Greek Tragedy

Paul Krugman

The bad news is that Greece’s problems are deeper than Europe’s leaders are willing to acknowledge, even now — and they’re shared, to a lesser degree, by other European countries. Many observers now expect the Greek tragedy to end in default; I’m increasingly convinced that they’re too optimistic, that default will be accompanied or followed by departure from the euro.

I remember when people talked up the Euro against the dollar and the moneyman at Berkshire was betting on the Euro. Hope he got he money out.

I expect the Greek tragedy to end in default. At some point you simply rack up too much debt. Here in America, I fully expect us to just print money to pay off our bills. For Greece that is not an option.

Robert Samuelson

What we're seeing in Greece is the death spiral of the welfare state. This isn't Greece's problem alone, and that's why its crisis has rattled global stock markets and threatens economic recovery. Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven't fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies.

Coming to a theater near you!

Samuelson's closer:

If only a few countries faced these problems, the solution would be easy. Unlucky countries would trim budgets and resume growth by exporting to healthier nations. But developed countries represent about half the world economy; most have overcommitted welfare states. They might defuse the dangers by gradually trimming future benefits in a way that reassured financial markets. In practice, they haven't done that; indeed, President Obama's health program expands benefits. What happens if all these countries are thrust into Greece's situation? One answer -- another worldwide economic collapse -- explains why dawdling is so risky.

The collapse is going to be spectacular.

I have often joked (darkly) that it is wishful thinking when conservatives complain that our children are going to be paying off the debts that we are incurring today. I think that assumes that we can keep spending like we do and just hand it off to our children. I think the reality is that WE are going to be paying off these bills, and that the due date is going to come sooner rather than later.

Like everything else, in hindsight it will be abundantly clear for all to see. Life isn't lived in hindsight though, and it is going to be one collasal clusterfudge when we hit the wall. At this point I am convinced that neither political party has the will to cut the size of government until it is too late.

"Things that can't go on forever, don't"

20 Things You Will Need To Survive When the Economy Collapses and the Next Great Depression Begins

The New York Times on Health Care Reform:

Another reform high on the list is removing the state from the marketplace in crucial sectors like health care, transportation and energy and allowing private investment. Economists say that the liberalization of trucking routes — where a trucking license can cost up to $90,000 — and the health care industry would help bring down prices in these areas, which are among the highest in Europe.

It looks as if the New York Times doesn't support socialized medicine, at least when it comes to the Greeks. Maybe they should have told us a little about this when Obamacare was making the rounds... Sphere: Related Content

The Politics of 'Anything Goes'

From the Wall Street Journal's "Best Of the Web"

• "Even as we speak, there are those who are preparing to divide us--the spin masters, the negative ad peddlers who embrace the politics of 'anything goes.' Well, I say to them tonight, there is not a liberal America and a conservative America--there is the United States of America. There is not a black America and a white America and Latino America and Asian America--there's the United States of America."--state senator Barack Obama, Democratic National Convention, July 27, 2004

• "In the video message to his supporters, [President] Obama said his administration's success depends on the outcome of this fall's elections and warned that if Republicans regain control of Congress, they could 'undo all that we have accomplished.' 'This year, the stakes are higher than ever,' he said, according to a transcript of his remarks provided by Democratic officials. 'It will be up to each of you to make sure that young people, African Americans, Latinos and women who powered our victory in 2008 stand together once again. . . .' "--Washington Post, April 26, 2010

I think it is the Democrat's Southern Strategy. Sphere: Related Content

Death of a President

I saw this movie tonight for the first time. I couldn't imagine seeing it at the time it was in cinemas or was on the new release wall. I chuckled at Blockbuster when I rented it because I could only imagine what would happen if a conservative made an identical movie today.

After watching it I feel the same way. It wasn't poorly done but I think it could have been better. It was slow. I would not recommend it. It did win some awards. I doubt a movie about killing Obama would win any awards.

The director was interviewed in the bonus section of the DVD and he was so excited when they came up with the idea of killing George Bush. Imagine how a conservative would be portrayed if he acted with glee at the notion of making a realistic film showing Obama's death. No epistemic closure there.

And the movie is portrayed as even handed, but they sink all the left wing issues in. The real victim in the movie is a Muslim who is found guilty of racial profiling, just because he trained at an Al Queada terrorist camp. One quote was "Just because he went to the wrong summer camp".

And the aftermath is horrible still, because Dick Cheney becomes President and then enact "Patriot Act III" which gives the government more power for the police state.

Many liberals hate the police state. I saw thousands of them protest George W. Bush. The Patriot Act authorized people looking into library records. I never saw anyone convicted or persecuted from library records. That doesn't make it right. I don't want the government to be able to access my library records, while even in theory I am going to the government library. That is the sticky part, the government already has your library records, because the government owns the library.

