second?

"In general this seems like a good idea since this keeps states from exacerbating the recession by laying off workers as revenues decline. Unfortunately many states (like California) have structural fiscal problems and were running budget deficits even during the housing boom. These states still need to fix their fiscal problems."

Umm... reward bad behavior by not punishing it and we'll never see the structural changes we need to.  To quote Bart Simpson: we're damed if we do, damned if don't.

I want to be a teacher.

This insures that the states will be back for more.

Between state aid, tax breaks, infrastucture, forclosure relief, and 600K retail jobs, $750 billion don't seem like much.

I hate to do this, but anyone have the Roubini call from today?

Out of curiosity, how much does RGE cost anyways?

I'd like to see at least some individuals or groups (like entire states!) be required to consider the reality of their finances. Instead they will be allowed (encouraged) to be more like the Federal Government.

For California, which was already a lost cause (all proposed solutions involve borrowing money, to a large extent), a balanced budget would ensure depression-level unemployment.

So a bailout from the Feds is great for us here in California. But like most of the solutions in this crisis, it just encourages bad behavior.

From that plot summary:

"The greenhouse effect has risen the temperature into nearly unbearable regions"

What the heck? 

BTW, Mish has a post up that is closely related to this topic:

Mish's Global Economic Trend Analysis: Massive Taxpayer Backlash Over Pension Crisis Is Coming 

It's about state and local pension absurdities.

It's like; "When will the camel just die" Forget about breaking his damn back...just put him outta' his misery.

China ups anti-graft crackdown amid economic woes

"Chinese President Hu Jintao has called for a renewed fight against corruption because of worries the financial crisis may boost graft, state media said Wednesday."

It would be nice to hear something similar from US leadership at any level.  Although I think Chinese punishments are a little harsher than we would want.

Mebbe it's time to look for a good slow gubmint plowhorse to use down here on the commune?
Aristophon | 01.14.09 - 12:15 am | #

Sorry, we're going to have to sell them all for glue in order to balance the budget.

BTW, "I refute it thus" is my favorite Johnson quote (and I was Anon above -- had a CR companion hiccup).

ShortCourage

thanks for the link to Mishs stuff about pension systems failures

wait

what am i sayin

thanks?

after readin that shiznet im ready to go to a high place and

we are so seriously effed

makes me think TPTB are gonna run those printing presses until the green ink runs like blood in the street

weeeee doggie...jaget that wiff of inflation?

its out there... just beyond the depression horizo

Strings, strings, strings, strings...

States accepting money will be required to (fill-in-the-blank).

Yeah right if folks believe this will save the pensioneeers... the three pensioneers! A fireman, a policeman, and a teacher! Fighting to make sure they can retire at 45 and you get to retire at 145! But they are there for you providing great service!

I'm sorry, but this country is a joke. California recently proposed giving 5 more days off of school and of course the school folks were up in arms. When my kids are school age I'm going to make sure they are "sick" at least 25% of the time... I'll surely give them a number of 3 day weekends to spend time with their parents.

I'm sure if someone found out about my plans to take my kids out of school 1 day a month I'd be arrested by social services... yes.... yes.... yes... I'm sure the schools also take credit for me teaching my children numbers, counting, and how to read? Math too? Really?

There's so much wrong in this country that goes unsaid.

YLSP,

"A fireman, a policeman, and a teacher..."

...walk into a bar. The bartender asks:

BT-What is this, a joke?

FP&T pull out pistols:

Nope, this is a robbery.

Nostrovia,

Aristophon,

"but his crippling flaw was his remarks about Scotsmen."

What? Did he point out their lack of tennis skills...

Nostrovia,

Public pensions are riduculous in Cali. I cant talk about it at work 'cause some asshat (or asshatress) is miling it. Give them a f'in 401K like the rest of us.

Police and Firemen's pensions do seem exhorbitant to me -- but they got there because citizens at the local level felt that they should have them. It's similar to the "support our troops" meme isn't it? Satisfied some deep emotional need to be part of the rah! rah! herd and gain some share of the glory of their dangerous occupations by paying more money or benefits to them. Tough the taxpayers didn't get a T-shirt for the experience.

