The Tin Lizard

Back To The Future - The Banks' View

Have you been noticing the "buzz" - ads on television and those new "paid-news" stories on your local television station - about the great new idea banks have for us?

It's ATMs that will dispense bills other than twenties!

Wow, there is no doubt that might be a great convenience, though I think it's stretching a bit to suggest, and one "news" story did, that there's a huge pent-up demand in the world for people who want just one dollar in cash, or who might want exactly (say) $189 and would be unwilling to just withdraw 200.

Anyway, I'm sure we've all dealt, with the nuisance of having only twenties.  Now we can get other bills!

The thing about it that makes me chuckle to myself, though, is how this is being billed as an amazing leap of technology that brings more convenience to our lives.  The fact is, we HAD ATMs as much as twenty years ago that would give you the amount of cash you wanted (well, maybe they didn't dispense ones).  But they disappeared because banks and/or ATM manufacturers wanted to bring more convenience to their lives.

It hasn't been mentioned yet, but I'm sure there will be an extra little fee for those who want to withdraw their own money in multiple denominations of bills. 

Related articles

New ATMs dispense $1, $5 bills

Where's George

Do you ever wonder where your money goes?  Literally?

Then check out the website "Where's George?" on which you can enter the serial numbers of bills and perhaps find out where they have been and eventually, as other bill-trackers randomly log in bills that pass through their hands, find out where at least some of them travel.  Naturally, amidst the millions of bills that must be in circulation, and the relatively small number of people who will go to the site and log their currency, a "hit" in the form of a report back on one of your bills will not be common.  But I've logged maybe 20 or 30 bills over a couple of years and have had one or two reports.

I'm not sure there is a lot of practical use for this information, unless the U.S. Treasury somehow finds the statistics useful, but it's an interesting curiosity.

Penny Pity?

The Canadian government has announced it will put its one-cent coin out of its misery (http://www.washingtonpost.com/business/markets/the-penny-drops-_-canada-to-kill-its-one-cent-coin-calling-it-a-costly-nuisance/2012/03/31/gIQAIz1smS_story.html), ceasing production later this year. Canada thus joins a number of other countries, mostly in the northern reaches of Europe, in being penniless.

The decision has produced a small flutter of the usual stories here in the U.S. about doing away with the penny. Yes, pennies are often more a nuisance than a value; they have little economic worth, and they load your pockets, your car's console trays, and your dresser top. I'd be perfectly happy to see us get rid of them too, although they are stoutly defended by nostalgia buffs and zinc manufacturers.

But let's also recognize that convenience and lack of a need are really the only reasons to dump the penny. We are often told how it costs more than a penny (in the U.S. now, about $.017, I believe) to make a penny but that's a spurious argument. Pennies, like other coins, remain in circulation for quite a while, being used hundreds or thousands of times in exchange before they meet their demise. So the cost of producing isn't relevant, IF they serve an economic purpose, which they don't seem to any longer.

Another reality: to stop producing the penny is likely to cost all of us more in tax, specifically the sales tax, where you can bet the $1.63 you may pay for a bolt at your local hardware store is going to become $1.65.

But why not make lemonade while we're at it? In the U.S., we've had trouble introducing a dollar coin, which would actually save the government money over the cost of dollar bills. Of course one reason is nostalgia for the "greenback," but beyond that, even those who would use dollar coins have found them inconvenient because of their size and weight. Why does a dollar have to be bigger than other coins? A nickel is bigger than a dime and that doesn't bother anyone.

So let's kill the penny, introduce a dollar coin of approximately (though not exactly) the same size, maybe with a different weight and color. We won't miss Lincoln; he can be on the new dollar. Stores won't object to not having a space in their cash drawer for dollar coins; they will have a space where the pennies used to be.

The Donald's Inconsistencies - Can You Trump This?

A few days ago the country's best-known large investor, Warren Buffett, made a splash by saying it is inherently unfair that he should pay only about 17% in taxes on his huge income, while his executive assistant might pay nearly twice that amount.  Well, who could disagree with that, really?

Answer:  Donald Trump. Really?  Yep, really!  But that's only one of the inconsistencies evident in ABC-News/Good Morning America gossip-monger George Stephanopoulos's interview with Trump this morning.  The interview doesn't seem to be available online yet except as snippets more focused on meaningless points; such is the state of "news" these days.  But look for the transcript later.

On Buffett's pronouncement regarding tax rates, Trump says there a "many different views" on that question.  Later on, he claims that he would be prepared to pay higher taxes, but other rich guys wouldn't.

News flash: Trump believes job creation is the key to economic recovery!  Now, he says (defending Texas Governor Perry's record of creating lots of menial jobs in his state), we're so desperate that it doesn't matter if we create good jobs - any kind of jobs will do.

And he's noticed that American jobs have gone to India and China!  That's very astute. But he omits to say how that happened, or who made the decisions to shift those jobs.  Though he can't bring himself to name the disease (Let's say it for him:  "corporate execs")  he knows the cure:  it's lower taxes on business.  Business will move offshore to flee taxes because corporations are "business machines" and can't be expected to be "patriotic."  

