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Article Archive: Government Making life worse one bulb at a time 04/08/23   Government "There's something off about LED bulbs - which will soon be, thanks to a federal ban, the only kind you can buy." Unforced errors 11/14/21   Government "Now where there is the ability to self-correct, eventually societies will remove regulators, politicians, etc. That said, some things are more entrenched than others. I speak of the cult of stimulus. What is more untouchable than the central banks? It's hard to think of anything more unaccountable. They may technically be beholden to the local parliament, but practically, no one ever messes with them aside from despots pursuing hyperinflation" The death algorithm 05/09/20   Government "If there was ever a subject that required a difficult public conversation, the response to Covid-19 is it. How many people are we willing to let die in order to keep businesses working? And which people will we let die? By creating a secret model to inform such decisions, the Trump administration is taking these questions out of the public and scientific spheres, replacing data-driven ethical debate with a pseudo-mathematical political tool. This is bad news for science, and potentially terrible news for Arizona residents." Until growth goes away 04/17/20   Government "We can't automatically assume we'll be able to grow out of Covid-19 debt like we did after World War II. A lot of things globally and demographically happened after the war that gave a tailwind to growth. Some of those forces are now headwinds." Canadian Government's predatory mortgage scheme 03/25/19   Government "The Government of Canada is using taxpayer money to invest in real estate at near peak valuations. The Department of Finance revealed the 2019 Budget yesterday, including new housing measures. Most notable is the First-Time Home Buyer Incentive, which allows the CMHC, Canada's national housing agency, to become an investor in your real estate. On the surface, it seems like it may provide a boost to the market, and is a generous gift to first-time buyers. The program's timing however, makes it a predatory loan scheme that will do more harm than good." Paul Volcker talks to Ray Dalio 02/12/19   Government "I sat down with one of my greatest heroes, Paul Volcker, to talk about the state of the economy and U.S. government as well as learn about the principles that guided his incredible career." [video] Manulife bailout 11/01/18   Government James comments on regulatory assistance provided to MFC. Rent control needs retirement 02/12/18   Government "If politicians actually want to make sure everyone who needs a place to rest their head has one, there's only one way to do it: Build more housing. Which means, in turn, loosening the legal restrictions and community veto points that make it so hard to add supply. Because there's no way to escape the fundamental math: Unless you build enough housing to shelter the people who want to live in your city, a whole lot of people will be left out in the cold." Ontario making it easier to underfund pensions 01/29/18   Government "Pension defaults are rare, but the CCPA study found that of the 39 largest publicly traded companies that have defined-benefit pensions, only nine had plans that were fully funded last year. Rather than loosening restrictions, Ontario should amend the Ontario Pension Benefit Act to require businesses to fund 100% of their pensions. Those that can't shouldn't offer pensions in the first place." Policy-based evidence making 01/29/18   Government "Social scientists, meanwhile, are discovering that they cannot replicate many of their own findings. The incentives of the profession weigh heavily toward designing experiments that will produce a positive result, analyzing and reanalyzing data until one appears, and then interpreting it as broadly as possible. That kind of research produces headlines, but not knowledge - a fact that social scientists are beginning to acknowledge. With their enthusiasm for EBP, policymakers are running headlong into a collapsing structure, pushing past inhabitants fleeing in the other direction." Risky mortgage investments 12/04/17   Government "The documents seen by Reuters, supported by interviews with 10 sources familiar with FSCO's activities, show that the agency didn't merely miss the problem; its senior investigators ignored or downplayed clear warnings from within their own ranks that retail investors were being sucked into a market to which they were ill-suited." Mind the gap 11/20/17   Government "On a walking tour of town officials and development consultants pointed to empty buildings and described all the things that could be done to bring them back to productive activity: open up the blank walls and re-install windows, incubate all kinds of new businesses, paint, outdoor seating. I rolled my eyes. None of those things make any economic sense given the regulatory hurdles involved and the likely negative return on the up front investment. I've seen this scenario play out many times before." Right math, wrong conclusion 11/20/17   Government "The answer is to confront the truth that the public plans are too generous and need rethinking. But wait, can't you hear the public-sector workers saying that it's unfair to reduce their DB promise because they have paid for it? Well they haven't. Government workers and their employers are still funding their pensions assuming the same 1990s returns that built the Factor of 9 (or maybe a factor of 12). They are ignoring the true cost of the pensions being earned and they hope that future investment gains will forever hide the fact that the guaranteed benefit they are receiving is being funded by risky investments that may or may not pay off. Government workers are paying about 12% of pay for a benefit that is worth about three times the amount even though the government is telling taxpayers its only worth twice as much." Inside Trump's U.S.D.A. 11/12/17   Government "The folks at the Department of Agriculture laid on a friendly welcome for the Trump transition team, but they soon discovered that most of his appointees were stunningly unqualified. With key U.S.D.A. programs - from food stamps to meat inspection, to grants and loans for rural development, to school lunches - under siege, the agency's greatest problem is that even the people it helps most don't know what it does." SEC insider-trading-like returns 11/06/17   Government "A portfolio mimicking trades made by SEC employees between 2009 and 2011 earned excess risk-adjusted returns of about 4 percent a year for all securities, with abnormal gains jumping to 8.5 percent when only stocks of firms based and registered in the U.S. were tracked" Pension crisis 03/26/17   Government "The question is why haven't the headlines presaged pension implosions? As was the case with the subprime crisis, the writing appears to be on the wall. And yet calamity has yet to strike. How so? Call it the triumvirate of conspirators - the actuaries, accountants and their accomplices in office. Throw in the law of big numbers, very big numbers, and you get to a disaster in a seemingly permanent state of making. Unfunded pension obligations have risen to $1.9 trillion from $292 billion since 2007." Of milk cows and moats 10/29/16   Government "When considering businesses that rely on a given locality, ask how the health of the locality affects the business. It's worth considering. For those who invest in municipal bonds, it is a critical factor. Particularly as the Baby Boomers age, weak municipalities will come under pressure. Stick with strong municipalities, and services that would be impossible to do without." If you build it 09/17/16   Government "While infrastructure investment is often needed when cities or regions are already expanding, too often it goes to declining areas that don't require it and winds up having little long-term economic benefit. As for fighting recessions, which require rapid response, it's dauntingly hard in today's regulatory environment to get infrastructure projects under way quickly and wisely." The $6 trillion public pension hole 08/21/16   Government "Compounding the problem, today's aggregate annual contributions of $160 billion don't even pay for newly earned benefits, adding more debt to be paid by future generations. State and local governments already face making bigger required contributions - even under the measurement approach that ignores risk - requiring higher taxes and crowding out other government spending. That is already happening in Chicago. In Detroit, Stockton, Calif., and Puerto Rico, bondholders haven't been paid." Why Americans don't trust government 05/29/16   Government "Though the bridge took only 11 months to build in 1912, it will take close to five years to repair today at a huge cost in dollars and mass delays." How politicians poisoned statistics 04/24/16   Government "Perhaps the lies aren't the real enemy here. Lies can be refuted; liars can be exposed. But bullshit? Bullshit is a stickier problem. Bullshit corrodes the very idea that the truth is out there, waiting to be discovered by a careful mind. It undermines the notion that the truth matters. As Harry Frankfurt himself wrote, the bullshitter 'does not reject the authority of the truth, as the liar does, and oppose himself to it. He pays no attention to it at all. By virtue of this, bullshit is a greater enemy of the truth than lies are.'" A debt of choice 03/26/16   Government "But the federal debt is only part of our overall debt level. The provinces collectively have debts very nearly equal to the feds, bringing the combined federal-provincial debt closer to 60 per cent of GDP" Trump's business disaster 03/05/16   Government "Why is Donald Trump getting a pass for his disastrous and incompetent track record of running a public company?" From the tower to the white house 02/21/16   Government "The era of humiliation came in the 1990s, as the casino business faltered and two of his gambling entities defaulted (two other related casino enterprises defaulted in 2004 and 2009). This destabilised the whole of Mr Trump's operation, which may have had as much as $6 billion of debt in today's prices. Through asset sales, defaults and forbearance from his creditors, Mr Trump clung on and avoided personal bankruptcy." Slaves of the markets 02/14/16   Government "The academics suggest central banks are following a rough rule of thumb. They postpone rate increases when volatility is high, for fear of causing further upset, but respond to high volatility with rate reductions." What the Big Short gets wrong 01/17/16   Government "Oscar-nominated director Adam McKay deserves credit for trying to make such complex financial concepts accessible. But since many Americans will be inclined to believe The Big Short's cinematic version of the mortgage crisis, it's worth noting that its analysis of what actually happened to the American economy - even down to the virtuosic little explainer asides- doesn't really add up." New York is a city of NO 11/28/15   Government "New York now is a city of no. You have this great idea? No, you can't do it. You want to try this out? No. You go to Baltimore and it's a city of, 'Well why the f- not? Let's try this!' They really, really love their city and it's exciting. It's that energy I felt when I was growing up in New York." Canadian pension plans the new speculators 11/15/15   Government "Leverage at Healthcare of Ontario Pension Plan, widely known as HOOPP, now exceeds 100 percent of its net assets, leading to a more than doubling of the total assets at its disposal to invest. Ontario Teachers. Pension Plan, the nation's third largest, has leverage equal to half its net assets." Taking on the drug profiteers 10/10/15   Government "The Turing scandal has shown just how vulnerable drug pricing is to exploitative, rent-seeking behavior. It's fair enough to excoriate Martin Shkreli for greed and indifference. The real problem, however, is not the man but the system that has let him thrive." Mansion owners who plead poverty 09/27/15   Government "The tax unfairness caused by the growing phenomenon of mansion owners alleging poverty can be traced largely to Canada failing to catch trans-national migrants who refuse to report their total global income at tax times." OPEC of maple syrup 08/22/15   Government "While Mr. Trepanier studiously avoids calling the organization a cartel, he has described it as the OPEC of maple syrup in the past, referring to the group of oil-producing countries." Wishful thinking 06/27/15   Government "There is little sign that states will face reality soon. A recent rule change by the Governmental Accounting Standards Board was intended to bring the deficit calculations of public plans closer to those of the private sector. In practice, however, the CRR found that only seven of 150 plans had reduced their discount rate by more than half a percentage point." How Chicago used financial engineering 04/04/15   Government "Unsurprisingly, some of Chicago's bonds are already trading at junk levels. That said, the rating agencies and most other market participants still appear to be light years away from understanding the true scope of Chicago's financial problems. The city has a very - well, let's just call it unconventional - approach to borrowing money and probably should not be considered investment grade." Red tape is strangling good samaritans 01/03/15   Government "Regulations and rules are making it harder to do the right thing." John Oliver: The Lottery 11/15/14   Government "State lotteries claim to be good for education and the general wellbeing of citizens. But are they? (Spoiler alert: No.)" [video] O Beholden Canada 10/26/14   Government "Call it Canada's summer of pension discontent. Governments throughout the country are grappling with as much as $300 billion in unfunded government-worker retirement debt. In a country of just 38.5 million people, that's a pension problem roughly equivalent to the one that California faces. And it's widely shared." The Secret Goldman Sachs tapes 09/26/14   Government "The Fed failed to regulate the banks because it did not encourage its employees to ask questions, to speak their minds or to point out problems. Just the opposite: The Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them." The Secret Recordings of Carmen Segarra 09/26/14   Government "An unprecedented look inside one of the most powerful, secretive institutions in the country. The NY Federal Reserve is supposed to monitor big banks. But when Carmen Segarra was hired, what she witnessed inside the Fed was so alarming that she got a tiny recorder and started secretly taping." The criminalisation of business 08/29/14   Government "Companies must be punished when they do wrong, but the legal system has become an extortion racket." Addicted to zero 07/05/14   Government "So tell me again why central bankers in North America feel they have to 'keep our economy going' by maintaining a zero-interest rate policy." Why was Canada exempt from the financial crisis? 