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January 30, 2012

The Daily DOOM


America’s GDP grew by a smokin’ hot 1.7% last year. Whee! It bears repeating: if you’re counting on getting investment returns in the 7-8% range, much less the 10% range, you’re likely to be disappointed for the next, oh, ten to twenty years. If you plan to retire on your savings, you need to be realistic about how much you need to put away, because you’re not going to be able to count on investment returns to fill the hole.

Don't read this story (it's just more of the same "California is boned" stuff I've been yelling about for a long time); read the comments to it. The mindset of the public employees -- particularly the unionized ones -- is pretty common to states high in the rankings of the LOTB. In fact, this attitude is pretty prevalent across the public sector generally. The sense of entitlement, grievance, and utter lack of clue about private-sector compensation and benefits is rife. But taxpayers are beginning to get a gut full of this rancid porridge, even in California. The window of opportunity where this fiasco can end amicably is closing fast.

I’m sure you’ll be as shocked as I was to find that a union official thinks that public-sector pensions -- mainly held by unionized public-sector workers -- are being unfairly demonized. Pensions are doing just fine and dandy, and that financial calamity looming over nearly every government budget in the land is just a specter conjured up by gun-toting anti-government wingnuts. Or something. I kind of lost track of his argument in the thicket of faulty reasoning, conculsion-jumping, obfuscation, and outright lies.

It’s really heartwarming how public-sector labor unions have stepped up and agreed to sacrifice in the name of fiscal responsibility. The spirit of public service is not dead!

You know why states are scared shitless of actually having to depend on realistic rate-of-return calculations in their pension actuarial tables? This is why. Unless the economy takes an extremely unlikely turn to the upside, and stays there for a good long while, there is no way on earth many states are ever going to be able to pay out the benefits they have promised to their employees and other beneficiaries. Which is why I advise people who are counting on government money -- pensions, benefits, welfare, whatever -- not to count on that money too much in the years ahead. If you can save your own money but aren’t doing it yet, you’d better start doing it right now.

That $1.2 billion (more or less) of segregated client money that MF Global "lost" is probably gone forever. I could have told them that, and for a hell of a lot less money than the lawyers and auditors charged. In a just world the CME would be on the hook for it, but I expect they'll weasel out of the obligation somehow. I also expect that a lot of the CME's customers will do their business elsewhere in the future, or simply abandon the futures-trading market entirely.

Well, you have to give California this: they never let previous mistakes scare them out of making entirely new ones. They also have a touching faith in the cosmic power of government fiat -- that if only they declare something to be so, why then it will be so, and reality be damned.

The Germans want the Greeks to give up a substantial part of their sovereignty as part of the bailout deal. The Greeks may be broke and deeply dysfunctional, but they are also a proud people who have no difficulty remembering the last German occupation of their homeland -- they may prefer penury to vassalage.

Terms of Enrampagement: Fitch goes apeshit with the red pen.

This story should be the stake through the heart of that stupid “Warren Buffet’s secretary pays a higher tax rate than he does” argument.

“But wait!” I hear you say. “Mr Buffet doesn’t actually write a check to the IRS for Berkshire Hathaway’s taxes. So obviously Greg Mankiw is looking at tax incidence (and doing a poor job at that) which means we can ignore him and return to Buffet’s numbers.” No. You can’t. Taxes are applied against people, not things. When you pay your property tax, you pay the tax. Not your house. So you have to attribute the corporate tax collection to somebody. That person should be the shareholders.

Please, Hammer, don’t hurt ‘im!

Isn’t it funny how liberals always seem to use the language of collectivism and fascism to explain their desired Utopia? Mark Levin’s recent book -- and Jonah Goldberg’s path-breaking Liberal Fascism -- could not be more timely.

George Will sees the same tendency towards tyranny that seems ever-present in the liberal heart. To a liberal, the checks and balances of a republican form of government are irritating roadblocks on the road to implementing Utopia -- hence the rise of such presidents as Wilson, FDR, Johnson, and Barack Obama, who wield executive power as if it were an imperial scepter.

The ECB chose...poorly.

Teh Krugman drops what may be one of his stupidest, badly-reasoned, and meretricious columns ever. And if you know Teh Krugman’s body of work, that’s quite a bar to clear.

And while we’re beating up on Teh Krugman, it’s worth pointing out that he pretty much gave up on being an economist a long time ago. These days he’s a professional leftist agitator and propagandist, and a particularly unsubtle and obvious one at that.

