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The Cybersecurity Play That Doubled Once – Will Double Again

Not long ago, a relative of mine was the victim of identity theft. And I have to tell you that I really felt for the entire family.

The thief ran up nearly $20,000 in charges, opened new accounts and tried to open others.

And I can tell you that the frustrations over the losses (most of which ended up being covered) were dwarfed by the helplessness that came whenever new charges showed up – and the worry that was spawned by never finding out how the whole mess started.

As we watch the headlines about data breaches and cybercrime – and watch as the violations move closer and closer to home – those worries only escalate.

  • Featured Story

    How to Prepare for the 17% "Supertax"

    “You never let a serious crisis go to waste… It’s an opportunity to do things you could not do before.” –Rahm Emanuel The once unthinkable is quickly becoming probable. At some point in the next few years, your assets could well become the target of a “Supertax” as high as 17%. Last week, we talked about the need to buy “out of print” assets to protect our wealth from brazen government seizures. I explained that quantitative easing (QE) was likely to get bigger, not smaller, and that you needed to become your own central bank. The truth is, the writing’s already on the wall. We’ve seen it happen. Cyprus’s “bail-in” cost numerous bank depositors more than 47% of their capital. Poland’s “pension reform” saw private pensions raided to help lower the government’s debt-to-GDP ratio. And Spain plundered its Social Security Reserve Fund to keep buying its own risky debt, when no one else would. Dangerous precedents are being set, with chilling regularity. More than ever, you need to be prepared…
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  • Taxes

  • Death Tax Woes: Don't Make the Same Mistake Tony Soprano Did pizza

    We were all shocked by the sudden, untimely death of James Gandolfini. Gandolfini was an immensely gifted actor who changed the face of television entertainment in the role of Anthony "Tony" Soprano, a deeply troubled gangster-in-therapy, who had to balance obligations to his family... and his Family.

    By all accounts, James Gandolfini was generous and kind to family and friends alike. It has been reported that he left a large legacy, in excess of $70 million, to be divided between them. His net worth is an estimate, and his asset inventory hasn't yet been disclosed, but he did alright for a middle class kid from North Jersey.

    Sadly, however, his nearest and dearest won't see anywhere near the full amount he left behind.

    It turns out that James Gandolfini was generous - to a fault. His wish was that his legacy, in the form of real estate and other assets in the United States and Italy, be distributed in large chunks, the largest in a trust for his 13-year old son, Michael and 8-month old daughter, Liliana. His widow, Deborah Lin, is set to receive 20% of his estate. The will stipulates that the shares to be doled out after taxes.

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  • High Taxes Mean It's Lights Out For California Running

    Would the last person leaving California please turn out the lights...

    Whether by coincidence or design there is a mass exodus of business and upper management from the golden state.

    Here's a guess why: California is the highest taxed state in the nation.

    Its top income tax rate is 13.3%, and its property tax per capita is $1,450. California also has the highest sales tax at 7.5% and is the proud bearer of the country's highest gas tax according to the Petroleum Institute.

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  • 2013 Tax Law Changes: Watch Out for These Hits Some of the 2013 tax law changes slated to take effect Jan. 1 could hit your portfolio if you aren't prepared - and some will go into effect regardless of the fiscal cliff resolution.

    In fact, the Internal Revenue Service (IRS) has released 159 pages of rules that will apply to trusts, annuities and individual equity traders.

    One tax that could affect you is a new 3.8% surtax on investment income - or as it's fondly called, the investment income Medicare tax. The new tax is part of the 2010 healthcare reform law passed by Congress, and represents the first surtax on capital gains and dividend income.

    There's also a new 0.9% healthcare tax on wages for high-income individuals; it is called the earned income Medicare tax increase.

    Combined, these two taxes could raise an estimated $317.7 billion over the next decade, reported Reuters, based on a June Joint Committee on Taxation analysis.

    To find out if you qualify for these taxes - and how to avoid them - check out this look at the proposed changes.