05/25/14   Government "From its beginning, Canada's banking system was structured to be less vulnerable to shocks and thus did not give rise to the need for a central bank to achieve stability. By contrast, the Fed was created to offset vulnerabilities in the American banking system." Flinty-eyed fiscal conservatives 05/04/14   Government "Why yes: reading the budget, one was taken back to the last days of the Bob Rae government, two decades ago - that same feeling that those in charge had no real grasp on the size of the hole they had dug for themselves, nor any serious plan to get out of it. In retrospect, the comparison seems unfair. Rae was a flinty-eyed fiscal conservative compared to this bunch." When hedge funds lobby 03/15/14   Government "The worrying thing is that the Ackmans and Westhuses of this world have discovered what you might call the Buffett Arbitrage. Rather than investing in advertising or capital stock, they invest instead in lobbying, with the aim of getting very specific legislation passed which will make them very rich." Now with less democracy 02/23/14   Government "Quebec is vowing to act fast and make changes that would give the corporate boards of locally-headquartered companies more power to reject hostile takeovers." Job creation plan won't create a single job 12/15/13   Government "However, reading through the details of this plan, skepticism turns to outrage. This is a plan that is explicitly designed to increase income inequality and transfer money from poorer regions of the province to one of Canada.s wealthiest cities and will likely not create a single new job." Confessions of a Quantitative Easer 11/17/13   Government "Even by the Fed's sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn't really working." Obamacare's losers and why they matter 11/03/13   Government "If we want health inflation to stay low and health care costs to be less of an anchor on advancement, we should want more Americans making $50,000 or $60,000 or $70,000 to spend less upfront on health insurance, rather than using regulatory pressure to induce them to spend more. And seen in that light, the potential problem with Obamacare's regulation-driven 'rate shock' isn't that it doesn't let everyone keep their pre-existing plans. It's that it cancels plans, and raises rates, for people who were doing their part to keep all of our costs low." Political fear vs technical needs 11/03/13   Government "Inside the Department of Health and Human Services. Centers for Medicare and Medicaid, the main agency responsible for the exchanges, there was no single administrator whose full-time job was to manage the project." The pension dragon 11/03/13   Government "After days of struggling to understand the financial condition of the retirement system for state employees and teachers, she came to realize that the system no longer made sense. Years of mismanagement and underfunding had allowed money to be drained that was needed to pay promised pensions. The crisis was much worse than Raimondo had expected." Debt limit 10/20/13   Government "A satirical short film taking a look at the national debt and how it applies to just one family." Puerto Rico's pension crisis 09/22/13   Government "Puerto Rico can cover only 11.2 percent of its public pension costs, which is even less than the notoriously underfunded Illinois retirement system" How Detroit went broke 09/16/13   Government "Detroit is broke, but it didn't have to be. An in-depth Free Press analysis of the city's financial history back to the 1950s shows that its elected officials and others charged with managing its finances repeatedly failed - or refused - to make the tough economic and political decisions that might have saved the city from financial ruin." Did Goldman Sachs overstep? 08/04/13   Government "A month after ace programmer Sergey Aleynikov left Goldman Sachs, he was arrested. Exactly what he'd done neither the F.B.I., which interrogated him, nor the jury, which convicted him a year later, seemed to understand. But Goldman had accused him of stealing computer code, and the 41-year-old father of three was sentenced to eight years in federal prison. Investigating Aleynikov's case, Michael Lewis holds a second trial." Feds vs. raisins 07/21/13   Government "The government allows them to sell one out of every two raisins.The farmers were always supposed to get a percentage of the money raised from the reserve pool raisins, but as profit margins dwindled over the years, so did the return to farmers. The tipping point came in 2003, when farmers received zero dollars in return for the 47 percent of the crop they had surrendered." Detroit gap and pension math 07/20/13   Government "Until mid-June, there was one ray of hope in Detroit's gathering storm: For all the city's problems, its pension fund was in pretty good shape. If the city went under, its thousands of retired clerks, police officers, bus drivers and other workers would still be safe. Then came bad news. Seemingly out of nowhere, a $3.5 billion hole appeared in Detroit's pension system, courtesy of calculations by a firm hired by the city's emergency manager." How not to run a pension fund 03/03/13   Government "I love alternative investments. I love Wall Street. I don't mind paying fees. But I want returns." We are the 98 percent 01/12/13   Government "The only way to finance a big European-style state is to have it paid for by massive taxation of everyone, mostly the middle class. Right now, we are avoiding honest debate on this fact." The real fiscal problem 01/01/13   Government "Why it's not repaying the swelling national debt that necessarily by itself creates a problem for the U.S. economy; rather it's the government's increasing spending on unproductive programs in the first place, financed with increasing levels of national debt, that creates the real problem for the economy." Zero-Sum doesn't add up 12/29/12   Government "Is life like a pizza, where if some people have too many slices, other people have to eat the pizza box?" Heading over the fiscal cliff 12/29/12   Government "Even if the United States slips back into recession in the short-term, the fiscal cliff's economic prescriptions will make it better in the long-run: The Congressional Budget Office estimates that, a decade after going over the edge, debt will be 58% of GDP - which is much better than 100%." Manitoba credit union depositors take note 12/22/12   Government "An experienced accountant with more than two decades of experience in government, Mr. Dalgliesh said he had been relegated to the Manitoba Information Technology Branch after trying to blow the whistle on Crocus, a disastrous labour-sponsored investment fund." How to burn $50 billion 12/22/12   Government "Ottawa has increased by $50-billion the amount of residential mortgages that it is willing to guarantee. But this time the Canada Mortgage and Housing Corp., the biggest provider of mortgage default insurance, is not getting any. Instead, the additional backing is going only to private-sector players such as Genworth Canada, who will see their maximum raised to $300-billion from $250-billion." Pay giveaway 12/15/12   Government "From coast to coast, states are cutting funding for schools, public safety and the poor as they struggle with fallout left by politicians who made pay-and-pension promises that taxpayers couldn't afford." Kindly note the impending bankruptcy 12/01/12   Government "You cannot simultaneously enjoy American-sized taxes and European-sized government. One or the other has to go." [Some colourful language.] Backseat drivers 10/06/12   Government "Yet our private sector is forever being treated as if it were, in fact, part of the public sector. I don't mean the normal laws and regulations to which all of us are properly subject, so far as our actions might cause harm to others. I mean the habit of certain busybodies, in government and out, to dictate how private firms should run their business, just as if the backseat drivers were the owners." It's just totally irresponsible 08/12/12   Government "What we're actually witnessing - and have been for years now - is not gridlock, but the abdication of responsibility by Congress and the president for performing the most basic responsibilities of government. Despite the fiscal crisis that Washington knows will occur if it fails to deal with unsustainable spending and debt, it hasn't managed to produce a federal budget in more than three years." The state of the States 08/12/12   Government "For operational purposes, 'states' are best understood as undercapitalized health care and pension funds that write speeding tickets on the side." Generational warfare 07/28/12   Government "Flash forward half a century, and the boomers who once sang along with Dylan have become the reactionary elders, clinging to their power and perks at the literal expense of everyone younger. There's a new generation gap opening up, one that threatens to tear apart the country every bit as much as past confrontations over war, free love, drugs, and sitar music. This fight is about old-age entitlements and whether the Me Generation will do what's right for the country and stop sucking up more and more money from their children and grandchildren." Operation Un-Twist 06/21/12   Government "I don't know who in their right mind is lending the US government money for 10 years at 1.59% and for thirty years at 2.67%. You have to believe inflation will be lower than these values just to get your money back, let alone make any real return. (The best I can do is to opine that these are not long-term investors, and they think they can get out before rates rise. I will admit that understanding such low rates is stretching my rational-investor efficient-market prejudices.) Well, no matter. When offered a screaming good deal, you should take it!" Red tape keeps poor people out of jobs 05/08/12   Government "One way to help improve the lives of low income people is to focus on how the government can give them more. Sometimes this can be very effective, and even desirable. But a far less common way is to look at how the government can stop doing stuff that is making them worse off. Occupational licensing is a great example of this." We're spent 05/04/12   Government "This is why pleas for 'Stimulus now, austerity later' in the U.S. and Europe have the ring of chalkboard economics: Looks great in (someone's) theory, but out in the real world the market and the citizens see right through it. The biggest economic problems are political: And the biggest political problem is commitment." Bias in government forecasts 04/21/12   Government "Clearly, part of the blame lies with voters who don't want to hear that budget discipline means cutting programs that matter to them, and with politicians who tell voters only what they want to hear. But another factor has attracted insufficient notice: systematically over-optimistic official forecasts." Why we must end too big to fail 03/22/12   Government "TBTF institutions were at the center of the financial crisis and the sluggish recovery that followed. If allowed to remain unchecked, these entities will continue posing a clear and present danger to the U.S. economy. As a nation, we face a distinct choice. We can perpetuate TBTF, with its inequities and dangers, or we can end it. Eliminating TBTF won't be easy, but the vitality of our capitalist system and the long-term prosperity it produces hang in the balance." Financial Repression 03/18/12   Government "As they have before in the aftermath of financial crises or wars, governments and central banks are increasingly resorting to a form of "taxation" that helps liquidate the huge overhang of public and private debt and eases the burden of servicing that debt. Such policies, known as financial repression, usually involve a strong connection between the government, the central bank and the financial sector. In the U.S., as in Europe, at present, this means consistent negative real interest rates (yielding less than the rate of inflation) that are equivalent to a tax on bondholders and, more generally, savers." Over-regulated America 02/16/12   Government "Complexity costs money. Sarbanes-Oxley, a law aimed at preventing Enron-style frauds, has made it so difficult to list shares on an American stockmarket that firms increasingly look elsewhere or stay private. America's share of initial public offerings fell from 67% in 2002 (when Sarbox passed) to 16% last year, despite some benign tweaks to the law. A study for the Small Business Administration, a government body, found that regulations in general add $10,585 in costs per employee. It's a wonder the jobless rate isn't even higher than it is." CPI retooling 02/13/12   Government "If Statscan is successful in reducing overestimation of consumer price inflation, then annual increases in public or private wages and pensions indexed to the CPI will end up smaller than they would have been. This could mean companies have to pay out less in annual wage increases, but it will also offer some cost savings for Ottawa" How sneaky governments steal your money 01/17/12   Government "Many nations in the developed world are in deep do-do with their debt levels. On one hand they need growth to earn their way out of their problems, while on the other they're being forced into anti-growth austerity measures by markets, concerned about their spiralling interest obligations. It's a grim position for those of us brought up to expect an unrelentingly rosy economic outlook. This isn't a new situation, though. We've been here many, many times before and governments have, by design and evolutionary accident, developed many, many ways of dealing with these problems. The cunning thing is that many of these involve stealthily thieving from their own citizens, but done so surreptitiously that, if we're not careful, we won't even notice it." Why you can't find heritage poultry 01/05/12   Government "But here's what hasn't been said about supply management: It is the enemy of deliciousness." Smoke Screening 12/23/11   Government "As you stand in endless lines this holiday season, here's a comforting thought: all those security measures accomplish nothing, at enormous cost. That's the conclusion of Charles C. Mann, who put the T.S.A. to the test with the help of one of America's top security experts." Unintended consequences: nanny state edition 11/30/11   Government "Today and tomorrow mark the last days that put-upon parents can satiate their youngsters by simply throwing down $2.18 for a Happy Meal toy. But, thanks to the new law taking effect on Dec. 1, this is no longer permitted. Now, in order to have the privilege of making a 10-cent charitable donation in exchange for the toy, you must buy the Happy Meal. Hilariously, it appears Mar et al., in their desire to keep McDonald's from selling grease and fat to kids with the lure of a toy have now actually incentivized the purchase of that grease and fat -- when, beforehand, a put-upon parent could get out cheaper and healthier with just the damn toy." How to kill an economy 11/26/11   Government "Venezuelan President Hugo Chavez's move to expand price controls this week sparked panic purchases by consumers, leading to shortages of everything from coffee to toilet paper." A model for Ontario 11/17/11   Government "California has long been among America's most extensive taxers and regulators of business. But at the same time, the state had assets that seemed to offset its economic disincentives: a famously sunny climate, a world-class public university system that produced a talented local workforce, sturdy infrastructure that often made doing business easier, and a history of innovative companies. No more. As California has transformed into a relentlessly antibusiness state, those redeeming characteristics haven't been enough to keep firms from leaving. Relocation experts say that the number of companies exiting the state for greener pastures has exploded. In surveys, executives regularly call California one of the country's most toxic business environments and one of the least likely places to open or expand a new company. Many firms still headquartered in California have forsaken expansion there." Congress: Trading stock on inside information? 