Facts are facts and will not disappear on account of your likes.
Jawaharlal Nehru
Beware the Ides of March
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| Courtesy of Classical Wisdom |
The Government Gives Them Free Cellphones
In 1985 the government created a Lifeline program, funded by mandatory "universal service charges" added to regular traditional landline/wired or cellphone plans, to provide basic phone service to low-income people, established by federal poverty guidelines or through qualification for certain related programs, e.g., Medicaid and Food Stamps. As we have come to expect from almost any federal program, there are very poor controls. The program's cost has nearly tripled from its 2008 cost of $819M. There's supposed to be a cap of one per household; an audit has shown 40% don't meet program eligibility, many households have multiple phones, and phones have been issued to (ineligible) minors or even dead people. (In theory, vendors are supposed to verify eligibility, just like I suppose under the housing bubble and federally guaranteed mortgage notes, bankers did due diligence qualifying applicants' income, etc.)
The Way We Were
in October 2007 vs. Now
Have you heard Democrats remind you, never mind high unemployment and weak GDP numbers, but, by gosh, isn't the stock market doing great??? Zero Hedge's Tyler Durden reminds us how things were back in October 2007 at the prior Dow Jones high when music stopped in the game of stock market musical chairs, 2 months before the Great Recession officially began:
- Dow Jones Industrial Average: Then 14164.5; Now 14164.5
- Regular Gas Price: Then $2.75; Now $3.73
- GDP Growth: Then +2.5%; Now +1.6%
- Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
- Americans On Food Stamps: Then 26.9 million; Now 47.69 million
- Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
- US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
- US Deficit (LTM): Then $97 billion; Now $975.6 billion
- Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
- US Household Debt: Then $13.5 trillion; Now 12.87 trillion
- Labor Force Participation Rate: Then 65.8%; Now 63.6%
- Consumer Confidence: Then 99.5; Now 69.6
- S&P Rating of the US: Then AAA; Now AA+
- VIX: Then 17.5%; Now 14%
- 10 Year Treasury Yield: Then 4.64%; Now 1.89%
- USDJPY: Then 117; Now 93
- EURUSD: Then 1.4145; Now 1.3050
- Gold: Then $748; Now $1583
- NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares
Public Pensions, Illinois and Chicago
A former Illinois Chicago suburban resident for most of the 1990's through 2004, I made a passing reference to Illinois' ongoing public pension crisis in a recent segment on Citizens Against Government Waste's 2012 Porker of the Year, with runner-up Gov. Quinn (D-IL), whom all but pleaded for federal help in dealing with the pension crisis. The state over the past several years has played politics over necessary funding (including pension contribution holidays). This fact was inadequately disclosed to prospective bondholders; obviously inadequately funded pensions has an impact if, say, cities or the state finds 20-35% of their budgets dealing with pension outlays in zero-sum funding competition with debt service and essential operations. Bondholders rightly would require an interest premium to accommodate the risk to funding of debt service. The SEC investigated, and as in recent cases of San Diego and New Jersey, slapped Illinois on the wrist: Illinois didn't admit to any wrongdoing but promised to be more transparent in the future.
I've also enjoyed the spectacle of seeing Chicago Mayor "Dead Fish" Emanuel grapple with the pension crisis; he's finding himself between a rock and a hard place as his long-time public union allies show little interest in making concessions: he was trying to cut a deal with the smaller police sergeant union to build momentum to plead his case with the state government for phasing in necessary full-scale pension funding . Without givebacks, Emanuel warns that he may need to push for more than doubling local property taxes, not an easy sell to local taxpayers. And here is the result:
By a nearly 7-1 ratio, sergeants rejected a deal that would have given them a 9 percent pay raise over four years in exchange for: raising the retirement age for sergeants to 53; increasing employee pension contributions from 9 to 12 percent by January, 2015; hiking health care contributions for new retirees to 2 percent of annuities; forfeiting cost-of-living adjustments every other year and limited COLA in intervening years to 2.5 percent with simple interest.In part, the wheeler dealer is getting pushback from bypassing his allies earlier:
Last year, Emanuel blindsided and infuriated union leaders whose collaboration he had promised to seek to solve the pension crisis. Instead of negotiating first with union leaders in Chicago, he went to Springfield to lower the boom by requesting: a 10-year freeze in cost-of-living increases for retirees; a five-year increase in the retirement age; a five-percent increase in employee contributions and a two-tiered pension system for new and old employees.Let me get this straight: the minimum retirement age is below 53? Expletive deleted. Why is this guy not putting new cops on defined contribution plans? I have to say, though, the unions griping about the mayor's framework are disingenuous; they know the city's fiscal constraint and the general nature of givebacks--more employee contributions, deferred pension eligibility date, the size of payment adjustments, any game playing to improve the pension-based compensation level, the number of years in service, cashing in accumulated sick leave, etc. And I bet they would have rejected any substantive concessions, insisting the mayor is changing the rules of the game at their expense, and demanding he should get the money by soaking the Chicago rich taxpayers. (Unions are very predictable.)
From my perspective, the city's pension system is unsustainable, and Chicago is in sore need of collective bargaining reform. The unions had to know the state and/or city were shortchanging contributions to their pension funds which put their pensions at risk: part of the savings went into pay increases for union workers. Obama is fond of saying elections have consequences; well, the unions backed spendthrift Democrats in Chicago and Springfield, and the chickens have come home to roost.
My Greatest Hits: March 2013
The top 5 posts by pageviews over the past month. I'm intrigued that a past November post got the most hits. My guess is that it had to do with the Hostess Brands bankruptcy commentary/nostalgic videos:
- Miscellany: 11/18/12
- Miscellany: 3/12/13
- Miscellany: 3/02/13
- Miscellany: 2/27/13
- Miscellany: 2/14/13 Happy Valentine's Day!
With Washington in the middle of a budget crisis, the White House is facing criticism for spending $250,000 a year on calligraphy. You can tell you're spending way too much money on calligraphy when you spend ANY money on calligraphy. - Jimmy Fallon
[They wanted to send out engraved invitations to RoboSquirrel's birthday party...]
Everyone is still talking about the new Pope. It turns out that he used to be a high school chemistry teacher. Or as most people put it: “Breaking Bad" spoiler alert! - Jimmy Fallon
[Hugo Chavez now knows what it feels like on the other end of a Bunsen burner.]
Political Cartoon
No smoke means that Congress isn't in session.... Blowing smoke up your Democrat...
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| Courtesy of Lisa Benson and Townhall |
Led Zeppelin, "All My Love". Hands down, one of the best power ballads of all time and my favorite Zeppelin track--I bought the album just to get the track. I don't think they ever released the track; it must have gotten a lot of airplay. Ironically, the group had mixed reaction to the track's success; Jimmy Page worried that it might damage their hard rock reputation.
