New Cain Accuser

I haven't really written anything lately and this isn't going to be a long one. Herman Cain has been accused of sexual harassment by a new accuser. Here are the details:

Sharon Bialek, who worked at the restaurant group's education foundation until shortly before the alleged groping incident, said Cain unexpectedly put his hand beneath her skirt and between her legs "toward my genitals." She also said he pushed her head toward his crotch.

If he wasn't done before, he surely is now. Why wasn't he properly vetted before he started running? Did they really expect this to not get out?

F-1 Comes To Jersey

I'm excited. If I'm in the area, I might have to go to this race.

Amazon Slips

Fresh off the heels of Netflix's earnings report last night, Amazon (AMZN) posted their earnings today. Needless to say, they were very disappointing:

Amazon.com Inc. is still growing at a fast pace, but Wall Street's concerns about the online retailer's margins are likely to grow after the company posted a 73% drop in quarterly profit Tuesday.

Their margins are starting to kill them:

Sales during the third quarter ended in September rose 44% compared to the same period last year, Amazon said. That's roughly in line with expectations and consistent with growth seen in recent periods. But as Amazon has roped in more sales, it has spent heavily on the expansion of shipping centers and data infrastructure, undercutting margins.

Operating margin as a percentage of world-wide sales slipped to 0.7% in the third quarter, from 3.5% in the period last year, Amazon said.

This was one of the main concerns of investors when Amazon introduced the Kindle Fire. The stock tumbled 12.39% in after hours trading. Much of this due to the gloomy fourth quarter outlook:

"They're basically calling for a break-even fourth quarter," said Ken Sena, an analyst who covers Amazon for Evercore Partners, "which is definitely disconcerting for investors."

The culprit of the margin cut looks like it's the Kindle Fire:

Szkutak danced around the culprit a bit, but the Kindle Fire, priced at $199, is definitely deterring higher earnings estimates. Szkutak also touted the long-term plan for the Kindle Fire, describing it as a “premium device,” and that Amazon takes all of the economics of the Kindle business into account, ranging from the lifetime value to the content available on the tablets and e-readers.

Because the Kindle Fire is sold at a loss, it might be the case that it won't pay off for a while. The real money will be generated in apps, Amazon Prime, and the e-books. For the time being, it's concerning because Amazon is still a strong company. In addition, it compounds the fact that in a week, we've seen Apple, Netflix, and Amazon all miss targets.

The current tech climate is alarming.

Netflix Tumbles

I like this guy, so:

Remember when Netflix raised their subscriber fees and split off their DVD mail-order services, and customers said they would boycott the company? Yeah, it seems they followed through on their words:

Shares in the once-hot but recently troubled subscription video company plummeted 27% in after-hours trading Monday after it reported a loss of 800,000 U.S. customers in the third quarter, more than the 600,000 it told investors to expect.

The stock had found some support after the price hike and the splitting of its streaming and DVD businesses:

For a while, Netflix seemed like the hot name, but it's taken an absolute beating. Reed Hastings, the CEO and graduate of my high school, is still optimistic:

“Pausing is a good thing from an investor standpoint,” Chief Executive Officer Reed Hasting said in an interview. “We are going to pause and restore our global profitability.”

Analysts don't believe it's the end of the world for the company, even though it has lost 2/3rds of its shareholder value:

"If they stop making mistakes, this is fixable," said Dan Rayburn, a principal analyst at consulting firm Frost & Sullivan. "The saving grace is that unlike a lot of other companies that get into this kind of situation, there isn't a competitor eating Netflix's lunch."

I tend to agree. They really don't have much competition and while this is a setback, they will continue to grow their business as they increase their content. They expect to have double the content and as long as it is relevant to subscriber interests, they should be fine. I'm not saying that it's time to buy NFLX. I'm not sure it has felt the entire wrath of the market yet. I do think there is potential for the company to bounce back once it gets back on solid footing.

