Kardashianomics

There are lots of reasons why marriage can be a good financial investment, including that marriage correlates with higher lifetime earnings. But of course for one (soon to be former) celebrity couple — Kim Kardashian and Kris Humphries — the payoff is much quicker, without that whole till-death-do-we-part commitment.

Ms. Kardashian, a reality TV persona, and Kris Humphries, a New Jersey Nets basketball player, were paid $17.9 million for media coverage and other promotional events related to their Aug. 20, 2011 wedding. Per The New York Post, these payments included:

* $15 million for four-hour, two-part wedding special on E!

* $2.5 million for exclusive photos with People magazine
* $300,000 for an exclusive engagement announcement with People
* $100,000 for exclusive rights to a bridal shower with Britain’s OK! mag
* $50,000 to have a bachelorette party at Tao in Las Vegas

And that’s not even including the in-kind payments they received, including $400,000 worth of Perrier Jouet Champagne and three $20,000 Vera Wang gowns.

Alas, on Monday the newlyweds announced their decision to divorce, 72 days after the wedding. As my colleague Don Van Natta Jr. points out, that comes to $10,358.80 per hour (or $5,179.40 each if split evenly, though I haven’t see the prenup).

Not a bad business to be in. I’m guessing that selling the publicity rights to the divorce hearings might be even more lucrative.

Rich Get Biggest Break in Perry Tax Plan, Study Finds

CATHERINE RAMPELL

Dollars to doughnuts.

Gov. Rick Perry’s proposal for an opt-in flat tax would primarily benefit the wealthiest Americans, according to a new analysis from the Tax Policy Center, a nonpartisan research organization. Compared with current tax policy, the plan would most likely reduce federal tax revenue by $570 billion, or about 15 percent.

Dollars to doughnuts.

The plan, released last week as part of Mr. Perry’s campaign for the Republican presidential nomination, allows taxpayers to calculate their personal income taxes under the existing tax code, which is progressive. But it also allows taxpayers to instead have their income taxed at a flat 20 percent rate. In this alternative system, long-term capital gains, qualified dividends and Social Security benefits would not be taxed, and only a handful of deductions would be allowed. Once a household chooses the new system, it cannot switch back.

Because no one would be forced to use the alternate system, Mr. Perry has said, no one would have to pay higher taxes (at least initially; presumably if a family’s income changes a few years after entering the plan, it may no longer be advantageous). Even so, the greatest beneficiaries of the flat-tax option — that is, the households that would be most likely to switch to this system — are far and away the highest earners:

Of all households in the bottom quintile of the tax distribution, only 18.9 percent would pay less in taxes under the Perry plan.

Meanwhile, 83.3 percent of households in the top quintile would get a tax cut. Closer inspection shows that almost every household in the top 1 percent would be offered a tax cut.

The size of the typical tax cut is also much larger for the richest households, both in raw numbers and as a share of that household’s income. For households in the top 0.1 percent, for example, after-tax income would rise by 27.4 percent. If every American household, however, chose the flat-tax system, after-tax incomes across the country would increase by an average of just 5.3 percent.

In addition to changes to individual income taxes, the Perry plan would also reduce the corporate income tax rate to 20 percent from 35 percent; allow companies to expense all investment purchases immediately; make any income that American companies earn abroad exempt from United States federal taxes; and repeal the federal estate taxes and various taxes contained in the Affordable Care Act.

The Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution, has also created tables showing tax cuts by dollar income (as opposed to percentile) and how families with different marital structures and varying numbers of children would most likely be affected.

Dow drops 2.3% for the day, gains 9.5% in October

A sell-off on Monday dented stocks' big advance for October, as worries about Europe's debt crisis flared again and the failure of brokerage MF Global Holdings Inc. rattled Wall Street.

The Dow Jones industrial average slumped 276.10 points, or 2.3%, to close at 11,955.01, the largest one-day drop in four weeks.

For October overall the Dow rallied 1,042 points, or 9.5%, the biggest monthly gain since October 2002.

The Standard & Poor’s 500 index fell 31.79 points, or 2.5%, to 1,253.30 on Monday. The S&P jumped 10.8% for the month, its best gain in nearly two decades, as recession worries faded.

Trading volume was relatively moderate Monday, suggesting there was no mad rush for the exits, though selling accelerated near the closing bell.

Many analysts had warned at the end of last week that the market was overdue for a pullback after soaring for most of October. In Wall Street parlance, stocks were “overbought.”

