been much better off had we done nothing at all, than what we are currently doing. The question now is, what will they come up with next.....
Now lets think about social security again. This is a program that a much greater percentage of the American people depend on than any of what I mentioned so far. So even stepping into the financial mentality of the law makers of the moment, why is it that we bailed out all these other companies, and yet I get a written threat in the mail that just before I am to retire, there will be none of the money I have put into this program for my entire life left for me. But what a relief, I will still be able to buy a Dodge/Ford/Chevy since we saved those companies. I do want to clarify, I in no way condone or support the creation of money for any reason, especially when it is needed do to the innate inability of our government to manage a program that we are forced to participate in. The people of this country need to stop asking what the government can do for me today, and start doing the right thing themselves by working hard and earning their own way. Then we need to hold accountable and start questioning our leaders on issues such as this and expect and demand resolutions to these problems not in years, but in days and a few months. If we do not, we will be the greatest has been story in man's history.

Tuesday, August 18, 2009

Money well spent?

Now that we have thrown a few billion dollars at the automotive industry, what results have there been? Well so far, 1350 workers that were subject to lay offs have been recalled, according to today's news from Bloomberg. That means that we paid 2.2 million dollars for each of those recalled jobs. Yes it is impossible to know how much this program has helped to limit the layoffs in the first place, but I doubt it is as impressive as one would think. Looking at it from another angle, how many of the jobs that were farmed out to other countries such as India are being brought back? These are not directly GM or Ford jobs, but the companies that designed and built the tooling, parts, electronics and so on. In this vein, it would be very enlightening to see what % of the money spent by the auto makers in this country, stays in the US and how much is supporting a foreign economy.
Another question to marinate on is how many of the people taking advantage of this deal will default due to job losses, could not afford it to begin with etc?
Lastly what impact has this had on the automotive support industry? The neighborhood auto body shop, the local mechanic, the auto parts stores and the salvage industry. All of this money has been given to the public and used to persuade people to buy a new car when in a lot of cases, the cars were in good shape and just needed routine maintenance work. This has created something of a drought for the auto service industry. How many of these are now losing the battle to stay afloat due to the government tilting the tables on them. Where are those numbers and facts. The ripple effect might well be much worse than anyone knows. It is always a bad idea when an economy that is based on free trade has the government step in and pick and choose who is saved and who goes. We will always be weaker for it.