    2013 Tax Law Changes: Medicare Surtax

    The 3.8% Medicare surtax is a big deal because it's the first time a Medicare tax will be assessed on investment income.

    For the purposes of the rule, investment income includes the following:

    • Interest, Dividends, Royalties, and Annuities
    • Capital gains, including any profit you make on the sale of your residence if it exceeds the amount you are allowed to exclude
    • Passive-activity income. This can defined as earnings that stem from rental property, limited partnerships or other business that an individual is not actively involved.
    You'll be affected by the Medicare surtax if your modified adjusted gross income (MAGI) is more than $200,000 as an individual, or $250,000 for married couples filing jointly.

    Your MAGI is the total of adjusted gross income plus any foreign income. So if you work in the United States, MAGI will equal AGI, which includes your net investment income (gains minus losses).

    It's a bit tricky, though.

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  • Warren Buffett, Bill Clinton Sound off on "Recession 2013" As concerns mount that the United States is headed for a recession, two famous minds offered opposing takes on what's in store for the U.S. economy.

    In one corner was the Oracle of Omaha, Warren Buffett; in the other, the 42nd President of the United States, Bill Clinton.

    Speaking at the 25th anniversary dinner of the Economic Club of Washington, Buffett said that it is unlikely the U.S. economy will fall into another recession. He said the chances of that happening are "very low."

    Buffett, who blames both political sides for the budget deficit, once again called for raising taxes and cutting spending.

    "The problem is the Democrats don't want to talk about what expenditures they would cut and the Republicans don't want to talk about raising revenues," he said.

    Buffett said "the big question" remains what's ahead for the euro.

    "We've got this system where they're half in and half out," said Buffett, who is currently auctioning off a lunch with himself this week on eBay for charity. "They have to reconcile these things."

    Reflecting on the Eurozone he said there is the possibility the U.S. will feel a "spill over" effect from Europe - which some would argue has already happened.

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  • From Obamacare to Taxes: 5 Hot Topics Politicians Love to Lie About Political lies are as old as the Republic, but that doesn't make the practice any less of an insult to the American people.

    Whether they are about Obamacare or taxes, political lies are a special kind of deception.

    Rarely are they blatantly false. Political lies rely on misrepresentation of facts and convenient omissions that make their target look better - or worse - than it really is.

    So convincing are today's politicians and their minions it's not even clear they always realize when they're bending facts past the breaking point.

    "The problem is we never know whether they believe what they're saying or not," Brendan Nyhan, a Dartmouth political scientist and author ofAll the President's Spin, told USA Today.

    At least three fact-checking organizations - the Annenberg Public Policy Center's FactCheck.org, the Washington Post's Fact Checker column and the Tampa Bay Times' PolitiFact - do their best to point out the almost daily deceptions.

    But politicians know that few citizens ever visit such Websites. And that's what politicians and their surrogates are counting on.

    "I don't think [the fact checkers] make a whit's worth of difference," Rick Tyler, a senior adviser to Winning Our Future, a super PAC that supports Newt Gingrich, told USA Today. "Millions more people will see [our] ad than will ever see the political fact check."

    That doesn't deter the fact checkers, however. The constant stream of political lies has been keeping them very busy lately.

    Here are five issues that have been particularly prone to political lies over the past several months. You'll probably hear variations of these all the way through the 2012 election.

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  • Making Earmarks Pay: Lawmakers Help Themselves to Congressional Pork For members of Congress, the only thing better than getting "pork" for the folks back home is getting a slice of that pork for themselves.

    Pork, also known as earmarks, describes the long-standing Congressional practice of steering tax money back to home districts to pay for expensive, constituent-pleasing projects.

    But in recent years lawmakers started taking pork a step further. Instead of just using earmarks to keep voters happy, some members of Congress have found ways to benefit personally.

    Some arranged for improvements to areas near property they owned; others sent money to organizations they would later go to work for after leaving office.

