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March 31, 2011

DOOM! in my pocket like grains of sand

You can read this news two ways. Optimistic: Fewer people are losing their jobs! DOOM!: Labor force participation is at a 26-year low; job losses are decelerating because there's no one left to lay off. Still, since unemployment is a lagging indicator, this does give some strength to the argument that the "recession" ended about six months back.

Nicole Gelinas at NRO steps into the debate about whether public-employee pensions are sustainable or not. She agrees with Veronique de Rugy (and me) that the rate-of-return many states are basing their contribution calculations off of are basically nonsense, but somewhat agrees that pensions aren't the biggest budgetary problems facing states right now. My take? It's true that pensions aren't an immediate funding threat to most states (that problem is centered more on municipalities at present) -- but they are going to consume an ever-larger proportion of general-fund revenues in coming years, and if borrowing rates go up or returns are lower than actuaries expected (or both), five or ten years from now the situation may go from "bad" to "catastrophic" pretty damned quick. In states like California and Illinois, this situation has already arrived.

Ireland is "stress testing" its banks, and unless Ireland decides to go full retard and hide the gruesome results, either the ECB will have to pony up additional bailout funds (with the associated austerity conditions that the population is unlikely to accept), or to default in some way (preferable to the populace, but it's unclear how Ireland could do this and still retain the Euro as the currency).

So now you have Portugal, Greece, and Ireland on the brink of default, and the ECB seems to be at a loss as to what to do next. Everyone insists that bond-defaults are not being seriously considered, but everyone also knows that this is a lie. Apparently, everyone is waiting for the Deus Ex Machina to descend from the clouds and magically resolve the situation. Somehow.

The old greenback, she ain't what she used to be.

Reason magazine looks into how Ohio Gov. Kasich plans to cut government spending...by increasing spending by 11%. It's a new thing we call "government math". You peasants just don't understand. (This is also why I despair of the GOP ever really getting a handle on our budgetary mess at the state and local level. They tend to love spending taxpayer money just as much as the Democrats do, just on different stuff.)

[UPDATE]: Wal-Mart CEO: Get ready for some serious inflation. As John McClane would say: welcome to the party, pal!

[UPDATE 2]: *Snif*. I'm so proud. If you type "california boned" into the Google, guess what pops up first?

[UPDATE 3]: Aaaah. This is how I like my DOOM!: fresh and piping hot. Bill Gross of PIMCO says that without entitlement reform, default is inevitable. Plus he uses a cartoon skunk as a framing device, which garners originality points.

[UPDATE 4]: John Tamny of Real Clear Markets says that GDP (Gross Domestic Product) is a nonsensical term. (He also says the same of "macroeconomics".) I'm not sure I agree entirely -- you have to have some way of measuring the output of a politically organized region, and while GDP is not the best way to measure output it's not the worst either. But Tamny understands that trade, and hence that amorphous beast we call "the economy" is truly global now, and completely interlinked. And this isn't true of just manufactured goods, either -- it applies to service industries as well (particularly in IT).

Doom! DOOM! DOOOOOOOOOOOOOOM!


Redneck cat says you've got one minute to get the hell off of his land before he fetches the shotgun.


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posted by Monty at 09:44 AM

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