Earthquake in Turkey

People dying and a country divided. This earthquake came at the wrong time and the people are suffering. A lot of the GOP candidates said we shouldn't give aid to foreign countries. Do you really think we shouldn't help the Turks in this time?

It was a 7.2 earthquake that hit and at least 138 people are dead.

Our thoughts are with them in these tragic circumstance.

Flooding in Thailand

The images are pretty heart breaking.

We Out

Peace out Baghdad! Peace out Fallujah! This occupation is over!

Rick Perry's Flat Tax Hail Mary

Rick Perry finally introduced his tax plan, a couple days after promising to have a plan ready for us in the CNN debate. Perry wants to simplify:

"It starts with scrapping the three million words of the current tax code, and starting over with something much simpler: a flat tax," Perry said.

This isn't the first time that someone has proposed a flat tax; Steve Forbes, Phil Gramm, and Jerry Brown have all run on it in the past. The problem with the flat tax is that it doesn't stick:

The allure of the flat tax is that it promises to wipe clean the complicated tax code. But it does this by throwing out some popular tax deductions, including breaks for mortgage interest payments, charitable giving and employer-paid health care.

We're talking about its popularity, not its viability. The rich would rather pay money to charity and get deductions than give money to the government. There's still the matter of burdening the poor:

The details of each flat tax proposal differ — the overall rate, whether some low-income families will be exempt and which deductions might be spared on the chopping block. But experts say they invariably increase taxes on lower-income households and cut them for the rich, a potentially dicey proposition for voters worried about the country’s decades-long trend of growing income inequality.

There's also the difficulty that goes with passing it:

“At least, in theory, it’s a simple plan, but getting from here to there would be enormously complex,” Bartlett said.

Others believe that the flat tax is a winner:

After all, tax simplification is both needed and polls well, and the flat tax promises a simpler approach to paying taxes. And at a time when President Obama is campaigning against the fact that Warren Buffett and his secretary pay different rates, the flat tax idea might just have met its moment for broader-based appeal.

Given the "class warfare" battles over taxes and spending and everything else, now might actually be a time when the flat tax has its breakthrough on the national stage.

Others believe that it is a joke:

Just because a tax is flat doesn't mean it can't go up. And if Perry's team designs a plan that maintains popular items such as the charitable deduction it's not a flat tax and pretty soon it looks like the same complicated mess we have now.

Th rich will want the ability to deduct no matter what. If he includes that, then the tax isn't exactly flat. In fact, it would skew it the other way.

The tax might help Perry with the Tea Partiers though:

FreedomWorks Chairman Dick Armey thinks this could revive Mr. Perry’s campaign. “The flat tax does more for Perry’s candidacy than anything else he could have done,” the former House majority leader told The Washington Times in an interview. “If Perry really means it, and he gets elected and makes it the top priority of his presidency, it would be the single best thing that could be done to spur economic growth and job creation in public policy today.”

I'm not so high on it because I don't think it will pass. I think it's very gimmicky. There are going to be questions about whether the poor will be exempt from the tax and what that line will be. There will also be other questions like deducations and things like that. Regarding conservatives, I think Perry is going to win over voters with this. The question is will he stand tall in defending it. There are a lot of things about it that raise questions and to really make a stand, he'll have to start doing well in debates, which, if you've seen the other debates, is as tall a task as Perry can face.

At the end of the day, it's a novel attempt to try and get back in the race. This could be his prayer at the buzzer.

Gadhafi: Dead

Another world leader falls. There's not much that needs to be said.

Greece: Austerity as Athens Burns

There was another round of Greek protests as the government met to pass an austerity bill:

Greece definitely needs to make progress in reducing their debt and getting their budget in order. The economy is suffering and people are going nuts over it. There's been an immense brain drain because of this. The whole country is unhappy:

Although the demonstration was organized by leading labor unions, everyone from trash collectors, teachers, retired army officers, lawyers and even judges walked off the job to protest the government-imposed wage cuts and tax increases that they say are squeezing the debt-ridden country into penury.