ShortCourage,

"Well it's nice to see that the state/local pension lunacy is upsetting to some other folks around here."

And don't forget, unlike private pensions, when Calpers eats sh*t for buying RMBS and CDO's that blow up, we taxpayers guarentee the payments. So when the idiots running those funds loose, they quit before it becomes known, and leave us holding the bag. Try that with the PBGC and your private pension.

Good work when you get money for nuthin' I suppose.

Nostrovia,

MP and Misean:  I'm horrified! You of the scintillating intellects don't recall how recorded the many aspersions against the Scots that Johnson m

Aristophon,

Yep, I think you're exactly right. After 9/11, who can argue against giving Firefighters and Policemen all they ask for?

Still, I suspect most people just don't realize how much has been given away to them. But they will realized it soon, as they now do in Vallejo, California. Then they'll be as pissed off as I am.

Aristophon,

Ahem...forgot

/rant off...

Appologies.

Nostrovia,

My comment got mangled. Meant to say that Boswell recorded many instances of Johnson's anti Scotsman "hate speech" ...;)  I'm a Cameron so I have a dog in this fight. Mom never liked Johnson for that reason.

Seems like making states agree to set up adequate rainy day funds for the next downturn would be a good tit-for-tat for any federal aid...

Well, Texas needs federal funds to install an iron security gate on Daria Drive for former (that sounds so nice) President Bush. One wag wrote he will now be behind bars where he belongs.

The enormity of the task is beyond belief, and one might think that spending nine years with six amanuenses, five of whom were Scots, would have been too much for the supposedly Scot-hating Johnson. Here again we find the truth underlying the myth, in this case the erroneous conception of a prejudiced Samuel Johnson. The amanuenses Johnson employed were Shiels, the two Macbean brothers, Stewart, Maitland, and Peyton, the latter being the single Englishman. Over time, Johnson came to look on these men as not just mere employees, but as dependents, supporting Stewart, who died during the process, Shiels, who died shortly afterward, as well as literally burying Peyton. The much-quoted joke definition for "oats" was designed more as a good-natured jibe toward the Scots on his team than some arrogant slap at Scotland in general. This is not to imply that Johnson and his assistants enjoyed a non-stop, rosy joviality; there was plenty of backbiting, gossiping, time-wasting and trips to the pub when the boss was away. But the fact remains that Johnson treated these men, Scots though they were, with the same kindness he reserved for all common people.

http://www.cyberpat.com/essays/sam.html

Maybe that whole scots thing was just bad press.  Or maybe the guy who wrote that essay is just some yahoo on the internet.  Thirty some years after my lit degree, I'm not sure if I have the energy to figure it out (which may be a sign that I'm lazy, just like this generation of students).

ShortCourage

not here in WA state

i worked a juvenile correctional officer for 28 years

my pension benefit will be calculated as 2, times years of service, yielding a number applied as a percent against the average of the final 5 years of service.

thats 56% of 41K but not payable until age 65

or

sliding scale reduction up to 60% less if retirement takes place at age 56-64 depending upon year

oh yeah, and we get no medical benefits upon retirement, at any age except we can buy into the system at full rate ($1,185 per month for me, wife and 1) which i dont

im in my mid 50s, and retired after being assaulted by an inmate

(happened several times over 3 decades of work...not unusual in our system and suits are never successful)

fortunately, my wife and i are savers and investors and are independently well off

mock, seems to me in any such situation, some groups of workers get lavish comp and benefits while others get crumbs.

Markel: it's all about what sells newspapers and gets people on Fox News.

If Natalie Holloway had been a 45 year old black woman, we wouldn't have known.

Perhaps posting while drinking is less than ideal.

mock turtle,

Well it sounds like WA state doesn't suffer from the same overly-generous pension policies as we do here in CA!

Thanks for the personal tidbits (fascinating to hear details about some here on CR!), and glad that you came out of it healthy and prosperous!

Isn't that the way it should be? You earned a decent living, and by responsible saving and investing, you made a comfortable retirement for yourself. How refreshing!

