JoeTaxpayer

Last week, I read a story on SmartMoney.com stating that American Airlines was planning to charge $15 per checked bag. Here’s my response, also posted on the SmartMoney web site;

Have they really thought this through? This change in policy will have an ‘unintended consequence’ that will quickly become apparent.
As a frequent flier on American, I’ve noticed that when a flight is pretty full there’s a good chance that right as the last passengers are boarding, they realize there’s no room for their bags, the overheads are full. Now, it won’t take much to tip things to be even worse. If even 10% of the fliers decide that the $15 for the checked bag is not worth it, the overheads will fill on a more regular basis. That last few minutes of scrambling will become even longer, and flights will be delayed as those bags need to leave the cabin to get loaded into the belly of the plane. When I first heard there was talk of charging for bags, I thought they would charge for the carry ons, not checked luggage. Too bad.
Joe

written by JOE \\ tags: american airlines, Finance, Investing, money, unintended consequences

I’m starting to see more articles supporting my fears regarding the conflict between BioFuel and BioFood. The tragic unintended consequences of corn based ethanol is that the cost of food, starting with the grains, corn, wheat, and rice, has increased dramatically over the past year. Here is a chart from the World Bank illustrating this unfortunate price rise

Liz Ann Sonders (at Charles Schwab and Co.) recently wrote a piece on this topic titled “Beast of Burden: A Global Food Crisis Erupts.” An excellent discussion on this topic.

Joe

written by JOE \\ tags: biofood, biofuel, corn, ethanol, Finance, food prices, rice, unintended consequences, wheat

In September and October, I talked about unintended consequences. I can’t help but ponder the concept, and will continue to post those that strike me as more than a passing thought.

We, as a country, are trying to get away from the stranglehold the oil producing nations seem to have over us. The current $3/gallon price of gasoline is putting a dent in all of our budgets, and the search for alternative fuel is on. Now, I believe that once an ideal storage system (read that - a better battery) is created, we will all be better off as wind and solar energy will gain favor. But, meanwhile, I hear a demand growing for “home grown” fuel in the form of ethanol, created from corn (or other grain). This scares me. It’s not too tough to see that any large use of this piece of the food chain will have a ripple effect on the rest of the system. First the cost of all grains will rise due to the increase in demand. Then the cost of any grain-fed livestock will rise as well. We will have a solution that’s far worse than the original problem. I welcome any view to the contrary.

Here is the futures chart for corn, a scary picture to say the least.

JOE

written by JOE \\ tags: energy, Finance, food, unintended consequences

Today I caught a bit of CNBC, in which there was a brief discussion of the AMT. The AMT (Alternative Minimum Tax) was put in place to be sure that the wealthy were not able to gather so many deductions and tax loopholes that they could avoid paying taxes on all their income. Good idea in theory, but in practice the AMT amount was never adjusted for inflation and is now hitting people it was never intended to. People who live in a state with high taxes are now finding that their Real Estate taxes and/or State Income Tax are no longer deductible, but wiped out by the AMT.

written by JOE \\ tags: AMT, income tax, irs, tax, unintended consequences