    Of course, none of this is illegal.

    Congress literally makes its own rules regarding the ethics of earmarks. Still, much of what goes on looks bad.

    Take the case of former Rep. William Delahunt, D-MA. The seven-term Congressman retired last year and launched his own lobbying firm in Boston.

    Before long the small coastal town of Hull had hired Delahunt for $15,000 a month to help out with a wind energy project.

    Coincidentally, Delahunt had set aside a $1.7 million earmark for the Hull project back in 2009. The bulk of his fee - 80% - is being paid from the same earmark money.

    And that's not all. The Mashpee Wampanoag tribe has paid Delahunt's firm at least $40,000 to lobby for a casino. As a congressman, Delahunt sent the tribe earmarks worth $400,000.

    Delahunt also has done work for Quincy, MA, lobbying for a downtown redevelopment project. Back in 2008, he was sending Quincy $2.4 million in earmarks.

    "I cannot recall such an obvious example of a member of Congress allocating money that went directly into his own pocket," Barney Keller, communications director for theconservative group Club for Growth, told The New York Times. "It speaks to why members of Congress shouldn't be using earmarks."

    While Delahunt may be the most blatant example of a lawmaker enjoying generous helpings of Congressional pork, he's not the only one.

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  • President Obama’s 2013 Budget: Five Things You Should Know U.S. President Barack Obama's 2013 budget proposal will give Republicans and Democrats plenty to fight about.

    The $3.8 trillion budget proposal, submitted to Congress, essentially follows the blueprint President Obama outlined in his State of the Union address.

    That means fewer spending cuts and more taxes than Republicans will like.

    So if you thought last summer's wrangling over the raising of the debt ceiling was nasty, watch the rhetorical Armageddon when those battles get re-fought in an election year.

    President Obama's 2013 budget sets much of the agenda for the stormy election season ahead. These points will help you make sense of the chaos.

    What You Should Know About President Obama's 2013 Budget

    1. Congress Sets the Budget: The fact is Congress, not the president, ultimately controls the federal purse strings. While much hoopla will accompany President Obama's 2013 budget, presidential budget proposals often serve more as a political billboard than a framework for how money is collected and spent by the government.

    2. So President Obama's budget will provide talking points for his 2012 re-election campaign and targets for the Republicans who seek to defeat him.

      "Every budget proposal is partly a serious policy document and partly a political statement,"Stan Collender, a former staffer for both the House and Senate Budget Committees, told msnbc.com.

    1. No Budget, No Problem: Not only can Congress reject the president's budget,

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    2. Obama Now Must Rally Democrats to Seal Tax Deal With GOP President Barack Obama on Monday struck a deal with Republicans to extend the Bush-era tax cuts and federal unemployment insurance as well as a host of other tax breaks, but now he faces an uphill battle to convince reluctant members of his own party to go along.

      Ignoring Democratic opposition, President Obama agreed to the compromise package, which cuts taxes on businesses in an effort to help the economy recover.

      The deal capped weeks of negotiations between leaders in Congress and an administration team led by U.S. Treasury Secretary Timothy Geithner. Ultimately, Obama accepted a deal that contradicts his long-held position that tax cuts should only be extended for lower and middle-class earners in exchange for a 13-month extension of jobless benefits for the long-term unemployed.

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    3. We Want to Hear From You: What Do You Think Of President Obama's Proposed Tax Deal? For months now, U.S. President Barack Obama watched as the expiration date for the Bush tax cuts drew closer and closer – with no signs of compromise among Congressional Republicans.

      So in an attempt to beat the Dec. 31 deadline – and the big tax increase facing American individuals and businesses – President Obama on Monday struck a controversial compromise with Republicans.

      Pundits are now questioning his call. Did President Obama cave to pressure, or did he pull off a sly political coup? Will this decision aid a still-struggling U.S. recovery, or will it add to the mountain of existing U.S. debt and stick future generations with the tab?