“There’s no precedent for this,” said Anastasia Dotsi, 70, a retired bank worker who said anger had driven her out to protest. After two years of austerity measures, “we have been crushed as a people,” she said.

The bill is harsh in that it will include wage cuts and job cuts, but it might be a necessary measure:

The controversial bill includes cuts in wages and pensions as well as thousands of layoffs in the public sector — once a political third rail in Greece’s welfare state. It also changes collective bargaining rules to make it easier to hire and fire workers, a highly unpopular action that economists say is crucial to liberalizing Greece’s economy but that has little popular support.

Some of this is a necessary for Greece's EU position:

“The vote will boost our negotiating position; it will give us strength for the E.U. summit,” Mr. Papandreou said this week. The main goal for Greece, he added, is “to stay in the euro zone.”

The situation is bad. There's no other way to describe it. Any decision that the government makes seems like a poison pill. I have no idea how Greece is going to get through this in the short term, but in the long term, moving towards a strengthen private sector makes sense. The government is stuck between a rock and a hard place though.

Arthur Laffer: Defending the 9-9-9 Plan

Herman Cain came under fire for his 9-9-9 plan at yesterday's debate. Cain did an extremely poor job defending the plan and I think Romney did the best job of dissembling it (at the end):

This morning, Arthur Laffer, one of the architects of the 9-9-9 plan, had an editorial defense in the Wall Street Journal:

By contrast, the three tax bases for Mr. Cain's 9-9-9 plan add up to about $33 trillion. But the plan exempts from any tax people below the poverty line. Using poverty tables, this exemption reduces each tax base by roughly $2.5 trillion. Thus, Mr. Cain's 9-9-9 tax base for his business tax is $9.5 trillion, for his income tax $7.7 trillion, and for his sales tax $8.3 trillion. And there you have it! Three federal taxes at 9% that would raise roughly $2.3 trillion and replace the current income tax, corporate tax, payroll tax (employer and employee), capital gains tax and estate tax.

While this does address the math behind the plan, it doesn't address the concerns that the sales tax will be burdensome on the poor. It's a regressive tax, meaning it's going to have less impact on you the more money you make. It will affect the poor the most because their consume a higher percentage of their income.

Laffer does have the best argument for the plan though:

The whole purpose of a flat tax, à la 9-9-9, is to lower marginal tax rates and simplify the tax code. With lower marginal tax rates (and boy will marginal tax rates be lower with the 9-9-9 plan), both the demand for and the supply of labor and capital will increase. Output will soar, as will jobs. Tax revenues will also increase enormously—not because tax rates have increased, but because marginal tax rates have decreased.

He believes that will stimulate upward mobility:

A static revenue-neutral tax change requires static winners and losers. And this 9-9-9 plan has made certain that even on static terms those below the poverty line will be better off—period. Once the dynamics take hold, many of those below the poverty line will find good jobs and thus will rise above the poverty line and start paying taxes.

I do believe he falls short on the sales tax:

Still, a number of my fellow economists don't like the retail sales component of the 9-9-9 plan. They argue that, once in place, the retail rate could be raised to the moon. They are correct, but what they miss is that any tax could be instituted in the future at a higher rate. If I could figure a way to stop future Congresses from ever raising taxes I'd do it every day of the week and twice on Sunday. Until then, let's not make the perfect the enemy of the good.

He's deflecting the focus of the argument. It's not about raising taxes. It's about creating the tax in the first place. While it may make up for the revenue, it also creates a new tax source which can be raised. Saying other taxes can be raised just as easily isn't a defense of the new tax plan.

After reading Laffer's defense of the 9-9-9, I feel better about the plan as a whole. However, I still have some very strong, lingering doubts. The sales tax is a huge concern because it's a new tax, a regressive tax, and a double tax. People often complain that capital gains are taxed twice by capital gains and by income tax. This is essentially what it's going to feel like when you have both state and federal sales tax when you buy something.