But most on the left have no problem with our system of income taxation. You have to report all your sources of income to the government, which in great detail is your life...much more than your library records. You bank account has your social security number attached and is reported to the government, and credit card companies have given the government leeway with your files for quite some time.

When it comes to checking out books liberals get defensive, when it comes to making or spending money liberals think the government should play. Not all liberals, but many of them. You could be avoiding taxes! So banks are required to report suspicious transactions as well as credit card companies. And then you have the IRS, which will now make sure you have health insurance or they will fine you. Let alone the health records that government health care entails. And many liberals were complaining about library books!

I think that someday we will yearn for the day that all people worried about was library records.

The government tracks all political activity. If you donate to a candidate, campaign finance laws dictate that we must have a record. As Prop 8 in California has taught us, that can lead to consequences. Eightmaps.com told everyone your address if you gave money and people lost their jobs.

Think of a society where the government has a monopoly on education. We have that right now. The government is in charge of teaching everyone what is right. Think of a society where all your political activity is actively monitored by the government. We have that right now. Think of a society where all the money you make must be reported and the source of that income must be reported as well. We have that right now. You even have to report you retirement accounts, and they have floated taxing and taking those too. They want to know what you have and once they know they can angle on getting some of that.

Liberals were pissed about library records from a library already owned by the government. It is funny. Truth be told, I am pissed about library records. I don't want the government to look at those records. But if you look at what we already have to give them it is minuscule. I want liberals that were pissed about library records to join with me and demand independence for other freedoms. Freedoms in education, income and political activity. Why shouldn't we be free to do those things?

If you agree with me you may be an extremist. Welcome to the lunatic frindge. I just had several shots of rum, so excuse my blather. Sphere: Related Content

The national debt and Washington's deficit of will

Joel Achenbach makes some good points about the political will to take on the national debt...

The national debt and Washington's deficit of will
Washington Post
By Joel Achenbach
Sunday, April 25, 2010; B01

The national debt -- which totaled $8,370,635,856,604.98 as of a few days ago, not even counting the trillions owed by the government to Social Security and other pilfered trust funds -- is rapidly becoming a dominant political issue in Washington and across the country, and not just among the "tea party" crowd. President Obama is feeling the pressure, and on Tuesday he will open the first session of a high-level bipartisan commission that will look for ways to reduce deficits and put the country on a sustainable fiscal path.

It's a tough task. The short term looks awful, and the long term looks hideous. Under any likely scenario, the federal debt will continue to balloon in the years to come. The Congressional Budget Office expects it to reach $20 trillion over the next decade -- and that assumes no new recessions, no new wars and no new financial crises. In the doomsday scenario, foreign investors get spooked and demand higher interest rates to continue bankrolling American profligacy. As rates shoot up, the United States has to borrow more and more simply to pay the interest on its debt, and soon the economy is in a downward spiral.

Of course, at least in theory, this problem can be fixed. Unlike a real Ponzi scheme, which collapses when no new suckers offer money that can be used to pay off earlier investors, the government can restore fiscal sanity whenever our leaders decide to do so.

But that premise is what has people like Gross worried. In addition to running a budget deficit, Washington for years has had a massive deficit of political will.

Over the past decade, lawmakers have avoided the kind of unpopular decisions -- tax increases, spending cuts or some combination -- needed to keep the debt under control. Federal Reserve Chairman Ben Bernanke testified recently that, for investors, the underlying problem with the debt isn't economic. "At some point, the markets will make a judgment about, really, not our economic capacity but our political ability, our political will, to achieve longer-term sustainability," he said.

How hard is it to cut the debt? Not hard if you have the will. Simply cut every federal outlay by the percentage that we overspend. If we spend 25% more than we take in, then cut the funding to every department by %25. Cut all federal salaries above $50k by $25 while you are at it, and get them on defined contribution benefit plans instead of open ended pensions.

When I spoke to Peter Orszag, the director of the Office of Management and Budget, he expressed optimism that the administration can balance the primary budget -- not including interest payments -- by 2015. The longer-term deficits are his bigger worry. Asked if the political process in Washington is broken, he answered: "I think it's too soon to know whether the system's broken. The problem is not what happened last year or this year. The real issue is when we move forward in time, something has to give."

The danger is that what "gives" will be investors' confidence in the United States. Bill Gross told me that Pimco still has $150 billion in Treasuries, but that's seriously "underweight" given that the company controls $1 trillion in assets.

"It's becoming immediately apparent that some countries will not do especially well and may not escape the debt trap from the recent financial crisis, Greece and Iceland being the most prominent cases," Gross said. "But now investors are even looking at the best of the best, including the United States."

