Sub-prime mortgage problem for dummies

Good article about how collateralized debt obligations were used to generate fees from sub-prime mortgage loans. There is perhaps an inevitable tone to the article which now makes it seem obvious what the effects of these type of financial instruments would be. But why wasn't it more evident at the time to those responsible for looking out for risks? I'm uncomfortable with assuming that everyone is corrupt. But the combination of a few corrupt individuals, executives desperate to hit a quarterly revenue target and regulators who don't wish to appear ignorant is the mix I would bet on.

See complete WSJ article copied below.
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Wall Street Wizardry Amplified Credit Crisis

A CDO Called Norma Left 'Hairball of Risk'; Tailored by Merrill Lynch

By CARRICK MOLLENKAMP and SERENA NG

In recent years, as home prices and mortgage lending boomed, bankers found ever-more-clever ways to repackage trillions of dollars in loans, selling them off in slivers to investors around the world. Financiers and regulators figured all the activity would disperse risk, and maybe even make markets safer and stronger.

Then along came Norma.

Norma CDO I Ltd., as its full name goes, is one of a new breed of mortgage investments created in the waning days of the U.S. housing boom. Instead of spreading the risk of a global home-finance boom, the instruments have magnified and concentrated the effects of the subprime-mortgage bust. They are now behind tens of billions of dollars of write-downs at some of the world's largest banks, including the $9.4 billion announced last week by Morgan Stanley.

Norma illustrates how investors and Wall Street, in their efforts to keep a lucrative market going, took a good idea too far. Created at the behest of an Illinois hedge fund looking for a tailor-made bet on subprime mortgages, the vehicle was brought into existence by Merrill Lynch & Co. and a posse of little-known partners.

In its use of newfangled derivatives, Norma contributed to a speculative market that dwarfed the value of the subprime mortgages on which it was based. It was also part of a chain of mortgage-linked investments that took stakes in one another. The practice generated fees for a handful of big banks. But, say critics, it created little value for investors or the broader economy.

"Everyone was passing the risk to the next deal and keeping it within a closed system," says Ann Rutledge, a principal of R&R Consulting, a New York structured-finance consultancy. "If you hold my risk and I hold yours, we can say whatever we think it's worth and generate fees from that. It's like...creating artificial value."

Only nine months after selling $1.5 billion in securities to investors, Norma is worth a fraction of its original value. Credit-rating firms, which once signed off approvingly on the deal, have slashed its ratings to junk.

The concept behind Norma, known as a collateralized debt obligation, has been in use since the 1980s. A CDO, most broadly, is a device that repackages the income from a pool of bonds, derivatives or other investments. A mortgage CDO might own pieces of a hundred or more bonds, each of which contains thousands of individual mortgages. Ideally, this diversification makes investors in the CDO less vulnerable to the problems of a single borrower or security.

The CDO issues a new set of securities, each bearing a different degree of risk. The highest-risk pieces of a CDO pay their investors higher returns. Pieces with lower risk, and higher credit ratings, pay less. Investors in the lower-risk pieces are first in line to receive income from the CDO's investments; investors in the higher-risk pieces are first to take losses.

But Norma and similar CDOs added potentially fatal new twists to the model. Rather than diversifying their investments, they bet heavily on securities that had one thing in common: They were among the most vulnerable to a rise in defaults on so-called subprime mortgage loans, typically made to borrowers with poor or patchy credit histories. While this boosted returns, it also increased the chances that losses would hit investors severely.

Also, these CDOs invested in more than simply subprime-backed securities. The CDOs held chunks of each other, as well as derivative contracts that allowed them to bet on mortgage-backed bonds they didn't own. This magnified risk. Wall Street banks took big pieces of Norma and similar CDOs on their own balance sheets, concentrating the losses rather than spreading them among far-flung investors.

"It is a tangled hairball of risk," Janet Tavakoli, a Chicago consultant who specializes in CDOs, says of Norma. "In March of 2007, any savvy investor would have thrown this...in the trash bin."

Penny Stocks

Norma was nurtured in a small office building on a busy road in Roslyn, on the north shore of New York's Long Island. There, a stocky, 37-year-old money manager named Corey Ribotsky runs a company called N.I.R. Group LLC. Mr. Ribotsky came not from the world of mortgage securities, but from the arena of penny stocks, shares that trade cheaply and often become targets of speculation or manipulation.