11/14/11   Government "The next national election is now less than a year away and congressmen and senators are expending much of their time and their energy raising the millions of dollars in campaign funds they'll need just to hold onto a job that pays $174,000 a year. Few of them are doing it for the salary and all of them will say they are doing it to serve the public. But there are other benefits: Power, prestige, and the opportunity to become a Washington insider with access to information and connections that no one else has, in an environment of privilege where rules that govern the rest of the country, don't always apply to them. When Nancy Pelosi, John Boehner, and other lawmakers wouldn't answer Steve Kroft's questions, he headed to Washington to get some answers about their stock trades. Most former congressmen and senators manage to leave Washington - if they ever leave Washington - with more money in their pockets than they had when they arrived, and as you are about to see, the biggest challenge is often avoiding temptation." Capitol gains 10/15/11   Government "It's also possible that congressional insiders could have simply stopped reporting potentially dubious transactions once they knew people were paying attention. According to Ziobrowski, the forms still aren't audited, and they're woefully inadequate - for example, Eggers and Hainmueller say there's no clear method for reporting short-selling, one of the major ways to profit from inside information." A national debt Of $14 trillion? Try $211 trillion 09/30/11   Government "'We've got 78 million baby boomers who are poised to collect, in about 15 to 20 years, about $40,000 per person. Multiply 78 million by $40,000 - you're talking about more than $3 trillion a year just to give to a portion of the population,' he says. 'That's an enormous bill that's overhanging our heads, and Congress isn't focused on it. ... To eliminate the fiscal gap, Kotlikoff says, the U.S. would have to have tax increases and spending reductions far beyond what's being negotiated right now in Washington. 'What you have to do is either immediately and permanently raise taxes by about two-thirds, or immediately and permanently cut every dollar of spending by 40 percent forever." A Ponzi scheme that should be fixed 09/21/11   Government "You can force young people into Social Security, but if there just aren't enough young people in existence to support current beneficiaries, the system will collapse anyway. When Social Security began making monthly distributions in 1940, there were 160 workers for every senior receiving benefits. In 1950, there were 16.5 today, three in 20 years, there will be but two. Now, the average senior receives in Social Security about a third of what the average worker makes. Applying that ratio retroactively, this means that in 1940, the average worker had to pay only 0.2 percent of his salary to sustain the older folks of his time in 1950, 2 percent today, 11 percent in 20 years, 17 percent. This is a staggering sum, considering that it is in addition to all the other taxes he pays to sustain other functions of government, such as Medicare, whose costs are exploding." Is social security a Ponzi scheme? 09/10/11   Government "Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today's young may well get less than they put in)." The forgotten man 09/10/11   Government "With equities down sharply, many people are wondering if Uncle Ben and Uncle Sam will once again intervene and turn on the money spigot to prop up equities. Well, before the possible onset of QE3, it's time to consider who's paying for QE2 and all the other intervention strategies to date." India says no to $80 toilet paper 09/08/11   Government "Ordinary conversations over chai in India are now about markets and focus on the contrast between private success and public failure. While the private sector provides cutting-edge services and products to the world, the roads outside are potholed, electricity is patchy and water supply erratic. The difference between the two worlds is accountability: In private life, if you don't work, you don't eat in public life, jobs are effectively for life. Indians believe that they are rising despite the state and are often heard to say that 'India grows at night, when the government sleeps.'" The ugly truth 08/23/11   Government "Based on past behavior of fiscal policy makers, businesses understandably regard the debt ceiling agreement and the political outcome of negotiations between Congress and the president with the suspicion akin to how the British humorist P.G. Wodehouse regarded his aunts: "It is no use telling me there are bad aunts and good aunts," he wrote. "At the core they are all alike. Sooner or later, out pops the cloven hoof." It will be devilishly difficult for businesses to commit to adding significantly to their head count or to meaningful capital expansion in the United States until clarity is achieved on the particulars of how Congress will bend the curve of deficit and debt expansion and the "cloven hooves" are revealed. No amount of monetary accommodation can substitute for that needed clarity. In fact, it can only make it worse if business comes to suspect that the central bank is laying the groundwork for eventually inflating our way out of our fiscal predicament rather than staying above the political fray - thus creating another tranche of uncertainty." American idiots 08/18/11   Government "What the hell is going on? Standard and Poor's, the bond-rating agency, downgrades the U.S., and the world trembles. The markets here go nuts on the first trading day after the downgrade, losing $1 trillion in value. European Union finance chiefs are playing Whac-a-Mole with members' debt problems. And England ... England was literally burning." Debt, downgrades, and inflation 08/13/11   Government "Whether we are watching rioting in Greece, the US debt-ceiling showdown, or even the City of Toronto simply trying to reduce the number of libraries they offer, the issues in each case are exactly the same ..." It's the elderly 08/04/11   Government "If leadership is the capacity to take people where they need to go - whether or not they realize it or want it - then we've had almost no leadership in these weeks of frustrating and maddening debate over the budget and debt ceiling. There's been an unspoken consensus among President Obama, congressional Democrats and Republicans not to discuss the central issue underlying the standoff. We've heard lots about "compromise" or its absence. We've had dueling budgets with differing mixes of spending cuts and tax increases. But we've heard almost nothing of the main problem that makes the budget so intractable. It's the elderly, stupid." I've got all the clarity I need 08/03/11   Government "And then when you have a company like Boeing, you're talking about one of the iconic US companies gets sued by the federal government. If that doesn't get your attention, nothing will. They get sued for investing $2 billion in South Carolina. Last time I saw South Carolina was a part of the United States of America and you get sued for that." Dodger mania 07/06/11   Government "The result has been a vicious circle: because tax evasion is so common, people trust the system less, which makes them less willing to pay taxes. And, because so many don't chip in, the government has had to raise taxes on those who do. That only increases the incentive to cheat, since there tends to be a correlation between higher tax rates and higher rates of tax evasion." Wrong number 07/02/11   Government "The cast-iron nature of this pensions guarantee ought, you might think, to be reflected in pension accounting. But states are allowed a more generous accounting treatment than private-sector employers. They can discount their liabilities on the basis of the assumed rate of return (8% is standard) on the assets in their pension funds. Companies have to use the (lower) yield on an AA-rated corporate bond. So the present value of a state's liabilities is lower than it would be if private-sector rules applied, even though the rights of public-sector workers are greater." Private-public wage disparities 06/25/11   Government "When I negotiate collective agreements, I find a distinct difference between the instructions I receive from entrepreneurs -large or small -who are spending their own money compared to professional managers. The former are almost invariably more parsimonious and do not succumb to collective agreement 'creep' wherein, in each round of bargaining, more and more is given, until the collective agreement can be weighed in pounds, each clause providing another impediment or cost." The war on drugs turns 40 06/17/11   Government "Almost every year the DEA budget and staff are expanded, never mind if the organization is succeeding or failing at its mission. This isn't the DEA's fault. The illicit trade in narcotics is a black market that cannot be eliminated in a free society. But why do legislators continue to increase its size?" State finances are worse than estimated 06/07/11   Government "Fixed interest expenses are absorbing a bigger and bigger share of state budgets, leaving a shrinking portion for everything else. Today, debt service absorbs half of Nevada's budget, and 40% of Michigan's. In Arizona, California, Connecticut, Ohio and Illinois, the share now exceeds 20%." The U.S. postal service nears collapse 06/01/11   Government "The USPS has stayed afloat by borrowing $12 billion from the U.S. Treasury. This year it will reach its statutory debt limit. After that, insolvency looms. On Mar. 2, Postmaster General Patrick R. Donahoe warned Congress that his agency would default on $5.5 billion of health-care costs set aside for its future retirees scheduled for payment on Sept. 30 unless the government comes to the rescue. 'At the end of the year, we are out of cash,' Donahoe said. He noted that the unusual requirement was enacted five years ago by Congress before mail started to disappear." Economic stagnation explained, at 30,000 feet 05/28/11   Government "The man in the aisle seat is trying to tell me why he refuses to hire anybody. His business is successful, he says, as the 737 cruises smoothly eastward. Demand for his product is up. But he still won't hire. "Why not?" "Because I don't know how much it will cost," he explains. "How can I hire new workers today, when I don't know how much they will cost me tomorrow?" He's referring not to wages, but to regulation: He has no way of telling what new rules will go into effect when. His business, although it covers several states, operates on low margins. He can't afford to take the chance of losing what little profit there is to the next round of regulatory changes. And so he's hiring nobody until he has some certainty about cost." Beware of the yogurt 05/23/11   Government "Ms Dashtaki is pondering whether to move to another state, one whose rules allow for artisanal products. She would not be the first entrepreneur to flee the Golden State. Or she might just give up. After all, one has to make a living. It looks like California's regulators have triumphantly saved their population from the threat of mass poisoning once again." Rules for Fools 05/15/11   Government "Some occupations clearly need to be licensed. Nobody wants to unleash amateur doctors and dentists on the public, or untrained tattoo artists for that matter. But, as the Wall Street Journal has doggedly pointed out, America's Licence Raj has extended its tentacles into occupations that pose no plausible threat to health or safety - occupations, moreover, that are governed by considerations of taste rather than anything that can be objectively measured by licensing authorities. The list of jobs that require licences in some states already sounds like something from Monty Python - florists, handymen, wrestlers, tour guides, frozen-dessert sellers, firework operatives, second-hand booksellers and, of course, interior designers - but it will become sillier still if ambitious cat-groomers and dog-walkers get their way." GM's profits a huge net loss for taxpayers 05/14/11   Government "No, the question was not whether GM could make a profit after a bankruptcy that stiffed most of its creditors and shed the most grotesque burdens of its legacy costs, nor whether giving companies money will make them more profitable. The question is whether it was worth it to the taxpayer to burn $10-20 billion in order to give the company another shot at life. To put that in perspective, GM had about 75,000 hourly workers before the bankruptcy. We could have given each of them a cool $250,000 and still come out well ahead compared to the ultimate cost of the bailout including the tax breaks--and over $100,000 a piece if we just wanted to break even against our losses on the common stock." Botox and beancounting 05/10/11   Government "Take public-sector debt. The definition used in Washington, DC, is "federal government debt held by the public", which stood at 62% of GDP at the end of 2010. But if you instead use Europe's preferred measure - general government gross debt, which also includes the borrowing of state and local governments and Treasury securities held by other government bodies, such as the Social Security Trust Fund - it jumps to 92% of GDP (see left-hand chart). That is on a par with Portugal's level of public debt." Supersize