Remember: slow growth is almost as bad as actual recession. If your blood won't clot, you can bleed to death slowly just as well as you can quickly. It just takes more time.

Have I mentioned that Illinois is boned? Because they are, you know. Really, really boned.

It’s good to be the King. It’s also good to be a member of the King's Royal Court.

Do the poor deserve our help? I often think, like William Munny in the movie Unforgiven, that deserve’s got nothing to do with it. Ultimately charity should be an individual choice, not a governmental obligation. Charity suborned out of someone is not charity at all, but theft -- there’s a difference between handing a bum twenty bucks and having him pull a knife and take it from you by force. And many of “the poor” are poor because of bad habits and bad decision-making. I can feel sorry for their plight without thinking for a moment that it’s my fault, or my problem to fix.

...and this is why I wish I’d bought Apple stock way back when it was cheap.

The aging of America is giving rise to some predictable problems, specifically a shortage of nursing homes. I say “predictable” because it’s obvious to anyone who has studied demographics even briefly that this would be a problem, but it’s still one that seems to have taken a lot of states by surprise. And then there’s the fact that many nursing homes are just badly run, have poor oversight, and are funded with a collapsing welfare-state structure that probably won’t survive much longer (Medicaid/Medicare). Chances are that at some point you’re going to need supervised care in your old age, so start planning for it now -- don’t depend on the government to do it for you, because I can pretty much guarantee you that you won’t like where you end up if you do.

[E]xisting nursing homes are struggling. They long have lost money on patients whose stays are covered by state-run Medicaid programs, which pay for long-term care for chronically or terminally ill patients who have run out of money. According to a reportthis month by the AHCA, in 2011 nursing homes lost at least $20 per Medicaid resident per day nationwide. Total losses came to $6.3 billion nationally, the highest yearly total ever, with higher deficits to come next year, according to the report.

I’ve long wondered if the EU and ECB appreciate the harm they’d be doing to financial markets if they go ahead with their “voluntary” jawboning of debt-holders to avoid triggering CDS payouts. “Default” is mainly a semantic argument at this point anyway: Greece is busted, and every investor knows it. The default is already priced in. All this endless dithering and finagling has done is to make a bad situation worse and prevent Greece from making any kind of recovery.

Housing? Yeah, it’s still in the dumper, pretty much.

Entrepreneurship, not endless “aid” from governments or strangers in foreign lands, is the best and most long-lasting solution to poverty in most cases.

Futurists have been predicting the ‘end of cash’ for decades. Currency will never entirely disappear, even in a high-technology society, but it will become a niche commodity sooner rather than later. (Hell, it already is in a lot of ways: I probably only see about 2-3% of my yearly income in bank-notes. The rest is just digital bits sitting in a computer somewhere. I don’t even write that many checks these days.)

Boy, that last debt-ceiling throwdown was so fun I can’t wait for the next one to start!

I think the Euro is doomed, for reasons I’ve gone on about at tedious length in this space, but will the collapse of the Euro lead inexorably towards more nationalism, xenophobia, and -- eventually -- hostility among European nations? I’m not sure I buy that, at least not as a causative thing. Europeans have been going to war with each other every fifty years or so for centuries, over all manner of things. If it happens again, this is simply reversion to the mean, not some ghastly perversion of history.

When I said I’ll get to it, I meant I’ll get to it. The Good Lord did not decree the wife to be the Cosmic Timekeeper, Keeper of Keys, and Chronicler of Events. (I’ve always said that my ex and I divorced due to religious differences: she thought she was God and I disagreed.) But the fellows need to remember to actually, you know, get to it. A failure to get to it in the past may what causes the wife to remind you to get to it now.

Here's the thing about addicts: they make very reliable customers, through thick and thin.

It’s kind of funny how the NYT waited to unleash a thumb-sucker like this until after Steve Jobs passed away. Probably because they were scared of what he’d do to them if he were still alive.

California’s Redevelopment Agencies may be facing default in the wake of a recent Supreme Court decision.

China’s falling imports tell an interesting tale, and tend to support my belief that a “hard landing” is more likely in China than the China-boosters think.

It’s bad you get foreclosed on due to delinquent mortgage payments. It’s even worse to go into foreclosure on a house you don’t even own any more.

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posted by Monty at 08:40 AM

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