N.I.R. and its affiliates have taken stakes in 300 companies, some little-known, including a brewer called Bootie Beer Corp., lighting firm Cyberlux Corp. and water-purification company R.G. Global Lifestyles. Mr. Ribotsky's firms are in litigation in New York federal court with all three companies, which claim N.I.R. manipulated their share prices. Through its lawyer, N.I.R. denies wrongdoing and has accused the companies of failing to repay loans.

Mr. Ribotsky's firm attracted the attention of Merrill Lynch in 2005. The top underwriter of CDOs from 2004 to mid-2007, Merrill had generated hundreds of millions of dollars in profits from assembling and then helping to distribute CDOs backed by mortgage securities. For each CDO Merrill underwrote, the investment bank earned fees of 1% to 1.50% of the deal's total size, or as much as $15 million for a typical $1 billion CDO.

To keep underwriting fees coming, Merrill recruited outside firms, called CDO managers. Merrill helped them raise funds, procure the assets for their CDOs and find investors. The managers, for their part, choose assets and later monitor the CDO's collateral, although many of the structures don't require much active management. It was an attractive proposition for many start-up firms, which could earn lucrative annual management fees.

Mr. Ribotsky's entry into the world of CDO managers began at Engineers Country Club on Long Island. There, in 2005, he met Mitchell Elman, a New York criminal-defense lawyer who specializes in drunk-driving and drug cases. Mr. Elman introduced Mr. Ribotsky to Kenneth Margolis, then a high-profile CDO salesman at Merrill, according to people familiar with the situation. Mr. Elman declined to comment.

'It Sounded Interesting'

Mr. Margolis, who in February 2006 became co-head of Merrill's CDO banking business, played a key role in seeking out start-up firms to manage CDOs. He put Mr. Ribotsky in contact with a few people who had experience in the mortgage debt market. They included two former Wachovia Corp. bankers, Scott Shannon and Joseph Parish III, who left Wachovia and established their own CDO management firm.

Mr. Ribotsky decided to team up with Messrs. Shannon and Parish. "It sounded interesting and that's how we ventured into it," Mr. Ribotsky says. Messrs. Parish and Shannon declined to discuss specifics of Norma.

Together the trio set up a company called N.I.R. Capital Management, which over the next year or so took on the management of three CDOs underwritten by Merrill.

In 2006, Mr. Ribotsky says Merrill came to N.I.R. with a new proposition: One of the investment bank's clients, a hedge fund, wanted to invest in the riskiest piece of a certain type of CDO. Merrill worked out a general structure for the vehicle. It asked N.I.R. to manage it.

"It was already set up when it was presented to us," Mr. Ribotsky says. "They interviewed a bunch of managers and selected our team."

The CDO would be called Norma, after a small constellation in the southern hemisphere. According to people familiar to the matter, the hedge fund was Evanston, Ill.-based Magnetar, a fund that shared its name with a powerful neutron star. Magnetar declined to comment.

On Dec. 7, 2006, Norma was established as a company domiciled in the Cayman Islands. N.I.R., as its manager, would earn fees of some 0.1%, or about $1.5 million a year.

Norma belonged to a class of instruments known as "mezzanine" CDOs, because they invested in securities with middling credit ratings, averaging triple-B. Despite their risks, mezzanine CDOs boomed in the late stages of the credit cycle as investors reached for the higher returns they offered. In the first half of 2007, issuers put out $68 billion in mortgage CDOs containing securities with an average rating of triple-B or the equivalent -- the lowest investment-grade rating -- or lower, according to research from Lehman Brothers Holdings Inc. That was more than double the level for the same period a year earlier.

Buying Protection

For Norma, N.I.R. assembled $1.5 billion in investments. Most were not actual securities, but derivatives linked to triple-B-rated mortgage securities. Called credit default swaps, these derivatives worked like insurance policies on subprime residential mortgage-backed securities or on the CDOs that held them. Norma, acting as the insurer, would receive a regular premium payment, which it would pass on to its investors. The buyer of protection, which was initially Merrill Lynch, would receive payouts from Norma if the insured securities were hurt by losses. It is unclear whether Merrill retained the insurance, or resold it to other investors who were hedging their subprime exposure or betting on a meltdown.

Many investment banks favored CDOs that contained these credit-default swaps, because they didn't require the purchase of securities, a process that typically took months. With credit-default swaps, a billion-dollar CDO could be assembled in weeks.