Part of me doubts we will ever have the political will to cut the size of government. Government grows under Democrats and Republicans. At some point the dollar will collapse and that will be a disaster for America. If they thought the Tea Party is an angry bunch wait until they see the pitchforks when that day comes... Sphere: Related Content

Los Angeles is going to go Bankrupt

Going for broke in L.A.?

Former mayor Richard Riordan has been roiling the civic waters by arguing that the surest -- and perhaps the only -- way out of Los Angeles' fiscal crisis is a declaration of municipal bankruptcy, which he believes ought to come sooner rather than later.

In a conversation with The Times over the weekend, Riordan argued that bankruptcy may be the only way to attack the structural problem gnawing the heart out of the city budget: unsustainable public employee pension costs. Currently, Riordan says, the city is struggling to meet its pension obligations, and that's assuming it will receive 8% annually on the money invested on retirees' behalf. In fact, the average return over the past decade has been just 4%. Over the next few years, L.A. may be looking at $1.5 billion in pension obligations it can't meet. "We need some adults to come alive in the city and to talk through how to meet that liability," he said. "If that doesn't happen, we shouldn't rule out bankruptcy."

Mayor Antonio Villaraigosa's chief of staff, Jeff Carr, says categorically that "this mayor has made it clear that we are not going to declare bankruptcy." Moreover, while federal law lets bankruptcy judges reduce negotiated pension and health benefits in the private sector, it forbids changes in public employees' agreements.

Interesting federal law that forbids changes in public employees' agreements.

At one time I could never imagine a city like LA going bankrupt. LA is the second biggest city in the USA.

California is in trouble. The whole state is going to go bankrupt. Welcome to the progressive version of the future. They are hiking energy rates across the state because they mandated "green" renewable energy. The refuse to drill off their coasts and harvest the oil that lays patiently for them. It is amazing.

The State of California will be bankrupt at some point. The cities in California are about to go bankrupt, some sooner, some later. And on a nationwide level, Uncle Sam might reach the same fate. Our whole country is bankrupt. At least we have Obamacare and green energy.

The California city of Vallerjo went bankrupt in 2008. The details are both delicious and nutricious.

Vallejo's Painful Lessons in Municipal Bankruptcy
Two years after going broke, the California city still

Vallejo is a Bay Area community of 121,000 that two years ago became the state's largest city to declare bankruptcy. Like other municipalities, its public-sector unions had driven its budget deep into the red. A report issued by the Cato Institute last September noted that 74% of the city's general budget was eaten up by police and firefighter salaries and overtime along with pension obligations. The average city in the state spends 60% of its budget on those things.

The study also found that lavish pay and benefit packages were a root cause of the city's problems. In Vallejo compensation packages for police captains top $300,000 a year and average $171,000 a year for firefighters. Regular public employees in the city can retire at age 55 with 81% of their final year's pay guaranteed. Police and fire officials can retire at age 50 with a pension that pays them 90% of their final year's salary every year for life and the lives of their spouses.

Over the past five years, Vallejo has slashed spending where it could, mostly by cutting personnel and services. As a recent San Francisco Chronicle editorial pointed out, the city cut its police force to about 100 officers from nearly 160 and warned residents to use the 911 system judiciously, even while it experienced crime rates higher than other comparable cities in California. The city has also cut funding for a senior center, youth groups, and arts organizations and has done little to restore an increasingly decrepit downtown, develop waterfront properties, or attract new businesses.

Imagine the Police Chief that retires at 50 and makes $300,000. He gets $270,000 (90%) a year every year (not including health benefits) for the rest of both his life and the life of his spouse. The odds of them living into their 80's isn't off the hook. You could have 35 more years to pay that sum easy. That would amount to be about 10 million dollars not even counting the health benefits. It is staggering.

Consider the hypothetical case: Let's say I worked hard when I was in the police corps and I rose to the top job. It took me 25 years. I graduated at 22, applied and went into the academy at 23, and after 25 years in service I am now 47. In three years I am going to retire making $270,000 a year. I do this so my best friend and loyal confidant who is vice Chief can retire next year. It isn't like we are paying 1 guy $270k a year, as soon as these guys get the creds the pressure is on for them to retire so their friends can move up. Who wants to work past 50 if you don't have to?

I wonder how many people just from this small city get pensions of over $100k a year. I have seen some data from San Diego's firefighters in the past and it is something.

I have never made $270,000 in a year. I am still holding out hope that I can accomplish this feat in my dreams. But imagine a public servant making that every year in retirement. I am jealous. I would love that life. Not only that life, but the life of the poor schmucks that only make $100,000 every year in retirement with full government health benefits to boot.

But the catch is, they are all going to go bankrupt. Los Angeles is going to go bankrupt. San Diego is going to go bankrupt. California is going to go bankrupt. Unless the feds step in, I can't see any way around it, and I find it hard to see the feds stepping in, because I will clue you in on a little secret, they don't really have any money either.