our pension plan 04/29/11   Government "The overconcentration of financial power isn't even the biggest flaw with the proposed Mega CPP. Even worse, it will take money away from many of those who need it, and give it to those who don't. Advocates of a fat CPP insist that it is needed to keep the elderly out of food banks. In fact, poverty among seniors is remarkably low. Fewer than 5% of those over 65 are below Statistics Canada's low-income cutoff. Thanks to Ottawa's Old Age Security and Guaranteed Income Supplement programs, many seniors actually see their disposable income go up when they retire, says Vettese. Poverty is a far bigger problem among working-age adults - nearly 10% of them fall below the Statscan line. Yet most of them would have to pay extra taxes to fund the Mega CPP. That's Layton's anti-Robin Hood scheme in a nutshell: removing money from the pockets of younger workers, business owners and the working poor to give better pensions to everybody, including those who already have a sweet deal at retirement. I can understand why union leaders like this approach. I just can't understand why anyone else thinks it's fair." Losing 84 Cents on Dollar 04/21/11   Government "Stephen Street, the state inspector general who led the investigation with U.S. authorities, says that criminal law fell short of addressing all of the police pension system's shortcomings. "Randy Zinna is a symptom of a larger problem over there, which is a lack of oversight, a lack of accountability," Street says. "You can't conclude anything other than that."" State of war 04/12/11   Government "The funding crisis in public-sector pensions is, in large part, the result of post-dated cheques written by politicians in the past. As Roger Lowenstein, a journalist, recounts in his book "While America Aged", there has been a "devil's pact" in which politicians granted benefits to unions without funding those promises properly. A classic illustration comes from San Diego, California. In 2002 the funding ratio (the proportion of pension liabilities covered by assets) of the city's pension scheme dropped close to 82.3%, a level that should have triggered a rise in the contribution to make up the shortfall. That would have required a tax increase. To avoid this, the city did a deal with the unions whereby it would raise future benefits in return for not having to lift contributions. In other words, faced with a hole in the fund, the authorities dug deeper." Pick a number, any number 04/12/11   Government "Unfunded schemes cannot use the assumed rate of return on their assets because they do not have any. One possible measure would be the growth rate of the economy, since tax revenues (which will fund the pensions) should rise in line with GDP. The problem lies in estimating the future growth rate. In 1990 the Japanese government would have forecast a much higher growth rate than it actually achieved. The financial economists say that the discount rate should be based on the inflation-linked government bond yield, because British public-sector pensions are inflation-protected. As index-linked yields are currently very low (below 1% in real terms), that makes the British shortfall on public-sector pension funding look very large, at around 1 trillion, or 81% of GDP." The Ryan Journey 04/08/11   Government "The Democrats are on defense because they are unwilling to ask voters to confront the implications of their choices. Democrats seem to believe that most Americans want to preserve the 20th-century welfare state programs. But they are unwilling to ask voters to pay for them, and they are unwilling to describe the tax increases that would be required to cover their exploding future costs." Ontario's search for a solar system 03/29/11   Government "In Germany, where the solar revolution began, critics are now questioning the huge size of the subsidies, estimated at $200,000 to $300,000 per job created." The expansion of regulators 03/29/11   Government "From an evolutionary perspective, a research regulator is a life form with three very interesting characteristics. First, its numbers explode in response to catastrophic events regardless of how rare that event is. Second, it has few natural predators, so its expansion goes unchecked. Third, regulators multiply like bacteria: they spawn more regulations which require more regulators, so there is a rapid increase in population over time. And these three characteristics derive, I submit, from a basic human tendency to focus on emotionally-engaging events while ignoring their probability." Public Pension-Fund Squeeze 03/23/11   Government "Some public pension funds are finding themselves caught in a squeeze between actuaries worried about future benefit costs and local governments worried about immediate budgets strains. The tension was on display last week, when California pension fund Calpers decided to hold its expected annual return rate steady. The fund's actuary had recommended that the California Public Employees' Retirement System adopt a more-conservative long-term investment expectation nearly a dozen local officials attended a meeting last week to urge Calpers not to change the rate." How state budgets are breaking 03/13/11   Government "In this fiery talk, Bill Gates says that state budgets are riddled with accounting tricks that disguise the true cost of health care and pensions and weighted with worsening deficits -- with the financing of education at the losing end." The Lobster Underground 03/10/11   Government "Whether as a treat for the common man or an excuse to slum it for the well-to-do, the lobster roll was never terribly hip, edgy, or controversial. Until last year, when a Brooklyn artist and chef reinvented the lobster roll as delicious underground performance art. Using the moniker Dr. Claw, the thirtysomething chef began boiling batches of lobsters in his home kitchen and using the meat in rolls he sold - without the requisite licenses and permit - in Greenpoint, a Brooklyn neighborhood populated by Polish Americans and an ever-increasing numbers of hipsters. In order to skirt the law, Claw - whose real name is widely published but whom I chose not to identify here so that he could speak freely to me - devised a system that would be the envy of even the most enterprising drug dealers on The Wire. Claw's customers first had to friend him on Facebook. Then, if they checked out, Claw would provide the potential customer with a phone number, exchange texts when the roll was ready, and hand off the goods in a plain brown bag." The elephant in the room 03/09/11   Government "As can be seen, entitlements and interest will absorb all government spending by 2025. But when the CBO did the same sums a decade ago, says Ms Meeker, the critical point was reached in 2060. In short, the fiscal position is deteriorating rapidly. Where then is the appetite for cutting entitlements or increasing taxes sharply?" Broke Town, U.S.A. 03/03/11   Government "In May 2008, Vallejo filed for bankruptcy. The filing drew little national attention most people were too busy watching banks fail to worry about cities. But while the banks have largely recovered, Vallejo is still in bankruptcy. The police force has shrunk from 153 officers to 92. Calls for any but the most serious crimes go unanswered. Residents who complain about prostitutes or vandals are told to fill out a form. Three of the city's firehouses were closed. Last summer, a fire ravaged a house in one of the city's better neighborhoods one of the firetrucks came from another town, 15 miles away. Is this America's future?" Flee the land of quota 03/03/11   Government "So, rightly or wrongly, unlike so many others, we didn't base our family's future on an industry spinning its wheels, plus having an investment-to-earnings ratio similar to where Nortel was when things went into the manure pit." Why Koch Industries Is Speaking Out 03/01/11   Government "Federal data indicate how urgently we need reform: The unfunded liabilities of Social Security, Medicare and Medicaid already exceed $106 trillion. That's well over $300,000 for every man, woman and child in America (and exceeds the combined value of every U.S. bank account, stock certificate, building and piece of personal or public property)." A License to Shampoo 02/07/11   Government "Amid calls for shrinking government, lawmakers across the country are vowing to cut regulations that crimp economic growth. President Barack Obama recently said it's time to root out laws that 'are just plain dumb.' Tell that to the cat groomers, tattoo artists, tree trimmers and about a dozen other specialists across the country who are clamoring for more rules governing small businesses." State Budget Bunk 02/07/11   Government "When Arizona claimed to be selling its government buildings, it was engaging in a far more deceptive kind of borrowing - a gimmick known as "tax-exempt certificates of participation" and even more preposterous than the Daily Show correspondent realized. There was no new owner in this so-called sale. Rather, the state floated more than $1 billion of notes, promising to repay bondholders with the "rent" that it would pay to lease the buildings. Since rent, not tax revenues, technically would repay the certificates, Arizona could borrow the money, even though it exceeded the state's constitutional debt limit. Yet Arizona will pay the rent on the buildings with tax revenues, so the impact on taxpayers is exactly the same as more borrowing would have been: in this case, $1.5 billion in future taxes." In debt to Grandpa 01/30/11   Government "Sometimes the financial system can appear like one of those Escher drawings in which water flows simultaneously uphill and downhill. Governments rescued banks from the threat of failure in 2008, but banks are also big buyers of government bonds - so much so that a sovereign default in Europe might cause a banking crisis. Who is supporting whom? The same question can be asked of pension funds." Illinois Plan for Pensions Questioned 01/28/11   Government "The Securities and Exchange Commission has said it has a special team devoted to investigating public pensions, and last year it brought its first case ever against a state, accusing New Jersey of securities fraud for claiming to have pension assets that did not really exist." The Cost of Clout 01/27/11   Government "People in Chicago tend to write off clout and political corruption in Chicago with a shrug, as a unique or even amusing local affectation, or just part of the character of purely political life of the city, but one that doesn't fundamentally change its status as the "City That Works." But nothing could be further from the truth. Chicago's culture of clout is a key, perhaps the key, factor holding the city back economically." A path to escape debt 01/23/11   Government "Policymakers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers." Dire States 01/09/11   Government "'If something cannot go on forever, it will stop.' States with a permanent mismatch between taxes and spending will not be able to squeak by on budget gimmicks and backdoor borrowing forever either they'll find a way to bring their budgets into balance, or they'll run out of money and default on their obligations. The path they choose will make a big difference in the future of the states, and of their citizens - and in the life of the nation as a whole." Government workers of the world unite! 01/09/11   Government "It would be a mistake to write off the public-sector unions. They are masters of diverting attention from strategic to tactical questions. Undoubtedly the unions will lose some of their privileges over the coming years the scale of the debt crisis makes this inevitable. But will governments have the courage to tackle the root causes of the problem (such as pensions) rather than dealing with secondary problems (such as wages)? And will they dare to tackle questions of power rather than just pay and perks? If they are to claim victory in the coming fight, they need not just to restore the public finances to health. They also need to breathe the spirit of innovation into Leviathan." When States Default 01/04/11   Government "Land values soared. States splurged on new programs. Then it all went bust, bringing down banks and state governments with them. This wasn't America in 2011, it was America in 1841, when a now-forgotten depression pushed eight states and a desolate territory called Florida into the unthinkable: They defaulted on debts." Day of Reckoning 12/22/10   Government "60 Minutes recently did a short program on the looming municipal bond problems, with a focus on Illinois and New Jersey, plus an interview with Meredith Whitney..." Accounting for Public Pensions 12/12/10   Government "A generation ago, when Ronald Reagan was president, the accounting rule makers forced American companies to come clean on the cost of the pension plans they were promising to employees. That decision, perhaps more than any other, heralded the eventual demise of defined-benefit pensions for employees of American companies. Now something very similar may be in store for public sector employees..." Speak softly and carry a big chainsaw 11/21/10   Government "Mr Obama badly needs to show that he can still lead on domestic policy. He should start by cajoling Congress into an agreement to tackle America's ominous fiscal arithmetic. Conventional wisdom says such an agreement is impossible: the problem is too big, the politics too difficult. But it is wrong to suppose that the deficit is unfixable, as two proposals for fixing it have shown this month. And even the politics may not be totally intractable." 70 Years Early 11/07/10   Government "Looking back into the 1920s, he found that investment-grade bonds went bust with alarming frequency, often in the same year they were rated. On average, he showed, a bank that followed the new rules would end up with a third of its bond portfolio going into default. The record was so unreliable that it would be 'still more responsible,' Mr. Palyi growled, to 'stop the publication of ratings altogether.'" Pensions: Angry populists' next target 11/03/10   Government "This is d j vu: Generous retirement packages, enabling middle-age workers to retire early, helped sink Detroit -- eventually landing GM and Chrysler at Treasury's door. The United Auto Workers, of course, negotiated those packages -- and management signed off on them. Now a majority of union members work for the government, and labor is determined to protect its pensions. Unlike those in the private sector, government retirement packages are often embedded in law. Wait until politicians tell that to the taxpayers stuck footing the bill." The Fed Loses Twice 11/03/10   Government "Bad timing for the Fed. They are powerless, or even negatively powerful (They will achieve the opposite of what they are intending), because they don't understand how monetary policy really works, particularly during times of crisis. The Fed is imitating Japan, which has done horribly over the last 20 years. Can't they learn from recent data? Interest rates that are too low cause businessmen to make bad decisions." Labour and the left 10/28/10   Government "Last year there were more public-sector employees (7.9m) than private-sector workers (7.4m) in unions - the first time this has happened. And public-sector unions have a distinct advantage over private ones. 