Monday’s headlines brought good excuses to sell. Italian government bond yields rose, raising fresh doubts about Europe's latest plan to solve its debt crisis.

When European leaders on Thursday announced their new strategy to end the debt nightmare, a key to the plan was to make investors feel confident about buying Italian bonds, thereby driving interest rates down. Instead, yields are rising.

Most European stock markets slid between 2.8% and 3.8% on Monday, after rocketing in the aftermath of the rescue-plan announcement.

MF Global’s failure, though not a total surprise, spooked investors by resurrecting memories of the collapse of Lehman Bros. in September 2008.

Some investors and traders rushed into the usual havens: U.S. Treasury bonds and the dollar. The yield on the 10-year T-note dived to 2.11% from 2.32% on Friday. The dollar rallied against most currencies, helped in part by Japan’s decision to try to beat back the yen from all-time highs.

On Wall Street, the bulls know they have history on their side in the near term -- if you believe that the U.S. economy will keep growing, Europe won’t implode and no other major disaster looms: Since 1950, November and December have been the stock market’s best two-month period of the year, on average, as investors often look ahead to the new year with optimism.

RELATED:

Rising Italian bond yields cast doubt on Europe rescue plan

MF Global fails, first U.S. casualty of Europe debt crisis

EU announces new plan to tackle debt crisis

-- Tom Petruno

Photo: The New York Stock Exchange floor on Monday. Credit: Brendan McDermid / Reuters

Dollar surges as global fears rise and Japan tries to beat down yen

The dollar is back to playing the strongman of world currencies -- a bad sign for markets if it continues.

The buck soared Monday against other major and minor currencies as Japan intervened to halt the yen’s surge and as new worries about Europe fueled a classic rush for safety.

Markets also were on edge after securities firm MF Global filed for bankruptcy, a casualty of Europe’s financial crisis.

The DXY index of the dollar’s value against six other major currencies jumped almost 2% to 76.54, its biggest one-day move this year. But the gain just pushed the index back to where it was Oct. 20.

The dollar surged in September as Europe seemed closer to a meltdown and as global recession fears mounted. In October the buck reversed course as stock markets rallied and investors began to feel more comfortable taking risks in other currencies.

On Monday, safety considerations once again trumped everything else. The euro tumbled 2.2% to $1.383 by 1 p.m. PDT as rising Italian bond yields cast fresh doubt on Europe's financial rescue plan.

The dollar’s biggest move was against the yen, which had hit a record high against the greenback Friday, posing an ever-rising threat to Japan’s export economy.

That finally pushed the Japanese government into action Monday, selling yen and buying dollars in the open market. The dollar jumped 3.1%, to 78.18 yen from 75.82 on Friday. But the U.S. currency still is down against the yen year to date. It was at 81.12 yen at the end of 2010.

"We started currency intervention this morning in order to take every measure against speculative and disorderly moves and to prevent risks to the Japanese economy from materializing," Prime Minister Yoshihiko Noda told parliament.

In the struggling global economy every country prefers a weak currency because everyone wants to export their way back to health.

It’s not a coincidence that U.S. stocks plunged in September as the dollar shot higher. Some of the worst-performing shares in September were those of U.S. exporters such as Boeing and Caterpillar, which potentially have a lot to lose if a rising dollar makes their products more expensive overseas.

On Monday Boeing and Caterpillar helped lead the Dow Jones industrial average’s slide. The Dow fell 276.10 points, or 2.3%, to close at 11,955.01. Boeing fell 3.3% and Caterpillar lost 2.4%.

RELATED:

Stocks slump as doubts grow about Europe rescue plan

MF Global fails, first U.S. casualty of Europe debt crisis

-- Tom Petruno

Photo: A currency trader in Tokyo on Monday. Credit: Tomohiro Ohsumi / Bloomberg News

Boeing to establish center in Florida for new spaceship program

Aerospace giant Boeing Co. announced plans to establish a headquarters for its new spaceship program at NASA’s Kennedy Space Center in Cape Canaveral, Fla.

The Chicago company is in the process of developing a seven-person spaceship, dubbed the Crew Space Transportation-100, for the job of ferrying astronauts to and from the International Space Station now that the space shuttle program is over.

Boeing will consolidate the program’s engineering and manufacturing operations, which are now spread across the country in space-centric cities like Huntington Beach, Houston and Huntsville, Ala. Boeing’s decision is expected to bring back high-paying aerospace jobs to the nation’s “space coast,” near Cape Canaveral, which lost thousands of jobs when the shuttle program was retired this year.