--------------------
Update: 1 in 3 San Francisco employees earned $100,000

More than 1 in 3 of San Francisco's nearly 27,000 city workers earned $100,000 or more last year - a number that has been growing steadily for the past decade.

The number of city workers paid at least $100,000 in base salary totaled 6,449 last year. When such extras as overtime are included, the number jumped to 9,487 workers, nearly eight times the number from a decade ago. And that calculation doesn't include the cost of often-generous city benefits such as health care and pensions.

LA is going bankrupt. California is going bankrupt. The progressive vision of our future is going bankrupt. Sphere: Related Content

Bin Laden: Dead Again

Dead or Alive?
Thursday, January 21, 2010
By Charles Ferndale

On 10th Jan 10, BBC 2 aired a program dealing with the question of whether or not Osama bin Laden is dead or alive. During an hour long program many views were aired, all of which failed to answer the question conclusively. This should surprise no one, because, as in any murder investigation, the only conclusive proof that someone is dead is the discovery of the person’s body. If Osama bin Laden is dead, it is most unlikely that his body will ever be found and, until it is, we can only argue on the basis of probabilities. And the balance of probabilities strongly favours the hypothesis that he is dead and has been dead for a very long time, probably since December 2001

I shall not discuss here all the arguments for and against his probable death. These are discussed lucidly and with cautious honesty by David Ray Griffin in his book Osama bin Laden--Dead or Alive?

I shall concern myself here with only one argument which, so far, no one seems to have considered.

US intelligence officials base the claim that Bin Laden was at the caves of Tora Bora in December 2001 on intercepted mobile phone conversations emanating from that region. Ever since the bombing of the Tora Bora caves, Osama bin Laden’s voice has never again been heard from a source that can be trusted. According to Robert Bauer, an ex-member of the CIA, at least half of the US intelligence community concerned with this issue believe Osama was killed during the bombing at Tora Bora. I suspect the percentage is higher. My argument is simple: if he was in the Tora Bora complex when it was bombed in December 2001, then he certainly died during that bombing, because nothing living could have survived it.

I still believe that he died at Tora Bora. Other AQ heavyweights put out videos that are authentic and digital and clear. If Osama was alive he would be taunting us all the time. He had quite an ego, and he would use it.

David Ray Griffin was quoted and linked in this quote. David Ray Griffin thinks that the United States Government knows Bin Laden is dead and that the Bush Administration was behind the fake tapes. That is not the belief held by this blogger. I was not a huge fan of Bush (though Obama has made me actually miss him). George Bush was a big spender but in the end I believe a fine and decent man.

I think we should dress the Gitmo prisoners up in Pashtun garb and drop them from a plane on a fabricated Afghan villiage on the Paki-Afghan border. Then we should fake some Bin Laden DNA and say that we discovered the village that he was hiding in and killed him and all of his terrorist pals. Obama can take some victory laps and we can all go home from Afghanistan.

More:

BBC: Is Osama Bin Laden dead or alive?

Bruce Riedel, who chaired President Barack Obama's Afghanistan/Pakistan policy review, and who has seen the intelligence on Bin Laden, says the trail has not so much gone cold as "frozen over".

"We don't have a clue where he is," he says.

...

One former CIA agent also questions its authenticity. Robert Baer dismisses the suggestion of a conspiracy by Western intelligence but thinks that al-Qaeda may have faked the video.

"[al-Qaeda has] an interest in manipulating it to look like current tapes," he says. "You can digitally manipulate voice to say anything. You can change months, years, you can tape vowels and syllables and put it into a recording and change it."

Do the Fake Bin Laden Videos Prove he is Dead?

my vote goes to Bin Laden being dead. The photos before 9/11 showed a very sickly person and it is not likely that he could have jumped around the mountains carrying a dialysis machine evading the most sophisticated intelligence and technology for nearly a decade.

ABC News: Hunt for Osama Over? Obama Steers Clear of Bin Laden References

Some conspiracy theorists have said the U.S. government created the most recent bin Laden tapes. Others have dismissed his tapes as fake, but no one has been able to say with certainty if the world's most-wanted terrorist is still alive.

Sphere: Related Content

Banks Bundled Bad Debt, Bet Against It and Won

Banks Bundled Bad Debt, Bet Against It and Won

By GRETCHEN MORGENSON and LOUISE STORY
Published: December 23, 2009

Goldman and other firms eventually used the C.D.O.’s to place unusually large negative bets that were not mainly for hedging purposes, and investors and industry experts say that put the firms at odds with their own clients’ interests.

“The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,” said Sylvain R. Raynes, an expert in structured finance at R & R Consulting in New York. “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”

I don't know why people would do business with Goldman Sachs. I don't know why the taxpayer bailed them out via AIG either. Sphere: Related Content