Markel: Isn't everyone drinking?

dr munch,

Well I am (drinking), and I'm thinking of opening another bottle of wine...

Aristophon- "I'm horrified! "

Hey, everybody! Aristophon is horrified!

States should not get a dime prior to at least initiating reforms to address structural budget deficits (yes, California, I'm talking to you).

As part of that requirement, state government pensions should be subject to 'cram downs'. For a given job position type, and number of years of service, payout should be limited to a predetermined level. Otherwise, no fed $ to bailout ye old pension plan. Likewise limit compensation packages for current employees.

I guess this is turning into a diatribe against government waste, so why not a useless anecdote while I'm at it. My uncle worked for the gov't in Canada at a fairly high level. After what he saw (not in his dept, but generally how the budget process worked) he had not doubt that if people knew how their money was being wasted, there would be bodies hanging from trees in front of the legislature.

If you work for the government, your employer is the equivalent of a bankrupt private corporation. Time to restructure obligations.

@Comrade Bear:

Didn't the "Climate of opinion"  in late 70' and 1980's California lead to the power of the prison guard's union? Seems I recall the "Get Tough on Crime" meme was everywhere and nowhere more powerful than in California and Texas. The Republican party did real well out of that meme. Don't think there was much outrage from the public about criminal justice system  expenditures then -- that are now seen as monstrous.

We have met the enemy and it is us? ...

My biggest bitch about most public pension plans is they have adopted the military model of 20 or 30 years and out...
Ross | 01.14.09 - 12:57 am | #

Me too. I have no problem without after 20 or 30. But disagree with allowing collection of the pension before 65 at earliest. This crap about retiring from the gov't at 45 with full pension for another 40 years needs to end. I'm overstating the ridiculousness of if with the above numbers, but not by much.

Alybaba - you asked for the latest Roubini piece waaaayy up above. I posted it at the end of the previous thread for you, to keep it out of everyone's way - it's really long. I've been able to read Roubini for free for years - I really think all attempts to charge for his content were abandoned a while back.

1 currency soon [yogi] writes:
The lack of municipal union representation on this blog is disturbing.

I'm not sure whether you're arguing for the current absurd pay/benefit levels for cops and firefighters... I hope not. To oppose their current criminal employment terms (as a taxpayer being robbed) does not imply that I oppose unions in general. I just object to unions sucking on the public tit, unimpeded by the politicians who are supposed to watch our pennies.

ztexas

in Washington state

there are actuarial reductions to your retirement benefit if

1) you retire with less than 30 years of service

and if

2) you retire at any age less than 65

and yes

the two "reductions" add up to even larger reductions if both circumstances occur together

this is "pers 2" system, there are no more pers 1 employees,(more generous system, which expired in oct of 1978)

Make it illegal for people on pensions to take someone else's job!
.

Ross

others

which states are you talking about

there are 50 out there

most state employees dont work in california...as ive tried to show, most of us work tough jobs for reasonable pay

ill accept posters (upthread) on their word that california has abused the system, but this is not the case in many many other states

@ Mock Turtle:  I'm in Arkansas (ugh!) and had nearly five years direct experience with the State's financing of the prison system as an administrator. It's not pretty -- but I agree with you, it's noway nohow not even close to what it's apparently like in California.

He,he,he ... had an evil thought ... would sure like to see Davis-Bacon Act used on the stimulus construction jobs that the pigmen are planning on using imported  illegal immigrants for ...

Lordy hear the screams as the upperclass realizes that U.S.citizens will, in fact do the jobs after all (at the proper level of price "wage") But then they knew that all along.

Mexico has no problems with pensions for its cops. Just another type of problem.

If you don't pay the police adequately , you basically have no state. Same with teachers.

By the way, there are plenty of teaching openings (esp in Math, Science and Special Ed). Schools usually recruit all three subjects from overseas, because they can't find people to do it here - despite the 'exorbitant' wages.

Everyone seems to accept that teachers are underpaid. Well, take a look at these salary numbers for Santa Clara (South Bay Area) California teacher salaries.