Quite frankly, I think the negatives still outweigh the positives. The sales tax being the most worrisome aspect, why doesn't Cain just ditch it and tax business and income at a higher rate (13.4%, using the numbers provided in the op-ed). It doesn't have the same ring as the 9-9-9 plan, but it certainly doesn't threaten the people's ability to consume. I expect that Cain will be further pushed on this in future debates. He's going to need a stronger defense on his own. Otherwise, he's just dust in the wind.

Quick Hits: Ohio, Greece, Israel-Palestine

This will be a new way for me to quickly introduce things that are going on in the news that I don't feel I can write full entries for. I used to post a lot of videos and it has become less frequent.

We'll start in Ohio, where the owner of an animal reserve released his animals, including lions, and killed himself shortly afterwards:

Police have had to kill some of the animals, which seems necessary to keep the people of that area safe.

In Greece. there are protests as the government tries to pass an austerity bill:

One of the main problems with Greece is that there are too many people with government jobs, which has made it unsustainable for the government to operate. With the debt, there is a need to make cuts. The people are understandably unhappy about losing jobs when ends have become hard to be met. A quote on the need for austerity:

“If Greece can dramatically reduce its debt burden and interest payments, that may well mean that it needs to implement slightly less austerity in the near term,” Ben May, an economist at Capital Economics Ltd. in London, said in a Bloomberg Television interview. “It certainly won’t solve all of Greece’s problems and it will have to continue to reduce its deficit over time, but it might make that process a bit more manageable and less painful.”

Zero Hedge is reporting that a deal is done. Things are going violent, I'm sure I'll talk about this as it further develops.

Israel and Palestine had a prisoner swap, including an Israeli soldier:

Is this a sign of better relations or just another chapter in the tensions?

Google and Samsung Bring It

As I said yesterday, Google and Samsung introduced the Google Galaxy Nexus phone. It's a technical doozy:

Samsung started the press event by unveiling the Galaxy Nexus, an impressive new smartphone that the consumer electronics company codeveloped with Google to serve as the ICS launch device. Rumors about the device's lofty specs have been circulating for months. The highlight is its 4.65-inch Super AMOLED display with an impressive 1280x720 resolution. The device has a curved form factor that is said to give it a natural feel despite its large size.

The device also has a 1.2GHz dual-core TI OMAP4 CPU, front and rear-facing cameras and 1GB of RAM. Samsung says that there will be separate models with HSPA+ and LTE connectivity available depending on region. Other connectivity features include Bluetooth, WiFi, and NFC. It also has the full array of sensors, including a built-in gyroscope and barometer. The device is scheduled to ship in November with Android 4 on board.

That'll be with the Android 4.0 Ice Cream Sandwich software:

Android 4.0 Ice Cream Sandwich – taking cues from the Honeycomb tablet OS – uses the entire screen for navigation, with the usual Android buttons appearing on the interface itself as opposed to existing as physical hardware components. ICS introduces a smorgasbord of new features to the platform, including face recognition for unlocking, advanced voice integration, and an improved notification system.

It's a technological beast:
Sleek looking devices with technological advancements should up the cool factor but are people actually going to appreciate these features? How will it compare to the RAZR and the iPhone:

In the multimedia department, you won’t run out of options with either of these phones. The Droid RAZR and the iPhone 4S have 8-megapixel cameras at the back that can record full HD 1080p video. The Galaxy Nexus can also record 1080p video, but, surprisingly, Samsung put only a 5-megapixel shooter on Google’s phone, which is less than what we have seen on other phones from the manufacturer, such as the Galaxy SII. All three phones also have video chat cameras on the front.