Multiplying Risk

In principle, credit-default swaps help banks and other investors pass along risks they don't want to keep. But in the case of subprime mortgages, the derivatives have magnified the effect of losses, because they allowed bankers to create an unlimited number of CDOs linked to the same mortgage-backed bonds. UBS Investment Research, a unit of Swiss bank UBS AG, estimates that CDOs sold credit protection on around three times the actual face value of triple-B-rated subprime bonds.

The use of derivatives "multiplied the risk," says Greg Medcraft, chairman of the American Securitization Forum, an industry association. "The subprime-mortgage crisis is far greater in terms of potential losses than anyone expected because it's not just physical loans that are defaulting."

Norma, for its part, bought only about $90 million of mortgage-backed securities, or 6% of its overall holdings. Of that, some were pieces of other CDOs mostly underwritten by Merrill, according to documents reviewed by The Wall Street Journal. These CDOs included Scorpius CDO Ltd., managed by a unit of Cohen & Co., a company run by former Merrill CDO chief Christopher Ricciardi. Later, Norma itself would be among the holdings of Glacier Funding CDO V Ltd., managed by an arm of New York mortgage firm Winter Group.

A Winter Group official said the company declined to comment, as did Cohen & Co.

Such cross-selling benefited banks, because it helped support the flow of new CDOs and underwriting fees. In fact, the bulk of the middle-rated pieces of CDOs underwritten by Merrill were purchased by other CDOs that the investment bank arranged, according to people familiar with the matter. Each CDO sold some of its riskier slices to the next CDO, which then sold its own slices to the next deal, and so on.

Propping Up Prices

Critics say the cross-selling reached such proportions that it artificially propped up the prices of CDOs. Rather than widely dispersing exposure to these mortgages, the practice circulated the same risk among a relatively small number of players.

By early 2007, Norma was ready to face the ratings firms. Different slices of CDOs get different ratings because some protect the others from losses to defaults. A "junior" slice might take the first $30 million in losses on a $1 billion CDO, while a triple-A "senior" slice would not be affected until losses reached $200 million or more.

But the system works only if the securities in the CDO are uncorrelated -- that is, if they are unlikely to go bad all at once. Corporate bonds, for example, tend to have low correlation because the companies that issue them operate in different industries, which typically don't get into trouble simultaneously.

Mortgage securities, by contrast, have turned out to be very similar to one another. They're all linked to thousands of loans across the U.S. Anything big enough to trigger defaults on a large portion of those loans -- like falling home prices across the country -- is likely to affect the bonds in a CDO as well. That's particularly true for the kinds of securities on which mezzanine CDOs made their bets. Triple-B-rated bonds would typically stand to suffer if losses to defaults on the underlying pools of loans reached about 10%.

Easy Credit

When rating companies analyzed Norma, though, they were looking backward to a time when rising house prices and easy credit had kept defaults on subprime mortgages low. Norma's marketing documents noted plenty of risks for investors but also said that CDO securities had a high degree of ratings stability.

Beyond that, rating firms say they had reason to believe that the securities wouldn't all go bad at once as the housing market soured. For one, each security contained mortgages from a different mix of lenders, so lending standards might differ from security to security. Also, each security had its own unique team of companies collecting the payments. Yuri Yoshizawa, group managing director at Moody's Investors Service, says the firm figured some of these mortgage servicers would be better than others at handling problematic loans.

In March, Moody's, Standard & Poor's and Fitch Ratings gave Norma their seal of approval. In its report, Fitch cited growing concern about the subprime mortgage business and the high number of borrowers who obtained loans without proof of income. Still, all three rating companies gave slices comprising 75% of the CDO's total value their highest, triple-A rating -- implying they had as little risk as Treasury bonds of the U.S. government.

Merrill and N.I.R. took Norma to investors. Together, they produced a 78-page pitchbook that bore Merrill's trademark bull. Inside were nine pages of risk factors that included standard warnings about CDOs. The pitchbook also extolled mortgage securities, which it noted "have historically exhibited lower default rates, higher recovery upon default and better rating stability than comparably rated corporate bonds."

Most importantly, though, Norma offered high returns: On a riskier triple-B slice, Norma said it would pay investors 5.5 percentage points above the interest rate at which banks lend to each other, known as the London interbank offered rate, or Libor. At the time, that translated into a yield of over 10% on the security -- compared with roughly 6% on triple-B corporate bonds.