'Through their extensive political activity,' says Mr DiSalvo, 'these government-workers' unions help elect the very politicians who will act as 'management' in their contract negotiations - in effect handpicking those who will sit across the bargaining table from them, in a way that workers in a private corporation (like, say, American Airlines or the Washington Post Company) cannot.' And the public-sector managers sitting across the table don't have the same worries as private-sector bosses, who must answer to profit-driven overlords. The lack of competition in government services produces little pressure on management or unions to come up with the most efficient work agreement. As a result, public-sector unions have become accustomed to getting what they want." Night of the Living Fed 10/27/10   Government "Since it is customary in polite society to apologize for causing distress, on behalf of the Fed, let me apologize for the extraordinary destructiveness of its policies for the last 15 years. Bernanke's version of an apology, delivered in January this year to the American Economic Association, was to claim that the Fed's monetary policy during the 2000-08 period was appropriate, and that there were no major failings, such as missing the housing bubble completely, that were worth mentioning. This stubbornness in the face of clear data is right up there with efficient market believers. And very impolite indeed." O Canada! 10/19/10   Government "By the 1990s, Canada had also become one of the developed world's most socialized economies, with the government accounting for 53% of the country's GDP. Economic growth was stagnating, while debt levels were inexorably and dangerously mounting. At its scariest zenith, Canadian federal and provincial government debt amounted to 120% of GDP, with roughly 70% at the national level and an outrageously bloated 50% owed by the provinces. Again, to put that in perspective, despite our debt binge over the last decade, US government debt is around 60% of GDP, while state debt is nearly 17% of GDP, or 77% overall (this is based on net, not gross, debt and excludes the Social Security trust fund holdings as well as intergovernmental liabilities.)Moreover, unlike in our present situation, Canada's interest rates were rising due to worries about the nation's solvency. Its coveted AAA credit rating was yanked, and the market was treating it as an increasingly unreliable borrower. In other words, it was much like the situation a number of European countries find themselves in today - except that Canada didn't have Germany to bail it out. As you can readily see, there's simply no question that Canada was in some very deep doo-doo. Which begs the multitrillion-dollar question: How the heck did it get out of that jam? " The Financial Time Bomb of Longer Lives 10/17/10   Government "First the good news: We're living longer, healthier lives than ever before.We're already so used to the idea of greater longevity, in fact, that it may seem ho-hum to learn that boys and girls born in 2008 in the United States have life expectancies of 75 and 81, respectively.Those life spans, however, represent a bonus of about three decades, compared with Americans born in 1900, according to a report last year from the Census Bureau. And, by the way, Spain, Greece and Austria fared even better, proportionally: Life expectancies in those countries doubled over the course of the 20th century.Now for the bad news: At this rate, we can't afford to live so long." The Crisis in Local Government Pensions 10/13/10   Government "We calculate the present value of local government employee pension liabilities as of June 2009 for approximately 2/3rds of the universe of local government employees. Using local government accounting methods, the total unfunded liability in these areas is 190 billion or over 7,000 per municipal household. When government accounting is corrected by discounting already-promised benefits at zero-coupon Treasury yields, the total unfunded obligation is 383 billion or over 14,000 per local household." N.Y. Faces 200 Billion in Retiree Health Costs 10/13/10   Government "The health benefits are entirely separate from the pensions that New York's public workers have earned. Governments have reported their pension obligations for years, but their retiree medical obligations have been building up unseen, because governments were not required to account for them. The information is starting to come to light because of a new accounting requirement." Congressional Staffers Gain From Trading in Stocks 10/11/10   Government "The aides identified by the Journal say they didn't profit by making trades based on any information gathered in the halls of Congress. Even if they had done so, it would be legal, because insider-trading laws don't apply to Congress." In praise of inflation 10/03/10   Government "In times when people are reluctant to take risks, a little inflation can help grease the skids. In doing this, though, inflation helps debtors and spenders at the expense of creditors and savers. It's easy to see why this makes us uncomfortable. It seems to reward those who have behaved recklessly, and to punish those who played by the rules, saving their money and living frugally. But the economy doesn't exist, in the end, to reward virtue and punish vice. It exists to maximize our well-being, and, currently, doing that may require helping the undeserving and irresponsible, if only because there are so many of them. Boosting inflation isn't the right policy, but it may just be the correct one." Hiding, Harboring, Hoarding at Harvard 09/26/10   Government "Until now, the conflicts of interest among academics who moonlight as well-paid corporate advisers haven't been page-one material. But 'Inside Job' breaks new ground by exposing the failure of universities to regulate the integrity of their biggest stars.Mr. Ferguson believes that the honor and independence of the economic discipline in academia has become so sullied that it poses 'systemic risk' by influencing policy." The Illusion of Pension Savings 09/19/10   Government "Earlier this year, Illinois said it had found a way to save billions of dollars. It would slash the pensions of workers it had not yet hired. The real-world savings would not materialize for decades, of course, but thanks to an actuarial trick, the state could start counting the savings this year and use it to help balance its budget." Not enough labor day 09/06/10   Government "Today, many Americans will be enjoying a respite from the incessant demands of their jobs. But many Americans will be wishing desperately they could trade the holiday for the incessant demands of a job. This year, given the state of the economy, Labor Day should be called Not Enough Labor Day." The Fed can create money, not confidence 08/25/10   Government "The key word here is "uncertainty." The Obama administration and Congress have dumped a huge load of highly dubious new legislation on Americans, much of it unread even by the legislators who voted for it. ObamaCare is an attempted federal takeover of a vast and complex industry. No one really knows how much chaos the financial sector "reform" act will generate. Hyperactive zealots in federal bureaucracies such as the Environmental Protection Agency have been unleashed to do silly things like attempt to reduce the planet's supply of carbon dioxide." War between the sexes 08/25/10   Government "On average, 65-year old men today will receive only 43.6% of the net benefits that women receive, and young men today can expect a net tax burden over their lifetimes that will be 3.4 times greater than for women." Complex adaptive systems 08/25/10   Government "As long as the Chinese keep giving us money and inflation remains low, I see nothing forcing US policy to change. This is not sustainable, however, and when the US turns into a Greece-like situation, it will be a very bad decade. When you try to micromanage a complex system, the most important virtue is humility." Battle looms over public pensions 08/23/10   Government "There's a class war coming to the world of government pensions. The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide. The have-nots are taxpayers who don't have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks." Huge government benefit 08/23/10   Government "Not participating in Social Security is a huge benefit. The implicit return on 'premiums' paid by you and your employer is typically below zero. In other words, if you took your social security taxes and stuffed them in a mattress, you would get a better return." U.S. is bankrupt 08/12/10   Government "Let's get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills. What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy." Why I'm not hiring 08/09/10   Government "A life in business is filled with uncertainties, but I can be quite sure that every time I hire someone my obligations to the government go up. From where I sit, the government's message is unmistakable: Creating a new job carries a punishing price." This ain't your granpa's debt 07/26/10   Government "The deficits of the next few decades are scheduled to balloon because of budget decisions -- Medicare and Social Security and tax levels -- that are decades in the making. The political process created this time bomb and the political process will have to defuse it." The technocracy boom 07/22/10   Government "When historians look back on the period between 2001 and 2011, they will be amazed that a nation that professed to hate bureaucracy produced so much of it." Washington takes aim at Apple 07/15/10   Government "If you want to produce something in America, you'd better play the game. Contribute to politicians' campaigns, hire their friends, go hat in hand to a congressional hearing, and apologize for your success." Government for sale 07/14/10   Government "The article's subhed tells you all you need to know: 'Why Lobbying Is Washington's Best Bargain; Lobbyists say for just a few million, they can make clients billions'" What fresh hell is this? 07/09/10   Government "Somewhere along the way an enterprising employee of mine made coffee in our new (not yet legal) office for the early morning fishermen, but we soon found that to continue to provide coffee would require the installation of a triple cleanup sink, which in turn would add marginally to the load on the current septic system, which in turn would trigger a county requirement for us to build a new $2.5 million sewage treatment facility. Uh, never mind on that coffee." The true cost of pensions 07/07/10   Government "But the present value of future liabilities is around 1.1 trillion, even after the government slipped in a reduction in index-linking in the recent budget. That is around 80% of GDP, a figure that of course is on top of the national debt numbers normally calculated. if the British government were to pay interest on this liability each year, the bill would be larger than the cost of servicing the official debt." Illinois stops paying its bills 07/04/10   Government "For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state's bills and refuses to take the painful steps - cuts and tax increases - to close a deficit of at least $12 billion, equal to nearly half the state's budget." Padded pensions 07/04/10   Government "In Yonkers, more than 100 retired police officers and firefighters are collecting pensions greater than their pay when they were working. One of the youngest, Hugo Tassone, retired at 44 with a base pay of about $74,000 a year. His pension is now $101,333 a year." States of crisis 06/26/10   Government "Even as the U.S. appears to be on the mend -- gross domestic product has climbed three straight quarters -- finances in Arizona, Illinois, New Jersey, New York and other states show few signs of improvement. Forty-six states face budget shortfalls that add up to $112 billion for the fiscal year ending next June, according to the Center on Budget and Policy Priorities, a Washington research institution. State spending is 12 percent of U.S. GDP." Is Illinois the new California? 06/22/10   Government "Like California, Illinois hasn't balanced a budget in nearly a decade, and instead uses gimmicks and borrowing to close gaps. Like California, Illinois regularly issues bonds to pay for current government operations. But unlike California, Illinois has some of the country's least-funded public employee pension plans." Do politicians cause downsizing? 