Ed’s Daily Notes for October 7th   8 comments

Washington Examiner: Where’s sense of crisis in a 17% government shutdown?

A good point from Byron York:

Everyone knows the phrase “government shutdown” doesn’t mean the entire U.S. government is shut down. So in a partial government shutdown, like the one underway at the moment, how much of the government is actually shut down, and how much is not?

One way to measure that is in how much money the government spends. In a conversation Thursday, a Republican member of Congress mentioned that the military pay act, passed by Congress and signed by President Obama at the beginning of the shutdown, is actually a huge percentage of the government’s discretionary spending in any given year. And that is still flowing. So if you took that money, and added it to all the entitlement spending that is unaffected by a shutdown, plus all the areas of spending that are exempted from a shutdown, and added it all together, how much of the federal government’s total spending is still underway even though the government is technically shut down?

I asked a Republican source on the Senate Budget Committee for an estimate. This was the answer: “Based on estimates drawn from CBO and OMB data, 83 percent of government operations will continue. This figure assumes that the government pays amounts due on appropriations obligated before the shutdown ($512 billion), spends $225 billion on exempted military and civilian personnel, pays entitlement benefits for those found eligible before the shutdown (about $2 trillion), and pays interest costs when due ($237 billion). This is about 83 percent of projected 2014 spending of $3.6 trillion.”

A 17% shutdown??? The politicians make it sound like we are waterboarding the American public…

Bloomberg: Ford Board Seen Discussing Mulally’s Plans This Week

Although I have talked a lot about Ford CEO Alan Mulally potentially going to Microsoft, the article above does a good job of talking about the potential impact on Ford. A must-read for Ford stockholders.

I would be worried about being a Ford stockholder right now. Even if Mulally stays, he won’t be there for long, as he is expected to leave at the end of 2014.

Truth be told, I am not really much of an auto industry fan at the moment. There is far too much competition for any one company to be hugely successful. The only auto company which I would consider owning would be Tesla (TSLA), but their stock is too expensive.

Fox News: Apple iPhone 5c price cut in half at Best Buy

If you’re waiting for the new iPhone’s price to drop, Best Buy already has you covered. The electronics retail giant is already selling the iPhone 5c for $50 two weeks following its launch.

Best Buy says that customers will get a $50 gift card that can be applied to the $99.99 phone, cutting the price in half. At the same time, the store will also offer a $50 discount on the Galaxy S4, dropping the cost from $199 to $150. The deal runs until Oct. 7, although you’ll still have to pay top dollar for the flagship iPhone 5s.

The 5c has only been on the market for two weeks, and we’ve already seen a number of price cuts. At launch, Walmart began selling the 5c for $80, which is $20 cheaper than the standard cost of the phone with a two-year contract. Target has also offered the same discount for the iPhone 5c.

I see this as a “good news/bad news” situation for Apple. The good news is the iPhone 5s, their top of the line model, is quite popular. The bad news is their 5c, their lower end model, is having trouble getting traction in the market. As long as Apple is relegated to the top end of the market, they run the risk of getting their market share eaten away over time by cheaper models.

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Posted October 7, 2013 by edmcgon in News, Politics, Stocks, Technology

8 responses to “Ed’s Daily Notes for October 7th

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  1. I’ve been trying to figure out why gold refuses to go up on a longer-term basis. This could be the answer:

    http://www.minyanville.com/business-news/markets/articles/structural-trap-liquidity-trap-tarp-the/10/7/2013/id/52103

  2. I would like to share an experience with you how our government works: this weekend, I went to my garage keeper because I have some problems with my car. Suddenly he is 15 miles further away, which I find strange, because he was working at his house – he was building a real garage at his house, since he started as an independent 2 years ago he worked in a small garage box (where fits in just once car), even during two winters without heating. But he looked forward to working in a real garage there – but he moved …
    So I talked to him and what gives? Before rebuilding his house, he asked the local government if he could keep a garage in that neighborhood, “yes, no problem” was the answer every time back then and he got the permit to start the rebuilding. Some months ago, the permit was recalled and he couldn’t keep the garage there anymore, because now there where too many cars on the street. He went complaining because it is his job and got a loan for the house and the rebuilding which had to be payed. They just said: “No, you can’t do that anymore. Maybe you should thinking about giving up working as an independent and start as an employer once again”. (which ofcourse he doesn’t want, so he had to find very quick another place where he could work).
    As an independent myself, things like this makes me really furious … but this is Belgium.

  3. Hello plas,
    Someone told me Belgium does not have a government for two years now; is a progressive country – free health care; euthanasia legal; if you use a bike you get €100 per month, et al. True?

    • We have a goverment – but it took a year and half to form one – we have the world record now 🙂
      progressive country: yes and no – we do like to think so, but at many points we are rusted, for example the unions as well as the order of the doctors, both of them have way too much power
      free health care: yes and no. A lot is subsidized, but there is always a part you have to pay. And you have to get lucky, many is not subsidized. Things like corticoids, antibiotics, surgery etc are, but fake tears are not – even if you really need them
      euthanasia legal: yes, if there is unbearable suffer, physical of psychic
      bike: not a fixed rate, but some categories of employees get a compensation for the kilometers to work (but same is true for going by car)

      There is a lot more subsidized in Belgium compared to USA, but there is a big catch: you cannot make the choice your own, you have to fit in. The powers now, do everything they can to remain in power, so change is very difficult.

    • Dream-scenario: Yes, it is one of my houses I’m putting for sale. Since it is located in Wallonia, and there is a big chance is will be a foreign country in some years, I’m putting it already for sale, because when Belgium cracks I think it will diminish in value 🙂

      Real scenario: no, and I don’t need it. I would like the land around it, but such a big house … I think some company will buy it. Companies buy many of the castles to accommodate their guests.

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