Network of Contacts

Mr. Ribotsky says the selling required little effort, as Merrill drummed up interest from its network of contacts. "That's what they get their fees for," he says.

Norma sold some $525 million in CDO slices -- largely the lower-rated ones with higher returns -- to investors. Merrill declined to say whether it kept Norma's triple-A rated, $975 million super-senior tranche or sold it to another financial institution.

Many investment banks with CDO businesses -- Citigroup Inc., Morgan Stanley and UBS -- frequently kept or bought these super-senior pieces, whose lower returns interested few investors. In doing so, they bet that the top CDO slices, which typically comprised as much as 60% of the whole CDO, were insulated from losses.

By September, Norma was in trouble. Amid a steep decline in house prices and rising defaults on mortgage loans, the value of subprime-backed securities went into a free fall. As increasingly worrisome delinquency data rolled in, analysts upped their estimates of total losses on subprime-backed securities issued in 2006 to 20% or more, a level that would wipe out most triple-B-rated securities.

Within weeks, ratings firms began to change their views. In October, Moody's downgraded $33.4 billion worth of mortgage-backed securities, including those which Norma had insured. Those downgrades set the stage for a review of CDOs backed by those securities -- and then further downgrades.

Mezzanine CDOs such as Norma were the hardest hit. On Nov. 2, Moody's slashed the ratings on seven of Norma's nine rated slices, three all the way from investment-grade to junk. Fitch downgraded all nine slices to junk, including two that it had rated triple-A.

Worse Performances

Other mezzanine CDOs, including some underwritten by other investment banks, have had worse performances. Around 30 are now in default, according to S&P. Norma is still paying interest on its securities. It is not known whether it has had to make payouts under the credit default swap agreements.

Ratings companies say their March opinions represented their best read at the time, and called the subprime deterioration unprecedented and unexpectedly rapid. "It's one of the worst performances that we've seen," says Kevin Kendra, a managing director at Fitch. "The world has changed quite drastically -- and our view of the world has changed quite drastically."

By mid-December, $153.5 billion in CDO slices had been downgraded, according to Deutsche Bank. Because banks owned the lion's share of the mezzanine CDOs, they bore the brunt of the losses. In all, banks' write-downs on mortgage investments announced so far add up to more than $70 billion.

For larger banks, holdings of mezzanine CDOs could account for one-third to three-quarters of the total losses. In addition to the $9.4 billion fourth-quarter write-down Morgan Stanley just announced it would take, Citigroup has projected its fourth-quarter write-down could reach $11 billion. UBS said this month it would take a $10 billion write-down after taking a $4.4 billion third-quarter loss.

Merrill, for its part, took a $7.9 billion write-down on mortgage-related holdings in the third quarter. Analysts expect it to write down a similar amount in the current quarter, which would represent the largest losses of any bank. News of the losses have led to the ouster of CEO Stan O'Neal and Osman Semerci, the bank's global head of fixed income. Mr. Margolis left this summer.

Mr. Ribotsky says he doesn't have plans to do any more CDOs at the current time. "Obviously, we're not happy about the occurrences in the marketplace," he says.

Write to Carrick Mollenkamp at carrick.mollenkamp@wsj.com and Serena Ng at serena.ng@wsj.com

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AMT – 2008 Tax Law changes

December 27, 2007

IRS: Tax Fix Delays Refunds

By THE ASSOCIATED PRESS

WASHINGTON (AP) -- More than 3 million people will have to wait until February to get their tax refunds because of Congress' late fix to the alternative minimum tax, the IRS said Thursday.

Congress put a one-year freeze on growth of the alternative minimum tax last week, shielding many middle- and upper-middle income taxpayers from first exposure to the tax. But Congress' late action means the Internal Revenue Service won't be able to start processing five AMT-related forms until February, delaying potential refunds for those people until that month.

''We regret the inconvenience the delay will mean for million of early tax filers, especially those expecting a refund,'' acting IRS Commissioner Linda Stiff said. [JC note: there was no record of laughter following her remarks].

As many as 13.5 million people will have to wait until February 11 to start filing with the five AMT-related forms, but the IRS said filing patterns show only between 3 million to 4 million of those people file during the early tax season anyhow.

The five forms affected by the delay are:

-- Form 8863, Education Credits.