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    4. Will Midterm Elections Ignite a Stock Market Rally? The Democrats and Republicans have spent a record $3.5 billion in preparation for this year's midterm elections. But regardless of the outcome - whether you're a Democrat or Republican - the good news is that the stock market traditionally has performed well during midterm election cycles.

      "The question is, 'Did the markets go up in the midterm election years by more than average in non-election years?' Brian Gendreau, market strategist for Financial Network told U.S. News & World Report. "And the answer is, 'Yes, by a huge amount more.'"

      In the period from 1922 to 2006, the average gain of the Dow Jones Industrial Average over the 90 trading days following midterm elections (roughly November until mid-March) was 8.5%, according to a new study authored by Gendreau. That's almost 5% higher than the Dow's gains in non-election years.

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    5. Investment Strategies: Three Ways to Profit – No Matter Who Wins Tuesday's Midterm Elections If you're worried that next week's midterm elections could further cloud an already-uncertain investment landscape, take a page from the investment playbook of Money Morning's Keith Fitz-Gerald: Position yourself to profit no matter which party wins on Tuesday.

      During an interview with Fox Business Network journalist Stuart Varney yesterday (Tuesday), Fitz-Gerald detailed three strategies that will afford investors both safety and significant profit potential - whether the Democrats or Republicans carry the day.

      For the full story - and a look at the video - please click here... Read More...
    6. We Want to Hear From You: What Are the Top Three Issues You Want To See Addressed After Midterm Elections? A tense Congressional tug-of-war will come to an end in less than a week, when the intensely sought-after seats in the U.S. House of Representatives and Senate are filled after the Nov. 2 midterm elections.

      The Republican-Democrat contest is the hottest in years. The voter debate is about which candidates will be the most likely to lift the United States out of a morass marked by near-double-digit unemployment, sluggish economic growth and a terrifying $1.29 trillion budget deficit.

      As campaigning time wanes, it's clear that an increasing number of seats are vulnerable.

      "Let me tell you something," U.S. Vice President Joe Biden wrote Monday. "I've been around campaigns for a long time and I have never seen a midterm election with this many races in play."

      Experts described this campaign season as more volatile than most because of a major possible shift in power.

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    7. Question of the Week: Investors Prepare for State and Local Governments' Tight Budgets It's been 25 years since state and local governments across the United States were in such bad shape - and the budgetary pain is far from over.

      The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.

      "While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.

      A study released last week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.

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    8. Money Morning Mailbag: Tobin Tax the Only Solution to Problems Posed by High Frequency Trading An episode of the television news program "60 Minutes" that aired Oct. 10 highlighted investors' fears over the growing trend of high frequency trading (HFT) run by a world of "supercomputers."

      The "60 Minutes" piece prompted this letter from a reader wondering if the technological shift means it's time to readjust investment strategy.

      Sunday night on "60 Minutes" they had a story about high-speed computers that are out-trading humans. Is it time to refocus on the world stage and find tangible rather than paper investments to put your money in? A partnership in a retail or manufacturing venue surely is more transparent than the stock market.

      --Roman

      Money Morning has been examining the effects of high frequency trading for years. In August 2009 Contributing Editor Martin Hutchinson said high frequency trading systems were front-running the market.

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    9. We Want to Hear From You: Are You Vulnerable to the Budgetary Woes of Your State and Local Governments? It's been 25 years since state and local governments across the United States were in such bad shape - and the budgetary pain is far from over.

      The state-funding gap is growing, local governments lost 76,000 jobs last month, and property tax receipts are slated to fall for years.

      "While the recession might have officially ended on the national level, cities are in the eye of the storm and the problems are intensifying," Christopher Hoene, a director at the National League of Cities, told The Financial Times.

      A study released this week showed that big U.S. cities could face a painful financial squeeze: Their pension plans are under-funded to the tune of $547 billion.

      Read More...