06/21/10   Government "This paper provides a new empirical approach for identifying the impact of government spending on the private sector. Using changes in congressional committee chairmanship as a source of exogenous variation in state-level federal expenditures, we find that fiscal spending shocks appear to significantly dampen corporate sector investment activity. Specifically, we find statistically and economically significant evidence that firms respond to government spending shocks by: i.) reducing investments in new capital, ii.) reducing investments in R&D, and iii.) paying out more to shareholders in the face of this reduced investment opportunity set. Further, we find that when the spending shocks reverse (through a relinquishing of chairmanship), most all of these behaviors reverse. Finally, we also find some evidence that firms scale back their employment, and experience a decline in sales growth." Payback time 06/21/10   Government "Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits." Poof, there goes the pension 06/13/10   Government "Gov. David A. Paterson and legislative leaders have tentatively agreed to allow the state and municipalities to borrow nearly $6 billion to help them make their required annual payments to the state pension fund. And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund - from the same pension fund." [Note the 8% return assumption for extra chuckles.] The ethanol trap 06/10/10   Government "The most disgusting aspect of the blowout in the Gulf of Mexico isn't the video images of oil-soaked birds or the incessant blather from pundits about what BP or the Obama administration should be doing to stem the flow of oil. Instead, it's the ugly spectacle of the corn-ethanol scammers doing all they can to capitalize on the disaster so that they can justify an expansion of the longest-running robbery of taxpayers in U.S. history." The millionaire cop 06/02/10   Government "So when you hear that government workers now make, on average, 30% more than private sector workers, you are not getting the full story. Government workers make more than twice as much as private sector workers, on average, when you include the net present value of their pensions." GM's phony bailout payback 04/27/10   Government "In short, GM is using government money to pay back government money to get more government money. And at a 2 percent lower interest rate at that." No money for you 04/26/10   Government "Entrepreneurs who want to put principles before profits - even after their companies go public - may soon have the legal cover to do just that. On Apr. 13, Maryland Governor Martin O'Malley signed a law creating legal entities known as "benefit corporations" and giving them greater protection from shareholder lawsuits. California and Vermont have similar bills in the works and legislators in at least three other states, including New York, are considering them. While many entrepreneurs applaud the measures, corporate governance experts worry about the rights of shareholders." The beholden state 04/21/10   Government "How public employees became members of the elite class in a declining California offers a cautionary tale to the rest of the country, where the same process is happening in slower motion." Nudge this 04/15/10   Government "In the Weekly Standard, Andrew Ferguson notes the paradox of behavioral economics, that proving people are often irrational then begs the question as to why we think some subset of intellectuals or regulators are more rational" Coal crackdown 04/04/10   Government "The EPA has set new limits on water pollution caused by coal mining, only days after President Obama angered environmentalists by opening up huge swaths of coastline to offshore drilling. The drilling story received louder coverage, but the mining announcement should have a far larger impact on America's energy future." Fix the mistake on the lake 03/20/10   Government "Like all too many American cities, Cleveland seems locked into a death spiral, shedding people, jobs, and dreams like nobody's business. When it comes to education, business climate, redevelopment, and more, Clevelanders have come to expect the worse. Is a renaissance possible?" Cut pay for government workers 03/02/10   Government "Imagine a company that dominates its field. It's been No. 1 in its industry as long as anyone can remember. But lately it's fallen on hard times. Revenue has dropped dramatically. The only thing keeping it afloat is record borrowing based on its stellar credit rating, earned many years ago. Meanwhile, independent analysts have shown that workers at this company earn higher than average wages. Moreover, the workers have skills that are not easily transferable. If this were an airline or an automaker, the solution would be a no-brainer: It would be time for a big pay cut. If the company didn't cut pay, or increased it, creditors and investors would question the seriousness of management." The trillion dollar gap 02/20/10   Government "A $1 trillion gap. That is what exists between the $3.35 trillion in pension, health care and other retirement benefits states have promised their current and retired workers as of fiscal year 2008 and the $2.35 trillion they have on hand to pay for them, according to a new report by the Pew Center on the States. In fact, this figure likely underestimates the bill coming due for states. public sector retirement benefit obligations: Because most states assess their retirement plans on June 30, our calculation does not fully reflect severe investment declines in pension funds in the second half of 2008 before the modest recovery in 2009." Inflation won't solve our debt problems 02/19/10   Government "The more powerful argument against inflating away debt is that it will not work, says Alan Auerbach, an economics professor at the University of California, Berkeley. Why? Because so much of our long-term spending obligations are indexed to inflation." Elders favor more regulation 02/17/10   Government "Put aside for a moment the populist pressure to regulate banking and trading. Ask the elder statesmen of these industries - giants like George Soros, Nicholas F. Brady, John S. Reed, William H. Donaldson and John C. Bogle - where they stand on regulation, and they will bowl you over with their populism." Crony Capitalism 02/09/10   Government "John Stossel's program on crony capitalism." Seven states of energy debt 02/08/10   Government "I've identified seven large US states by four criteria that are sure to cause trouble for Washington's political class at least for the next 3 years, through the 2012 elections. These are states with big populations, very high rates of unemployment, and which have already had to borrow big to pay unemployment claims. In addition, as a kind of Gregor.us kicker, I've thrown in a fourth criteria to identify those states that are large net importers of energy. Because the step change to higher energy prices played, and continues to play, such a large role in the developed world's financial crisis it's instructive to identify those US states that will struggle for years against the rising tide of higher energy costs." Leviathan stirs again 01/25/10   Government "The gap between American public spending and Canada's has tumbled from 15 percentage points in 1992 to just two percentage points today." Paul Volcker 01/24/10   Government "In mid 2009, he joked that the only useful recent banking innovation was the invention of the ATM; by late last year, this was no longer presented in jest and he was deploring excesses in risk-taking and bonuses." Illinois enters a state of insolvency 01/19/10   Government "The sharp rise in pension payments is the biggest factor pushing Illinois toward what a legislative task force last November called "a 'tipping point' beyond which it will be impossible to reverse the fiscal slide into bankruptcy." The little-noticed report on the state's pension problems warned that "the radical cost-cutting and huge tax increases necessary to pay all the deferred costs from the past would become so large that many businesses and individuals would be driven out of Illinois, thereby magnifying the vicious cycle of contracting state services, increasing taxes, and loss of the state's tax base."" Government replaced jobs 01/06/10   Government "In the just-so story of the evolution of our economy, our old manufacturing based economy has been replaced by an innovative knowledge economy. That's not quite true." What's a bailed-out banker worth? 01/03/10   Government "How people are paid at the top in a free-market system has always been a contentious issue, especially in bad times. Babe Ruth.s most famous quip was not about baseball but about salaries. When asked in 1930 if it was right that he should be making more money than President Hoover, he replied, 'I had a better year than he did.'" The states and the stimulus 01/03/10   Government "Remember how $200 billion in federal stimulus cash was supposed to save the states from fiscal calamity? Well, hold on to your paychecks, because a big story of 2010 will be how all that free money has set the states up for an even bigger mess this year and into the future." Loan effort adding to housing woes 01/02/10   Government "The Obama administration.s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good." Michigan forces owners into unions 12/26/09   Government "It's telling that in several states that have gone down this road, state and federal subsidies are the source of the union dues. In Michigan, the scheme is essentially throwing a cash lifeline to unions like the UAW, which are hemorrhaging members." How big a problem is moral hazard? 12/26/09   Government "Do I think that we have a moral hazard problem in our system? Indisputably. The continued existance of Citibank defies belief, unless you factor in implied guarantees." California's in trouble 12/26/09   Government "Without wishing to be overly dramatic, it is this sort of legislative impasse that has enabled many dictators in the past to come to power" The government that stole Christmas 12/26/09   Government "The science of trans-fats is not settled, but even if it were, surely a rational and humane exception must be made where it's a choice between imperfect foods and going hungry." Thinking about politics 12/20/09   Government "Bruce Yandle uses bootleggers and Baptists to explain what happens when a good cause collides with special interests. When the city council bans liquor sales on Sundays, the Baptists rejoice - it's wrong to drink on the Lord's day. The bootleggers, rejoice, too. It increases the demand for their services. The Baptists give the politicians cover for doing what the bootleggers want. No politicians says we should ban liquor sales on Sunday in order to enrich the bootleggers who support his campaign. The politician holds up one hand to heaven and talk about his devotion to morality. With the other hand, he collects campaign contributions (or bribes) from the bootleggers." The worst-run big city in the U.S. 12/16/09   Government "It's time to face facts: San Francisco is spectacularly mismanaged and arguably the worst-run big city in America. This year's city budget is an astonishing $6.6 billion - more than twice the budget for the entire state of Idaho - for roughly 800,000 residents. Yet despite that stratospheric amount, San Francisco can't point to progress on many of the social issues it spends liberally to tackle - and no one is made to answer when the city comes up short." Kill these job-killers 12/14/09   Government "Here's a thought: Instead of trying to "create" jobs by tweaking this tax break or increasing that spending program, why not stop doing things that destroy jobs?" Confronting high risk and banks 12/11/09   Government "Of course, banks also engaged in regulatory arbitrage, by moving from one regulator to another to seek more lenient treatment. Their route to regulatory success - at least in terms of building an empire - was to spike the punch bowl. The banks now want to stop FASB from forcing them to mark assets to market, or reveal their current market value. And they have some sympathy from bank regulators, which fear that marking to market can make banks look too healthy in good times and too unhealthy in bad times. That appalls investors." Obama's big sellout 12/11/09   Government "What's most troubling is that we don't know if Obama has changed, or if the influence of Wall Street is simply a fundamental and ineradicable element of our electoral system. What we do know is that Barack Obama pulled a bait-and-switch on us. If it were any other politician, we wouldn't be surprised. Maybe it's our fault, for thinking he was different." [Looks like the honeymoon is over...] Foxes guard the financial henhouse 12/03/09   Government "Now imagine the uproar if Obama actually allowed Goldman, rather than its ex-employees, to regulate risk in the financial markets. And yet the administration and its allies in Congress are poised to do just that." A growing disaster 11/29/09   Government "Allowing a higher percentage of ethanol in gasoline will not make us less dependent on such foreign energy sources. It will not help the environment. It will not lower consumer prices. And it will result in the poor of the world having less to eat. Instead of raising federal mandates on ethanol, Congress and the Obama administration should end them entirely." How little we know 11/24/09   Government "We are what we repeatedly do. Not what we say we are. Not what we.d like to be. But what we do. What we do as a body politic is rescue rich people from the consequences of their decisions. That is bad for democracy and bad for capitalism. Until we fix that, we as citizens are playing a game of 'heads - Wall Street executives win a ridiculously enormous amount, tails - they just win a ridiculous amount, paid for by the rest of us.' Until we fix that, little else matters." Public pensions face ugly choices 11/10/09   Government "States and municipalities are in deep financial trouble. Pension performance has faltered. Over a trillion dollars worth of municipal pension fund assets have been erased in the recent market meltdown. The average public pension plan is 35% under-funded, and things are getting worse. A wave of municipal bankruptcies could well follow." We're governed by callous children 11/01/09   Government "We are governed at all levels by America's luckiest children, sons and daughters of the abundance, and they call themselves optimists but they're not optimists - they're unimaginative. They don't have faith, they've just never been foreclosed on. They are stupid and they are callous, and they don't mind it when people become disheartened. They don't even notice." A drop in the wrong bucket 10/28/09   Government "The president has proposed sending a $250 check to every Social Security recipient, which sounds pretty good at first. The checks would be part of his admirable efforts to stimulate the economy, and older Americans are clearly a sympathetic group. Next year, they are scheduled to receive no cost-of-living increase in their Social Security benefits. Yet that is largely because they received an artificially high 5.8 percent increase this year. For this reason and others, economists are generally recoiling at the proposal." CMHC's growth fuels worries over new risks 10/18/09   Government "The federal government has quietly given Canada Mortgage and Housing Corp. more financial muscle, raising concerns the multibillion-dollar agency is expanding at an unprecedented pace with little oversight." [CMHC, helping to make Canadian real estate more expensive since 1946.] Then they came for the Fresca 09/27/09   Government "A nonalcoholic sequel to the Whiskey Rebellion seems to be brewing. And Slate may be joining it. I'll call it the Fresca Rebellion, in honor of our editor, David Plotz, a hard-core addict of the citrus-flavored soft drink. For a long time, the only discernible libertarian around here was Jack Shafer, a man unable to wean himself from speech, guns, and other annoying constitutional amendments. But lately, other folks seem to be getting a bit Ayn Randy. On Saturday, Jacob Weisberg blew the whistle on New York Mayor Michael Bloomberg for trying to ban outdoor smoking in public parks ("First They Came for the Marlboros"). Yesterday, Daniel Engber went after the hypocrisy and overreaching of soda-tax advocates. And I've become such a knee-jerk defender of burgers and fries that I'm tempted to seek funding from the Competitive Enterprise Institute." The hazard of moral hazard 09/19/09   Government "When someone insures you against the consequences of a nasty event, oddly enough, he raises the incentives for you to behave in a way that will cause the event. So if your diamond ring is insured for $50,000, you are more likely to leave it out of the safe. Economists call this phenomenon 'moral hazard,' and if you look around, you will see it everywhere." But who is watching regulators? 