I'm personally a multimedia guy and like to take pictures of my surroundings. The Nexus falls short, but not by much. It has tricks though:

If you’re looking for extra tricks from your phone, the Galaxy Nexus might be what you’re looking for. Out of the three phones, the Nexus is the only device with Near Field Communication support, which allows you to make wireless payments (at a small, but growing list of retailers), as well as to beam contacts, websites, apps or maps to other NFC-enabled devices by just bringing the phones together and making them touch.

So the Nexus has a lot of potential as a phone. We now have information as to when these phones come out:

Anyway, without any further adieu, a Verizon Wireless screen capture has surfaced online and is showing the “tentative” launch date for the HTC Rezound as well as the Samsung Galaxy Nexus and the Droid HD (aka Droid RAZR). According to the image, all three of these handsets will be available on November 10th.

I expect these phones to be huge hits amongst the tech geeks of our generation, but I don't know how well it's going to do against the iPhone. The iPhone still is the most popular and "coolest" phone on the market. A lot of people own Androids, but I don't think the technological capabilities of the phone are tapped. It's hard for the general public to get excited about that.

That's not say these phones won't sell. Familiarity with the RAZR name will bring interest. The recommendations for the Galaxy Nexus will help that phone. They will still sell. I'm not sure they'll sell as well as the iPhone.

The Razr's Return

This ain't the flip phone that you had in high school. This is a new phone that has the thin and sleek qualities of the old phone:

Motorola Mobility unveiled Tuesday the Droid Razr, an 7.1-millimeter thin handset that Chief Executive Sanjay Jha said is the world's thinnest smartphone. The Droid Razr is powered by Google's Android operating system and runs on Verizon Wireless' 4G LTE network. It will be available in early November and cost $299.99 with a two-year contract.

It's a technological juggernaut:

The device has as much processing power as a typical PC, allowing for faster Web browsing and multitasking, or running simultaneous applications. It also has a 4.3-inch touchscreen and a splashguard, which Jha described as nanotechnology that protects against water damage.

The problem for the Razr is that the new Samsung phone is supposed to be introduced in a couple hours and it's supposed to be better than this phone. I'm not saying this phone isn't great, it is exactly that. The Samsung is supposedly even better as far as the features are concerned. This looks like a very intriguing gadget though.

Ron Paul: The Cut Man

Ron Paul might not be talked about as a potential candidate for President, but he definitely has an important role as far as the conversation goes. No politician pushes small government and individual liberty like Ron Paul. He was on the forefront of the Tea Party movement, an epiphany that has had GOP candidates trying to find ways to appeal to this new segment of their electorate. Today, Ron Paul has pledged to drop a bomb on spending with $1 trillion in spending cuts:

Republican presidential candidate Ron Paul on Monday unveiled a plan to cut $1 trillion from the federal budget within one year by eliminating a handful of federal departments, including the Energy and Education departments.

He's the only one to propose a balanced budget:

"Ron Paul's plan is the only one that seriously addresses the economic and budgetary problems our nation faces," Jesse Benton, Paul's campaign chairman and a co-author of the plan, said in a statement. "It's the only plan offered by a presidential candidate that actually balances the budget and begins to pay down the debt."

I don't expect any other candidate to propose as drastic a change in government spending. Unfortunately, I don't expect him to get the attention he should get for this, at least in pushing the conversation forward in regards to spending cuts. I have no doubt that Paul would encourage positive discussion to getting the country back on track as far as the budget is concerned:

"The other candidates have not offered this," Paul said of his plan. "I don't believe they think it's very serious. They think they can just tinker around the edges, but the American people are ready for some honest thinking and some honest reforms ...

"Everything that's not explicitly in the Constitution should be up for grabs, and we should be able to cut it," Paul said.

The gauntlet has been thrown down.

As far as the viability of this proposal, I don't believe that he could make such drastic cuts. However, the extent of his cuts should push others to give more stringent proposals to cut spending. One of my main concerns is that he won't get enough airtime to actually make an impact. Clearly though, no one else is taking cutting government spending as seriously as Ron Paul.