See how well your school district pays its teachers - Sacramento News - Local and Breaking Sacramento News | Sacramento Bee

Lots of wealth here, and cost of living is high. But still, our teachers get LOTS of time off, and I assume they get pretty damn good benefits.

But if you suggest teachers are well paid, better not make your identity known...

I can point people to a long list of teaching openings in CA , if they feel the desire to partake in "platinum benefits and wages".

I doubt there is one person on this board who would be a special ed teacher. Let someone else (most likely from another country) do it, right ?

@ Purple"  I agree with you about paying policemen properly. And, as others have noted there's a problem about being "structurally sound" in the pension system.

I'm thinking it may be proper for police to retire at twenty years -- but there's something to be said for not drawing full pensions till age 60 or so.  This is  coming from a guy who enlisted in LBJ's "War on Poverty" and never surrendered. ,,,')

Welcome to EDJOIN! (state of CA teaching jobs)

go for it , guys

But you won't have much time to blog and complain, if you're a high school teacher

choices, choices

purple,

I'm betting that long list of teaching openings will not last long in the economic situation that's developing.

As to being a special ed teacher...what is your point? Should we throw exhorbitant amounts of money at any job we do not feel inclined to do?

Don't get me wrong, I admire and value teachers of all kinds. But that doesn't mean I am in favor of over-paying them. Let's just get some decent management (elected officials) to push back and keep compensation for public employees of all kinds at fair and competetive levels.

Just to be clear, I don't think teachers are vastly overpaid. I'm just questioning the notion that they are vastly underpaid, as seems to be the conventional wisdom.

Aristophon,

my general point is that too many people are hypocrites and complainers on these matters.

As I said, I rarely have ever seen an American-born person as a special ed teacher. My former district's HR went to the Philippines each year to recruit math, science and special ed teachers. Because the wages and 'platinum benefits' weren't enough to attract people in the U.S. It's just a fact.

As to being a special ed teacher...what is your point? Should we throw exhorbitant amounts of money at any job we do not feel inclined to do?

If it were truly an overpaid job - there would not be openings.

And believe me, there will always be teaching openings. I'd love to see the people on this board try teaching a class of 10 different native speakers. But most people just like to whine.

Purple,  I wonder if the level of debt college graduates have is steering many of them in the direction of making a quick "score" in pay at some other job as opposed to teaching. I don't think teaches are generally overpaid.

I think there's a great bureaucratic and financial impediment to people who would like to teach.

mp,

This is incredible.  Combine it with this chart from MacroMan and Asia is in VERY serious trouble.  BTW, from my perspective that is an temporary aberration because China is often the finished good producer.

I found this section also quite disconcerting:

... A report by ING yesterday said shipping activity at US ports has suddenly dived. Outbound traffic from Long Beach and Los Angeles, America's two top ports, has fallen by 18pc year-on-year, a far more serious decline than anything seen in recent recessions....

purple,

I did not say special ed teachers were overpaid. I was just trying to get you to explain your logic. I question the notion that teachers are underpaid, and you counter with the demand that I become a special ed teacher, or shut up!???

Get some rest, perhaps you'll make more sense in the morning.

A better metric for cost of housing:

3 Bed Rent for decent home in not so bad neighborhood: $1600

Short on Courage,

My logic is clear. I'm sorry you can't understand it.

You argue teacher are overpaid. I point out that in the key subjects of science and math, as well as special education - there are chronic shortages.

A job position that has chronic shortages is not overpaid - i.e. easy money, requiring low skills.

I did not tell you to shut up. However, you don't know much about the education field and how hard it is to recruit teachers.

Bgates:

What's your time horizon for currency destruction? How long are you willing to hold?

Part of gold's historic value is it's untraceability.  It promotes piracy.
1 currency soon [yogi] | 01.14.09 - 3:11 am | #

Well, it is nobody's liability.  In today's world that should stand for a lot and I am certain that it will.