-- Form 5695, Residential Energy Credits.

-- Form 1040A's Schedule 2, Child and Dependent Care Expenses for Form 1040A Filers.

-- Form 8396, Mortgage Interest Credit and

-- Form 8859, District of Columbia First-Time Homebuyer Credit.

Source: NYT article

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Elephant Man by Gabriela Costales

Nov 2007

This movie is not one of my favorite ones because it is very sad and the black and white feature makes it scary. John Merrick, or as known by everyone else in the world, the Elephant Man, due to his enormous features, has been treated terribly all his life.

He makes a living by being part of a traveling freak show carnival group. Everyone does not believe that he could possibly be human, so he frightens many people. He would frighten me too because he looked like something – not someone – that’s in my nightmares. One day a surgeon named Frederick Treves realized that John was human and decided to admit him into the hospital where he worked. Once there they learn that John is an intelligent man who can speak, read and write. He even begins to construct a model of a Church that is outside his window.

What really made this movie depressing was how people treated John as an animal and how for him, a simple task like watching a play, was a miracle. Another sad part was to realize that although John loved his mother dearly and thought she was the ‘most beautiful woman in the world,’ she probably hated him for his deformities. This movie gave me a new perspective on life – to know that there are others that suffer a million times worse than we do.

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I'm Cuban, and if I Wasn't, I'd Pay to be One

ARTICULO SOBRE LOS CUBANOS ESCRITO POR EL PERIODISTA MEXICANO VICTOR MONA

Los cubanos Salen de una isla pequeña y se han diseminado por todo el mundo. Uno es profesor en una universidad de Australia; otro, inauguró en Alaska un restaurante. Nada los detiene, ni el frio ni el calor. Los seduce el trópico de la Florida, pero soportan igualmente a pie firme los hielos de Boston y Nueva York. No mendigan, trabajan. Los que en Cuba eran pobres, aquí son ricos. Los que allá eran medio pelo, aquí son pelo y medio.

Ningun obstáculo detiene su laboriosidad beligerante si la oferta es digna. Uno es rector de la Universidad; otro, maquilla muertos. Cambian, pero solo en la superficie. En Miami siguen jugando la bolita (lotería Prohibida), peleando gallos a escondidas y enviando los hijos a la escuela privada. En Madrid, estan contra Jose Luis Rodríguez Zapatero y en Caracas, contra Hugo Chavez, siempre en la oposición.
Se les critica y se les envidia pero en el fondo se les admira. Gallegos por el trabajo y judios por la voluntad de sobrevivir, constituyen una legión empecinada que no se deja ignorar. Traen su musica calurosa, el ruido de sus tambores, los frijoles negros y el bistec de palomilla con moros y maduros. Pero traen sobre todo la simpatia, la cordialidad y la laboriosidad.

Quienes son? Son los cubanos del destierro, la unica población mundial trasplantada, que (salvo los hebreos) en más de un tercio de siglo no han perdido su identidad. Los que admiraban a Cuba desde lejos como ejemplo supremo de pujanza latinoamericana, los que veian a Cuba como un milagro etnico y cultural, donde todo parecia un relajo pero todo funcionaba bien,

Ya no tienen que ir a Cuba para conocerla. Aquí la tienen dentro de los mismos Estados Unidos. Esta es Cuba. Estos son los cubanos. Exagerados, fanfarrones, ruidosos, sí, pero tambien intensos, profundamente creadores y buenos amigos. Y que no han hecho en estos 47 años de destierro los cubanos para poder sobrevivir con dignidad? Cuál actividad manual o intelectual no han ensayado en este o en aquel pais, por complicada que pareciera, lo han realizado para no quedarse detrás, para no dejarse discriminar.

En alguna de esas actividades han llegado tan lejos que superan a emigraciones que los precedieron por cerca de medio siglo. No hay hospital en Estados Unidos donde no haya hoy un medico cubano. No hay periódico donde no haya un periodista cubano, ni banco donde no haya un banquero cubano, ni publicitaria donde no haya un publicitario cubano, ni escuela donde no haya un maestro cubano, ni universidad donde no haya un profesor cubano, ni comercio donde no haya un manager cubano.
En las Grandes Ligas del béisbol sus nombres tambien brillan. En Madrid, el primer poeta latinoamericano es un negro cubano.