"We selected Florida due to the cost benefits achieved with a consolidated operation, the skilled local workforce and proximity to our NASA customer,” John Mulholland, Boeing’s program manager of commercial programs, said in a statement.

Boeing estimated that the workforce at Kennedy Space Center will ramp up to 550 local jobs by December 2015. Although that's a relatively small number compared with the tens of thousands employed during the shuttle program, the announcement was heralded by state officials.

"We are extremely pleased that Boeing will locate its commercial crew headquarters here in Florida," said Frank DiBello, president of Space Florida, the state’s aerospace economic development agency. "This positions our state well for future growth and a leadership role in NASA's next-generation human space exploration initiatives. It is also a key factor in ensuring Florida's space-related economy continues to thrive after shuttle retirement."

In the coming years, NASA plans to rely on private businesses for low–orbit space missions such as carrying cargo to the space station. The space agency hopes that one day the companies will be able to take astronauts into space as well.

Modern-day industrialists have pounced on this opportunity, developing rockets and space ships to assume the responsibilities.

Boeing's contender to fill the role is an Apollo-like space capsule. Locally, engineers in Huntington Beach are developing the capsule's pressure vessel, base heat shield and autonomous docking systems.

RELATED:

Boeing cuts 100 workers in Huntington Beach

NASA awards millions to four firms to privately develop rockets and spacecraft

The space shuttle's Southland legacy

-- W.J. Hennigan

twitter.com/wjhenn

Image: An artist's rendering of Boeing's Crew Space Transportation-100. Composed of a crew module and a service module, the capsule could carry a crew of seven and would be used to support the International Space Station. Credit: Boeing

Honda will slash production because of new parts shortage

 

Just as Honda was recovering from a production disruption and inventory shortage caused by the Japanese earthquake, it has been hit with another natural disaster –- flooding in Thailand that is causing a parts shortage.

Honda says it will slash production at its U.S. factories by half through Nov. 10 and shutter its factories for a day on Nov. 11. It also has cut all overtime production for November.

About 87% of the Honda and Acura automobiles that the automaker sells in the U.S. are assembled here.

Most of the parts come from North American suppliers, but Honda said it also buys “a few critical electronic parts” from Thailand and other regions of the world.

Honda said it is working with suppliers in Thailand and elsewhere in its network to resume production of the parts it needs for its North American factories.

Honda said it will try to help out its U.S. factory workers by counting any “non-production days” as “no pay, no penalty” days. That means Honda employees can report to work, use a vacation day, or take the day off without compensation or penalty.

Honda’s U.S. sales have slid 6% to just under 860,000 vehicles so far this year. It’s share of the U.S. market has slid to 9% from 10.6%.  A portion of the decline has come from the shortage of vehicles it had available for sale caused by the parts shortages from the Japanese earthquake and tsunami in March.

Meanwhile, Honda said that its net profit for its fiscal second quarter ending in September fell 56% to 60.4 billion yen ($788 million.) Revenue slid 16% to 1.885 trillion yen ($24.6 billion.)

RELATED:

European brands have reliability woes

Ford tumbles in Consumer Reports reliability ratings

Detroit automakers still struggle to win California sales

-- Jerry Hirsch

Twitter.com/LATimesJerry

Photo: 2012 Honda Civic. Credit: Honda Motor Co. 

Greece must vote no to the bailout terms

Eurozone policymakers will view with horror George Papandreou's decision to hold a referendum on the Greek bailout package. Less than a week after agreeing a "comprehensive" deal to resolve Europe's sovereign debt crisis, the whole thing already seems to be coming apart at the seams. The Greek prime minister's commitment to a plebiscite introduces a further element of extreme uncertainty.

But for everyone, it could also be a blessing in disguise, for a vote on the bailout package would also in effect be a vote on continued membership of the euro. If it went against Mr Papandreou, his government would fall, and given that Greece could no longer deliver on the conditions attached to the bailout, public money to pay wages, pensions and bills would soon run out. The country would descend into chaos.

To restore order, whoever stepped into the ensuing vacuum would have to impose capital controls and leave the euro. It would be a cataclysmic economic event, but very probably better than the death by a thousand cuts that awaits if Greece agrees the bailout. The sudden death of a no vote is what Mr Papandreou will use as his chief weapon in presenting the case for acceptance of the bailout terms. But it is by no means clear he is going to win.

Things are about to get really interesting.