I'm self employed. My SEP IRA is down 30%. My Roth IRA is down 15%. When the public and company pensions get bailed out on my tax dollar, I wanna be there too.
CAN I HAZ BAILOUT PLEEZE
Also I'm a little annoyed at the americans don't save meme. WTF... I pay the employers share of SS etc... for total 15% SELF EMPLOYMENT TAX
If this isn't savings, THEN IT'S EXTORTION

The folks down South have been sending their unemployed up North for decades. Now it's your problem.
1 currency soon [yogi] | 01.14.09 - 12:39 am | #

Horseshit. Nice typing, however. The folk down south have been leaving for opportunity. That means jobs without preconditions like not being black or some knucklehead of a son/daughter/cousin/politically connected. The brain drain is also a problem. Youth get born, educated and leave the place where they learned that 1) Some people never heard of the changes that happened around them while they were 'preserving' dead institutions and wrong headed ways of life.

The back migration has been going on for a few years now. They're coming back from Buffalo, Chicago, Detroit, Cleveland, and other places where society has been out sourced, degraded, hollowed out.

So think what you will, say what you will, it's your right. You're just wrong about it.

There has never been a better time to ship.
Kondratieff canuk | 01.14.09 - 2:23 am | #

Really? Who's your customer? Or are you going to join the container beach party?

Sounds like a movie starring Frankie Avalon and Annette! Come party round the bonfire with the 20' containers. They make great cabanas, once you throw out the salad shooters, tooth whiteners and penis enlargers. Rack 'em and stack 'em kids, it's loads of fun for days on end of nothing to do and nowhere better to be.

How is the government going to keep home prices higher? That's the real issue.
dashingdwl | 01.14.09 - 12:10 am | #

Inflation is the only way.  No one can pay >3.5X income for long.

I'm not saying CA should or should be bailed out, but the idea strict per capita Federal expenditure by State is absurd.
1 currency soon [yogi] | 01.14.09 - 12:33 am | #

So by electorial vote is better?

Lordy hear the screams as the upperclass realizes that U.S.citizens will, in fact do the jobs after all (at the proper level of price "wage") But then they knew that all along.
Aristophon | 01.14.09 - 1:28 am | #

Now if that would only work for H1-B, I would feel a little more secure.

I don't follow CA politics but my point was I feel this blog only voices one side.
1 currency soon [yogi] | 01.14.09 - 1:42 am | #

I would argue that public sector jobs and compensation have been pretty static for decades.  It is just the competition with illegals and H-1Bs and China that have devalued the private sector.

To even things up, it might be a good idea for Uncle Sam to start "pensioning" up the rest of us with things like some kind of health care, rather than clawbacking those who were smart enough to take the lower pay and security, in a global market.

This is what happens when the Baltic Dry Index drys up I guess...

Jan. 14 (Bloomberg) -- As many as half of publicly traded commodity shipping lines may breach their loan covenants by April after a record collapse in hire rates, according to Royal Bank of Scotland Group Plc, the third-largest lender to the industry.

The cost of second-hand capesizes, the largest group of commodity carriers, plunged 70 percent last year, according to the Baltic Exchange in London. Fleet values are one of the key covenants used. Banks review loans as often as every quarter, Lambros Varnavides, the bank’s head of credit to the shipping industry, said in interviews in London on Jan. 12 and 13

"Berserker writes:
I'm self employed."

So am I. I note you pay the self-employment tax, so do I. I am still outraged that Geithner, who's going to be in charge of the IRS, didn't. That he only paid up 2 years arrears after an audit, and tried to game the rest.
Integrity in our public officials...I must have been dreaming when I voted for Obama. Now I am the fool.

For Counterpointer:

Half of Commodity Shippers May Breach Loans by April, RBS Says - Bloomberg.com

Half of Commodity Shippers May Breach Loans by April, RBS Says

Byz / nova - many thanks. Looks like we'll be living off inventory for the next wee while.

Can we haz lend-lease for the scotch fleet??