09/14/09   Government "Senior regulators who stood idly by for years as financial firms built their houses of cards have been rewarded with even bigger jobs or are jockeying for increased responsibilities. The Federal Reserve Board, for example, wants to become the financial system's uber-regulator, even though its officials did nothing as banks made deadly decisions to lend recklessly and leverage themselves to the max. Awarding increased power to those who failed in their oversight duties flies in the face of all notions of accountability." Henry Paulson's longest night 09/01/09   Government "In 2006, Goldman Sachs C.E.O. Henry Paulson reluctantly became Treasury secretary for an unpopular, lame-duck president. History will score his decisions, but the former Dartmouth offensive lineman definitely left everything on the field. In private conversations throughout his term, as crisis followed crisis.Bear Stearns, Fannie Mae and Freddie Mac, Lehman Brothers, A.I.G., and so forth.Paulson gave the author the inside track, from the political lunacy and bailout plans to the sleepless nights and flat-out fear, as he battled the greatest economic disruption in 80 years." Federal pay continues rapid ascent 08/24/09   Government "In 2008, federal worker compensation averaged a remarkable $119,982, which was more than double the private sector average of $59,909." The latest roadblock for California 08/18/09   Government "Litigators go to court to undo cuts made by legislators and the governor. The state is spending billions of dollars fighting the lawsuits and dealing with increasingly unfavorable rulings." The next great bailout 08/10/09   Government "In Washington these days, the only topics of discussion seem to be how many trillions to throw at health care and the recession, and whom on Wall Street to pillory next. But watch out. Lurking just below the surface is a bailout candidate that may soon emerge like the great white shark in Jaws: Social Security." Jobless checks for millions delayed 07/29/09   Government "Years of state and federal neglect have hobbled the nation's unemployment system just as a brutal recession has doubled the number of jobless Americans seeking aid. In a program that values timeliness above all else, decisions involving more than a million applicants have been slowed, and hundreds of thousands of needy people have waited months for checks." Fifty ways to kill recovery 07/21/09   Government "It's easy enough, of course, to mock state governments nowadays, what with California issuing I.O.U.s to pay its bills and New York's statehouse becoming the site of palace coups and senatorial sit-ins. But the real problem isn't the fecklessness of local politicians. It's the ordinary way in which state governments go about their business. Think about the $787-billion federal stimulus package. It's built on the idea that during serious economic downturns the government can use spending increases and tax cuts to counteract the effects of consumers who are cutting back on spending and businesses that are cutting back on investment. So fiscal policy at the national level is countercyclical: as the economy shrinks, government expands. At the state level, though, the opposite is happening." America's future 07/10/09   Government "Plenty of American states have budget crises; but California's illustrate two more structural worries about the state. Back in its golden age in the 1950s and 1960s, it offered middle-class people, not just techy high-fliers, a shot at the American dream - complete with superb schools and universities, and an enviable physical infrastructure. These days California's unemployment rate is running at 11.5%, two points ahead of the national average. In such Californian cities as Fresno, Merced and El Centro, jobless rates are higher than in Detroit. Its roads and schools are crumbling. Every year, over 100,000 more Americans leave the state than enter it." Why we'll leave L.A. 07/10/09   Government "If New Yorkers fantasize that doing business here in Los Angeles would be less of a headache, forget about it. This city is fast becoming a job-killing machine. It's no accident the unemployment rate is a frightening 11.4% and climbing." The great public-sector pension rip-off 07/10/09   Government "There is a lot of debate about the right discount rate to use, but the conservative approach is to take the cost of government borrowing. Use that rate, and the liability of American state and municipal pension schemes may be $3 trillion - three times the value of all the authorities' existing debts. In Britain the liability adds up to 85% of GDP." Stop the madness that's killing jobs 07/03/09   Government "Why is this job decline happening? The private sector - the real engine of economic and job growth - won't hire because it's scared of what it sees coming out of Washington. On the horizon, as far as the eye can see, are higher taxes, uncontrolled spending and layers upon layers of new regulations. Who would hire new workers faced with that?" Cash-poor California turns to IOUs 07/02/09   Government "Here come the California IOUs. Unable to meet its bills for the second time this year, the state started printing IOUs on Thursday. Some 28,750 IOUs worth $53.3 million will be issued initially, mainly for personal income tax refunds." Why isn't the stimulus stimulating? 06/27/09   Government "It's no secret that the Obama administration is deeply troubled by the continuing rise in unemployment. The national unemployment rate has risen to 9.4% from 7.2% in December and 5.5% in May 2008. The number of employed workers has fallen to 132 million from 135 million in December and 137.5 million in May 2008. Unemployment animates Democrats the way taxes animate Republicans--it's the issue that is important to them above all others. It's also the issue on which the Obama administration believes voters will primarily judge it in 2012. The recent dip in Obama's poll ratings could easily become a collapse if the economy doesn't turn around soon." Ghost cities may be bulldozed 06/18/09   Government "The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature." California's economy: too big to fail? 06/17/09   Government "Though few experts think California will default on its debt - following the example New York City set in 1975 and Cleveland in 1978 - the mere possibility is troubling for the credit markets. "If California truly defaults, I am sure it will shake the faith of bondholders and noteholders in the overall municipal finance system," says Dan Boyd, senior fellow at the Rockefeller Institute of Government. "That would undoubtedly lead to higher issuance costs to additional state and local government loans."" No bond safe from Obama 06/03/09   Government "Bondholders have a new risk to contend with -- the Obama administration's policy of 'shared sacrifice.' The government's approach to the bankruptcies of General Motors Corp. and Chrysler LLC illustrates how this new, unstated policy works: Bondholders are told to give up legal rights, and cash, as part of a government-mandated tradeoff that favors a politically connected special-interest group. The big threat is that this policy will extend to all bonds, including Treasury and municipal debt, not just corporate obligations." The peril of 'buy American' 06/03/09   Government "It's not surprising that Democrats in Congress could not resist adding a 'Buy American' provision to the fiscal stimulus bill earlier this year. It might seem sensible (or at least politically useful) to ensure that taxpayer dollars would be used exclusively to support American jobs. But as states and municipalities start spending stimulus money, the idea is starting to look as counterproductive as it should have looked from the beginning. It is sparking conflict with American allies and, rather than supporting employment at home, the 'Buy American' effort could ultimately cost American jobs." As GM goes so goes California 06/02/09   Government "Though the country has rightly focused on the mortgage mess, retirement obligations still loom as a daunting obligation. Thanks to plunging stock markets, which have decimated retirement accounts, they are more pressing than ever." The need for failure 05/27/09   Government "First, the very notion of "too big to fail" is dangerous. It suggests that there is an insurance policy that says, no matter how risky your behavior, we will make sure you stay in business. It encourages banks to get bigger (or more interconnected), and it subsidizes risky behavior." The climate-industrial complex 05/21/09   Government "Some business leaders are cozying up with politicians and scientists to demand swift, drastic action on global warming. This is a new twist on a very old practice: companies using public policy to line their own pockets." Dangerous toys, strange bedfellows 05/19/09   Government "Overnight, a bunch of cheerful believers in good government found themselves on the wrong side of a do-gooding law. Under the terms of the new rules, their lead-free, hand-crafted toys were now illegal until proven clean." Stimulating trade wars 05/18/09   Government "If you thought "buy American" provisions were a thing of the past, think again. Canadians are bellowing and U.S. companies trying to employ Americans are shutting down. Someone didn't think this through." Soak the rich, lose the rich 05/18/09   Government "Here's the problem for states that want to pry more money out of the wallets of rich people. It never works because people, investment capital and businesses are mobile: They can leave tax-unfriendly states and move to tax-friendly states." Geithner's gift to Wall Street 05/18/09   Government "Imagine if you were not really in the market for a house but the government came along and said that it would finance 94% of a home's purchase price with a mortgage rate of less than 3%. Still not interested? Wait, Uncle Sam has some additional sweeteners: if you do the deal and buy the house for only 6% down, you also get the equivalent of rental income every month to the tune of at least an annualized yield of 10% of the purchase price. But wait there's still more: if, say, after two years, you decide you don't want the house any longer, you can just walk away from it. No need to pay the balance of the mortgage (it won't affect your credit rating), and you can keep the rental income received to date." Chrysler and the Rule of Law 05/13/09   Government "Fleecing lenders to pay off politically powerful interests, or governmental threats to reputation and business from a failure to toe a political line? We might expect this behavior from a Hugo Chavez. But it would never happen here, right? Until Chrysler." One nation, under banks 04/27/09   Government "The spectacle of Ben Bernanke and Henry Paulson running roughshod over Kenneth Lewis and his minions at Bank of America Corp. raises a pivotal question for all Americans: Is the U.S. a nation of laws, or a nation of banks?" The wail of the 1% 04/20/09   Government "In a witch hunt, the witches have feelings, too. As populist rage has erupted around the country, stoked by canny politicians, an opposite rage has built on Wall Street and other arenas where the wealthy hold sway. Its expression is more furtive and it.s often mixed with a kind of sublimated shame, but it can be every bit as vitriolic." Pulp nonfiction 04/06/09   Government "Thanks to an obscure tax provision, the United States government stands to pay out as much as $8 billion this year to the ten largest paper companies. And get this: even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry -- handsomely -- to use more fossil fuel." [From the unintended consequences file ...] Why Bridgewater won't participate in PPIP 04/02/09   Government "The only way the plan can work is if the investors buy the assets at low prices, the banks sell them at high prices, and the taxpayer covers the difference. Dalio is worried that, eventually, taxpayers will figure that out." Bubblespeak 03/30/09   Government "In his timeless 1946 essay "Politics and the English Language," George Orwell condemned political rhetoric as a tool used "to make lies sound truthful" and "to give an appearnce of solidity to pure wind." Were he alive today, Orwell might well be moved to pen a comanion piece on the use of financial lingo. Remember those toxic assets? The poorly performing mortgages and collateralized debt obligations festering on the books of banks that made truly exerable lending decisions? In the latest federal bank rescue plan, they've been transformed into "legacy loans" and "legay securities" - safe for professional inestors to purchase, provided, of course, they get lots of cheap government credit." Obama's Nobel Headache 03/29/09   Government "Paul Krugman has emerged as Obama's toughest liberal critic. He's deeply skeptical of the bank bailout and pessimistic about the economy. Why the establishment worries he may be right." The quiet coup 03/28/09   Government "But I must tell you, to IMF officials, all of these crises looked depressingly similar. Each country, of course, needed a loan, but more than that, each needed to make big changes so that the loan could really work. Almost always, countries in crisis need to learn to live within their means after a period of excess - exports must be increased, and imports cut - and the goal is to do this without the most horrible of recessions. Naturally, the fund's economists spend time figuring out the policies - budget, money supply, and the like - that make sense in this context. Yet the economic solution is seldom very hard to work out. No, the real concern of the fund's senior staff, and the biggest obstacle to recovery, is almost invariably the politics of countries in crisis." Look who's getting the goodies 03/26/09   Government "To understand what Washington is actually up to, you have to watch what it does, not what it says. That's especially true when it comes to Washington's role in the ongoing bailout of Wall Street, part of its "let's hope this works" plan to revive the U.S. economy. While Washington is setting the populist mob on the individual American International Group employees who got a total of $165 million in bonuses this year, far larger amounts of money are being quietly handed to Wall Street through programs that generate barely a peep of protest." Have We Seen the Last of the Bear Raids? 