So, doesn't Trump share the views of Presidential candidate Mitt Romney, Supreme Court Chief Justice John Roberts, and the GOP faithful everywhere, that corporations are "people," individuals who have rights like free speech, which enable them to spend freely on political advertising?  Apparently not.  If he did, he would certainly also expect them to be patriotic, and possibly even ethical.  The "answer" to this inconsistency is, of course, that corporations are people when it suits them to be, and not at other times.  (Is anyone hearing echoes about now?  It may be the Queen of Hearts from Alice in Wonderland, shouting in the distance.)

Trump is handy as the poster child of the business genius whose smarts don't serve him so well in other areas.  That makes it easy to take potshots at him.   But he's just the messenger of a much more widely held flawed view of corporate responsibility.

Corporate Democracy

Did you hear the joke about the company that decided to take the Supreme Court's recent opinion about corporations having the rights of individuals to its logical conclusion, and ran (as a company) for Congress?   Trick question...it's NOT a joke.  Read about it here.

Elsewhere in the corporate world, however, democracy is not usually the theme of the day.  I think that's entirely legitimate where it concerns a company and its employees; a business should, and does, have the right to dismiss/fire/lay off employees and the employees don't generally get to vote on it. 

It's a different matter in relations between the corporation and its stockholders and investors, however.  Those people have an ownership stake in the company; they have money at risk.  The proof of that pudding used to be in the voting at the annual meeting that each company holds. 

But this process has changed immensely since I first started trading stocks nearly fifty years ago.  Back then, small stockholders got to vote via proxy on a whole range of matters of company policy; their measly few-hundred shares each couldn't normally change a decision, but they were asked nonetheless. 

Now, however, companies (and to be fair, probably also their big stockholders, who are often mutual funds) seem to find it inconvenient to seek those stockholder opinions.  If you're not attending the meeting, your proxy decisions are in most cases limited to the election of Directors (each listed separately to give an illusion of choice), to approve the accounting firm that will inadequately audit the books, plus the ominous phrase "such other business as may come before the board" - and that's where the real decisions get made.

What? Reelect the board and pick an accountant, then designate a proxy to vote on "other issues?"  If they don't have any other issues than that, or don't know of them at this point, it makes you wonder why they would hold a meeting at all.  Occasionally, stockholder proposals appear (invariably, management recommends a vote against these - Big Daddy knows best!); and rarely, a real issue that regulations require to be brought before all equity owners (e.g., a proposed merger or buyout). 

All of which is just to say, the world has changed.  Does the small stockholder have any less power than ever?  Perhaps not, except that now he isn't even told what the issues are, so he'd have a tough time deciding whether to attend the meeting.  In fact, many stock owners may look on the current practice as a favor that saves them reading those reams of explanation on seemingly arcane issues of company management, performance, or finance.

Bad Ads

The American Petroleum Institute (API), a lobbying group for the oil and gas industry, continues to spend really big bucks on television ads.  Like many commercials, they try to "pretty up" the reality of what they do: sow's ear, silk purse.

One common API pitch is for the oil industry's remote-location drilling, by which they mean one platform can now handle drilling in multiple, widely separated locations.  For the API, this means "more of the oil and gas we need, from less than meets the eye."  The public, presumably, will like the idea of fewer visible, above-the-surface rigs.  That's a selling point, maybe, but a pretty weak one.  "out of sight, out of mind" isn't a bad motto -- lumber companies have used it to good advantage, leaving a thin row of forest along miles and miles of roadside, screening the acres and acres of clear-cut. 

The truth is that the remote-location technique serves the industry, reducing the costs of setting up large, permanent platforms over each hole in the sea bottom.  It may also represent somewhat less danger to shipping, though that could be outweighed by what must certainly be much greater danger to the sea floor and marine life. 

In another frequently aired ad, API, using an alias, presents those "average-looking" people who surprisingly have lengthy, articulate ideas about how bad increased taxes on oil and gas would be for them.  It's as if Yogi Berra suddenly delivered an eloquent speech on the history of the Dead Sea Scrolls, or George W. Bush were to speak intelligibly about anything. 

Personally, I can only applaud the selflessness, the pure civic-mindedness of the American Petroleum Institute, spending millions on prime-time commercials just to warn people about a threat to their pocketbooks.  I can't think of any other reason they'd do it...can you? 

After all, there is some honesty here: without a doubt, any taxes imposed on oil and gas companies are ultimately going to be paid by the consumer.  And if petroleum-based energy should happen to retain an artificial market edge vis-a-vis competing forms of energy, just because efforts to impose new taxes were thwarted, no one at API is likely to complain.

Keep Up With Your Beneficiaries

I just celebrated a birthday recently.  Birthdays are nice, but they often bring a few chores that are less than completely fun.

One of those is that life insurance premiums, if you pay annually, tend to come due on your birthday.  I got my bill last week, and for some reason it prompted me to go back and look at a couple of small old life policies I have.  Apparently, I had not looked at the beneficiary designations since 1975!   That was the year I was married, so my wife was shown as the primary beneficiary, and that's fine, but much to my surprise, my parents were still listed as my secondary beneficiaries.  Problem:  they've been dead for 25 and 15 years, respectively.  

As I'm fixing that problem, I've decided to try to set my birthday as an annual reminder to check on the status of beneficiary information - not just insurance, but retirement accounts, wills, trusts and such, if you have them, all need to be checked periodically.