En la Coca Cola, Kellog's, McCormick, Pepsi Cola y tantas otras su dirigente es o fué un cubano. En el Congreso de Washington hay cuatro cubanos, en el Senado federal se sientan dos cubanos, el Ministro de Comercio de E. U. es un cubano, la Viceministro de Salud es una doctora cubana. Caramba, son unos pocos en éste pais y llegaron hace muy poco tiempo.

En la tierras prestadas del extranjero parecen llevar siempre en la frente la marca del sitio de donde vienen. Los cubanos llevan a Cuba. La enaltecen y la honran, porque ademas de en la frente la llevan en el corazón.

Pero hay algo en el desterrado cubano, a mi juicio, superior a esa actividad profesional triunfante, y es su odio al despotismo del que huyen, su amor a la tierra que dejaron. Eso lo separa y lo define. Eso da a sus triunfos en medio del desarraigo, una grandeza que de otro modo no tendría. Por qué, preguntan algunos, no se acaban de quedar tranquilos los exiliados cubanos?

Por que no aceptan de una vez que perdieron la batalla? Se han afincado definitivamente en estas tierras hospitalarias que los han acogido y donde viven en lo material muchas veces mejor que como vivian en Cuba. Los que se preguntan ésto, no conocen a los cubanos. El cubano sabe esto. Aun teniendolo todo, si les falta Cuba, no tienen nada. Quizas por ello han hecho su Cuba aquí. Saben mas todavía que esta prosperidad de que disfrutan, lejos de su isla hambreada y aterrada, es en cierto modo una forma de traición. Por eso, si se le mira bien, se verá que a veces parece que el cubano rie, pero en realidad esta llorando por dentro.

Le nace el hijo, le crece, se le gradua en la Universidad, pero el cubano suspira. Ay, si estuviera en mi Cuba! Compra una casa, un auto, o una lancha y sigue suspirando. Ay! Si todo esto lo tuviera en Cuba! De una manera misteriosa, que no puede definir, hay un vinculo con aquello que tira de aquí hacia allá. Ahora que perdió a su pais, sabe que no puede vivir sin Cuba, y la sueña de noche, y le agiganta los valores y la embellece y la idealiza, y se culpa de no haberla entendido mejor, y la recrea en su cantos y bailes, y la revive en sus historias en sus costumbres y en sus comidas.

Por que compran hoy los cubanos mas libros cubanos que nunca? Por que tienen sus casas, sus negocios y sus oficinas llenas de palmas, de banderas, de escudos y de retratos de Jose Marti? Por qué aunque sean USA citizens SIGUEN SIENDO CUBANOS? Por qué se reunen en sus municipios formados en el exilio, borrando antiguos antagonismos de partido o clase?

Porque el cubano sabe que lo unico auténticamente suyo fue SU CUBA y que a ella quisiera el poder regresar. No les preocupa que le devuelvan la residencia o el negocio, si lo tenian. Lo unico que desean es volver a su tierra. La casa donde nació esta destruída, al pueblo se lo han puesto desconocido, la madre ha muerto. Pero no importa. El exiliado cubano quiere de todos modos ir a esa casa, a ese pueblo y a esa tumba. La Patria empieza ahí. En el exilio tropieza, yerra y se equivoca, pero está salvado tambien porque en el fondo de su ser nunca traicionó a Cuba.

Cuando llegue ese momento muchos volveran, otros no podran hacerlo, pero las semillas que dejaron donde estuvieron exiliados no los olvidará, perdurarán por siempre y para siempre porque lo hicieron con mucho sacrificio, tenacidad y amor. Y aunque a lo mejor no tendremos la oportunniad de leerlo, muchos escribirán sobre su paso aquí para orgullo de sus descendientes.

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Zulu Pigeon

A transponder, either directly hit or affected by nearby lightning, exploded with a flash and loud bang and sent debris flying at least 30 feet. A pigeon who had been on the line, flew up, hovered for about 5 seconds and sat right back down on the line.

Bad asses know no species-limitations.

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Christopher Buckley

From the book, Thank You for Smoking: Tobacco company executive addressing his cowed sales team:

People, what is going on out there? I look down this table, all I see are white flags. Our numbers are down all across the board. Teen smoking, our bread and butter, is falling like a shit from heaven! We don't sell Tic-Tacs for Christ's sake. We sell cigarettes. And they're cool and available and addictive. The job is almost done for us!