C

The cost of second-hand capesizes, the largest group of commodity carriers, plunged 70 percent last year, according to the Baltic Exchange in London. Fleet values are one of the key covenants used. Banks review loans as often as every quarter, Lambros Varnavides, the bank’s head of credit to the shipping industry, said in interviews in London on Jan. 12 and 13
nova | Homepage | 01.14.09 - 6:36 am | #

Some might think it's a good time to pick up a slightly used, well maintained, equipped to fend off borders cape size ship. Warning: They're not much fun to sail on and berthing the bastard is a bit spendy. Although you may be the first on your block, you may well be the last as well.

Curious writes:

It looks like the most entertaining story of a recent financial fraudster has come to an end.

MadeOff wannabe. Are there others? Surely. Will we find them? Certainly. Will they all get their covers pulled? Doubtful.

Folk, this is the most devastating of the daggers being plunged into Caesar's heart. What little confidence we once had is dissipating like the slow fizzle of a leaking tire. We can still make it go, but the sidewalls degrade. We can pump more air into the confidence tire but fast approaches the day when the final pop happens and we're on the side of the economic highway waiting for road service.

At the risk of extending the metaphor a bridge too far, the government tow is coming, but we have to fix that bridge that spans the river of years of neglect. Too bad.

One can never cross the same river twice.

supafly: I'm not so convinced as you. Isn't it all transactional?

They produce the gold, we the people buy it. Now we own it. If they (the mining super nationals-do these truly exist) want to keep hold of the matter more must be produced. Follow? Are we all keeping up?

So, what ever else we want to control in the way of above ground supply is purchased. The counter party takes payment, transaction complete. Hard money backs the currency and the price of gold is what the price of gold is. Are you with me?

See, when the criminal mind controls the fiat system we get what we got.

When we remove these parties from the transaction something more robust has a chance. Alles klar?

Of course, people have vanished, been eliminated, were trashed and marginalized all in the name of power retention via the corrupt fiat system.

Hard money backs the currency and the price of gold is what the price of gold is. Are you with me?

Then the king debases the gold and enforces transactional parity with pure specie.

Then the king debases the gold and enforces transactional parity with pure specie.
Comrade Byzantine_Ruins | Homepage | 01.14.09 - 7:41 am | #

Yes, of course there is a risk there as history is replete with example. There is also recourse for every risk.

What would be worse than what we have?

Perhaps, as I have suggested before, humans need take a cognitive leap in a paradigm shift. Dreamers have posited what might be.

We just need to get enough monkeys to wash the mud from the yam.

Comrade Volker the Viking(Unrated) writes:
For those who would snort at dreamers.

I snort at it only in that I think it is utopian in the way people approach it. You can't secure yourself against the bad judgment of the future. The error of debasement will always be seen as superior to the fiscal paralysis that's on the other hand.

Comrade Byzantine_Ruins writes:
Comrade Volker the Viking(Unrated) writes:

Unrated?!? That's gonna leave a mark! I'm hurt. I think I'm gonna sulk awhile.

OT-Denniger in rare form this morning:
The Market Ticker 

....that denninger thread - since some of the off-shore bank accounts ARE being "thrown to the wolves", what is the chance a "known name" will surface as to having off-shore monies?

You'd think they would have been smarter than THAT, does history prove differently?

Both down apx 2x expectations, Nov also revised down
Dirk | Homepage | 01.14.09 - 8:39 am | #

This is the bottom, though, right?  

Eric
If by bottom you mean what you sit on, perhaps, otherwise no
Dirk | Homepage | 01.14.09 - 8:48 am | #

Hey, that bottom is getting smaller (although the Great Christmas Cookie Debacle of late 2008 saw a moderate bear market rally in bottoms).

"Eric writes:
So let's say I've accepted the thesis that pension funds are the next big thing to blow up.

How do I take the other side? Shorting insurance companies?"

Related question: I've got a whole term life policy (I know, don't ask) that I wish to hedge against capital loss.

How? Borrow against it? Not a complete solution I suspect.

Or, short the insurance complex? Too blunderbuss.

Anybody got ideas?

TIA.

Earmarking money given to states is intellectually dishonest: money is fungible. Any dollar earmarked for state education is just one less dollar the state needs to allocate for education out of their own budget, and can be used to fund things like the Garbage Board (yeah, a fitting name for the California Waste Management Board).