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Surf's Up by Daniel Costales -- # 41486

This movie was about a penguin named Cody Maverick who was the only surfer in his town. He had a brother and a mom. When he was young he met a legend name big Z. He was the one who really taught him surfing. All his life, Cody wanted to be just like him. But one day, a whale came to take any surfer to Penguin ‘U’ for the Big Z. Memorial surf-off.

When they got there, they found that Cody, couldn't see what he could do and left. But Cody chased after them and eventually came back to surf. On the way there he met a chicken named Chicken Joe, who was also a surfer who came from Wisconsin. When they got there, Cody saw Big Z’s shrine from his death, then he saw the champ who was named Tank Evans. When he was there, he did a one-on-one with him, lost, and step on a red urchin. So the lifeguard took him to a tree where this man was and cured him by peeing on his foot. A little later, Cody took him to a beach and then realized that he was Big Z, and realized that he didn't die. Then later on, the surf-off began and Tank Evans, Cody Maverick, and Chicken Joe were the finalists. Cody lost trying to save Chicken Joe from Tank Evans.

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Indiana Jones 4 by Nicole Galego

This past weekend, my family and I went to the movies to see Indiana Jones. As anyone else would, I had high expectations for the film due to the prior success of the famous Indiana Jones trilogy. I was excited to see what this new plot had to offer.

With past events like rolling boulders, temples of doom and cracking whips, I was experiencing a mixture of confusion and disappointment when I sat down to find a storyline full of paranormal discoveries, Russian communists and glowing skulls. Although some people were fascinated by the newer events in Indiana's adventures, I was unfazed by Steven Spielberg's attempts to have the last movie of the bunch be fresh & comedic.

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Words That Work by Frank Luntz

I was listening to an audio book [Words That Work] by Frank Luntz. He is known for his political work, but much of his insights are applicable outside the political arena. His main point is summarized in the following sentence;

It's not what you say, it's what people hear.

I've heard him on Fox discuss the ANWAR controversy and make the following point; exploring for alternate sources of energies is a better message than than drilling for oil, even if they constitute the same thing. It's one of those things which are annoyingly true. Below are his 10 rules of effective communication:

1. Simplicity: Use small words. Avoid words that might force someone to reach for the dictionary, because most Americans won't.
2. Brevity: Use short sentences. Be brief as possible. Never us a sentence when a phrase will do.
3. Credibility Is as Important as Philosophy. People have to believe it to buy it. If your words lack sincerity or if they contradict accepted facts, circumstances or perceptions, they will lack impact.
4. Consistency Matters. Repetition. Repetition. Repetition.
5. Novelty: Offer something new. Words that work often involve a new definition of an old idea.
6. Sound and Texture Matter. A string of words that have the same first letter, the same sound or the same syllabic cadence is more memorable than a random collection of sounds.
7. Speak Aspirationally. The key to successful aspirational language is to personalize and humanize the message to trigger an emotional remembrance.
8. Visualize. Paint a vivid picture.
9. Ask a Question. A statement put in the form of a rhetorical question can have much greater impact than a plain assertion.
10. Provide Context and Explain Relevance. You have to give people the "why" of a message before you tell them the "therefore" and the "so what."

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January 2008 – Business & Tax reminders

01/01 - Federal [Bank] Holiday

01/07 - IRA reminder - eligible to make IRA contributions up until April 15th

01/15 - All employers - payroll taxes due for monthly deposit filers

01/15 - Individuals. Make a payment of your estimated tax for 2007 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES. This is the final installment date for 2007 estimated tax. However, you do not have to make this payment if you file your 2007 return (Form 1040) and pay any tax due by January 31, 2008.

01/21 - Federal [Bank] Holiday - MLK Day

01/22 - State of Florida sales taxes are due

01/31 - All businesses - furnish Forms 1098 & 1099 to applicable recipients

01/31 - All employers - deposit FUTA tax owed thru Dec 2007 - if $500 or less

01/31 - All employers - Form 941, Employer's QUARTERLY Federal Tax Return. This form is due 1 month after the calendar quarter ends. Use it to report social security and Medicare taxes and withheld income taxes on wages if your employees are not farm workers or household employees.

01/31 - All employers. Give your employees their copies of Form W-2 for 2007 by January 31, 2008. If an employee agreed to receive Form W-2 electronically, post it on a website accessible to the employee and notify the employee of the posting by January 31.

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