03/26/09   Government "The whole exercise was stupid, akin to buying insurance from the captain of the Titanic, who put the premiums in the ship's safe and collected a tidy bonus for his efforts." Wall St. threatens to take ball, go home 03/25/09   Government "Wall Street has had enough and isn't going to take it any more. After months of being battered by politicians, pundits and the American people generally, the Empire is striking back" Rated F for failure 03/24/09   Government "The reason for this continued reliance on ratings is simple: bad regulation. We have seen up close how legal rules that depend on ratings pervert the process." Mass hysteria over AIG 03/23/09   Government "Since the beginning of the crisis I've wondered why the government has found neither the will nor the way to attack the root of the problem -- the people who borrowed money to buy homes they shouldn't have bought. Now I think I understand. It would be too simple. People would understand a lot of small payments to the guy down the street who doesn't deserve them, and become outraged. Far better to throw trillions at opaque corporations, the inner workings of which no one still really understands." Punitive damage 03/21/09   Government "The financial crisis has been widely interpreted as proof of the need for extensive government regulation of banks, insurance companies, and other capitalist institutions. The antics of politicians now that they have a greater role, however, are a vivid reminder of why they can't be trusted with such power." Is he listening? 03/20/09   Government "The president is now trapped between these two realms -- the governing elites who decide things and the people who are governed. Which side is he on? If he does not choose wisely, the anger could devour his presidency." Let's put down the pitchforks 03/20/09   Government "We're angry. We're frustrated. We feel cheated and abused. We're not going to take it anymore. But then again, we don't have much choice, do we? Sure, we can demand that a few more heads roll on Wall Street, or at the Treasury, or that a few hundred million are clawed back from financiers who never deserved it. But the reality is that no matter what we do now, tens of trillions of dollars in wealth have been lost. All that's left is simply an elaborate exercise in settling up the accounts." Tax on employee bonuses advances 03/19/09   Government "Congress, moving swiftly in response to public outrage, advanced legislation to impose steep taxes on employee bonuses at American International Group Inc. and other companies that received taxpayer bailouts." [On the upside, we'll soon know which U.S. banks are healthy based on how quickly they pay the government back. I can see the ads now. Come and work for us and you won't have to pay big taxes on your bonus.] The looting of America's coffers 03/11/09   Government "With moral hazard, bankers are making real wagers. If those wagers pay off, the government has no role in the transaction. With looting, the government's involvement is crucial to the whole enterprise." Lessons fron the great depression 03/10/09   Government "To start, I think it's important that I point out that there's a current recession, is unquestionably severe. It pales in comparison to what our parents and grandparents experienced in the 1930s." Stimulus: a history of folly 03/06/09   Government "Stimulus - that is, fiscal intervention with the express purpose of speeding up the normal regenerative process that Grant describes - is unnecessary and almost certainly harmful, a policy based on hubris and anxiety, rather than on history and good sense. Under such circumstances, the proper way to analyze discrete proposals today for spending or taxing is on their own merits, not on their supposed ability to stimulate something else. There may, in fact, be a good reason for government to spend billions of dollars today on building highways, and it has nothing to do with stimulus. It is that long-term interest rates are at historic lows and that the right highways can boost the economy in the long term. There also may be a good reason, again far apart from stimulus, for revising the tax code and reforming Social Security and Medicare. It is that Americans now understand that the economic future is not so assured as they believed a couple of years ago, and it is time for decisions to be made - in a manner careful, sensible, and unstimulated." Hidden pension fiasco 03/03/09   Government "Public pension funds across the U.S. are hiding the size of a crisis that.s been looming for years. Retirement plans play accounting games with numbers, giving the illusion that the funds are healthy." Bankers need more skin in the game 02/25/09   Government "There is, however, a better solution: expose players in the financial game to greater personal loss if their risk-taking fails. When you worry that a mistake will cause you to lose your second home, your stocks and bonds and your club memberships, then you're less likely to take the kinds of risks that expose the rest of society to your failures. A simple mechanism exists to achieve this purpose: the private partnership. Partners face liability that extends to their personal assets. They aren't protected by the corporate shield that limits losses to what the corporation itself owns (as well as the value of the stocks and bonds the corporation has issued). Unfortunately, the partnership is a legal form of business organization that was largely abandoned by banks over the past quarter-century. Our advice is to bring it back. In other words, don't nationalize; partnerize." Feds need to break up big banks 02/16/09   Government "Nobody is going to put fresh capital into the banking business when your major competitor is going to be continuously bailed out by the United States government with more and more money." Cautionary tales for America from Japan 02/15/09   Government "The Obama administration is committing huge sums of money to rescuing banks, but the veterans of Japan's banking crisis have three words for the Americans: more money, faster." California delays payments 02/02/09   Government "Running short of cash, California has started delaying $3.5 billion in payments to taxpayers, contractors, counties and social service agencies. . . . And because of California's financial woes, credit rating agencies are taking a dim view of the state. Moody's warned in mid-January it might downgrade California's general obligation bond rating because of its budget and liquidity problems. If this happens, it will become even costlier for California to borrow." [California and bust!] California's cash crunch 01/31/09   Government "The world's eighth largest economy is on the verge of issuing IOUs. Suffering from both a $15 billion budget deficit and a multi-million dollar cash shortfall, California is days away from not having enough money to cover all of its bills." Our permanent state of routine emergency 01/20/09   Government "The Cato Institute's James Bovard was struck by the plight of Vernon, Conn., a town ravaged in the winter of 1995-96 by, er, slightly more snow than they'd expected. So FEMA sent them a check for $40,023. Vernon had 30,000 people, and its town snow-removal costs that winter were $258,000. "That's just $8.60 per person," Bovard pointed out, "less than a 12-year-old charges to shovel out a driveway after a good snowfall." So why did they need "federal emergency" aid? Because the town had only budgeted $104,516, and so claimed to be "overwhelmed" by the additional costs. They could have asked the good burghers of Vernon to chip in an extra five bucks apiece. But why bother when FEMA's so eager to give you a warm bath in the federal love nectar? The town government wised up pretty quickly. The next winter, they set the snow-removal budget at just $69,383." Rates: when zero is way too high 01/20/09   Government "Trouble is, the Federal Reserve can't cut interest rates below the rate of inflation if inflation falls to zero, which many economists expect to happen soon. Clearly the Fed can't take in $1,000 and pay back only, say, $950 a year later. Rational investors would simply keep their money in cash outside the banking system to preserve its value. The solution is obvious: The Fed needs to deliberately raise the rate of inflation - maybe not all the way to 6%, but significantly above zero." The gold reserve act 01/19/09   Government "Under the law, no one in the U.S. was allowed to own gold without the permission of the government." America cannot spend its way to prosperity 01/14/09   Government "While some stimulus is called for, we cannot spend our way into economic prosperity, especially when all new spending is debt-financed. It was troubling to see one prominent incoming senior economic official refer to the Obama administration's planned stimulus proposal as a 'down payment' on the future. How can something be a down payment when there is no equity involved? This is an example of how words used in Washington do not always fit Webster's definitions." Trillion-dollar spree is road to ruin 01/12/09   Government "We are in the midst of a crisis caused by so many financial institutions borrowing too much money. Somehow, a critical mass of policy makers now believes that the correct response is for the U.S. government to borrow too much money." Bailout didn't get what Buffett got 01/09/09   Government "Henry Paulson may be the most powerful manager of money in the world and he still couldn't do for taxpayers with the $700 billion bailout of American banks what Warren Buffett did for his shareholders in investing in Goldman Sachs Group Inc." The end of the financial world 01/04/09   Government "This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don.t know what they are doing with money, who does?" GMAC, the Fed, and moral hazard 12/30/08   Government "These are important questions, because this is not the last time that bondholders are going to be asked to give up money they're owed in order to save a company. In fact, a much bigger bond exchange is looming: one from GM itself. And nowhere are moral hazard considerations more important than when it comes to the tactics of distressed-debt exchanges. If a bailout is coming anyway, then a smart bondholder will always stay out of any exchange. And if most bondholders are smart, then no distressed company can effect a significant debt reduction without declaring bankruptcy." Capitalism is worst system except for the rest 12/30/08   Government "Fixing the price of any other commodity, including labor, has proven to be a failure, an affront to the inviolable invisible hand. Yet when it comes to setting the interest rate that will keep the economy on an even keel, we put our faith in a chosen few to get it right. All sorts of unintended consequences flow forth from central bankers' fixing of a short-term rate." Bailout of Long-Term Capital 12/29/08   Government "The financial crisis is a result of many bad decisions, but one of them hasn.t received enough attention: the 1998 bailout of the Long-Term Capital Management hedge fund. If regulators had been less concerned with protecting the fund.s creditors, our current problems might not be quite so bad." A mortgage bailout plan's paltry results 12/26/08   Government "Basically, the plan was to offer as much as $300 billion in government-guaranteed home loans to people whose current mortgages exceed the value of their houses; 400,000 people would benefit, it was said. Well, the early returns are in, and the program is, at this point, a flop. There have been only 312 applications, according to the Department of Housing and Urban Development. At that rate, the three-year program would help only about 5,400 borrowers." Obama's program flunks basic math 12/26/08   Government "O'Neill did the math so you don't have to. Each job 'will cost $250,000, which doesn't suggest much labor intensity for the dollars spent,' he said. 'It makes me wonder if any of the planners or commentators are good at arithmetic.' They're not good at arithmetic. And one wonders about their facility with economics." California will run out of money in February 12/26/08   Government "Property taxes, the mainstay of any state's income, have been frozen for many homeowners since a proposition was passed in the late 1970s. A separate measure, introduced in the 1980s, means that income taxes cannot be raised without the agreement of two-thirds of the state's lawmakers. Meanwhile, a raft of other ballot measures control spending, meaning that only 25 per cent of California's spending is considered "discretionary". The rest has been "earmarked" for a particular cause or project." Solar meets polar 12/26/08   Government "Old Man Winter, it turns out, is no friend of renewable energy. This time of year, wind turbine blades ice up, biodiesel congeals in tanks and solar panels produce less power because there is not as much sun. And perhaps most irritating to the people who own them, the panels become covered with snow, rendering them useless even in bright winter sunshine." Get ready for a lost decade 12/24/08   Government "How many times have you heard that we've learned the lessons of the Great Depression and won't repeat the same mistakes? That statement is a bit of a false promise, since there was only one Great Depression, and many, many steps were taken and not taken, with no chance to rerun the experiment over and over to figure out what worked, or would have worked, and what didn't." California crisis may crunch jobs 12/24/08   Government "Republican Governor Arnold Schwarzenegger and the Democratic-controlled Legislature are deadlocked on how to close a two-year budget gap that grew to $42 billion as job losses and stalled consumer spending reduced income and sales taxes. Schwarzenegger and Democratic leaders met yesterday without a resolution and are scheduled to continue talks through the holidays. " Daddy, where do bailouts come from? 12/22/08   Government "I know it must sound strange, Junior. Many of the companies getting government money did bad things. They took risks with other people's money. They padded their own pockets instead of watching out for their customers. And they lost a lot of money in the process." All the regulations money can buy 12/22/08   Government "When congress and two presidents get tired of shoveling our unborn grandchildren's money into the bad debt inferno, sure as night follows day our public servants will embark on an orgy of regulatory rule making intended to ensure that nothing like this ever happens again. How'd that work out last time?" Nanny State 2008 12/19/08   Government "Do you really want to live in a world where giant inflatable apes are banned? Reason.tv takes a short, depressing look at nanny state bans that were passed or proposed in 2008." GM and Chrysler will get $13.4 Billion 12/19/08   Government "General Motors Corp. and Chrysler LLC will get $13.4 billion in emergency government loans in exchange for substantially restructuring their businesses, President George W. Bush announced. Another $4 billion will be available to GM in February providing Congress releases the second half of the $700 billion Troubled Asset Relief Program fund originally set up to bail out financial institutions. The automakers have until March 31 to meet the conditions of the loans, including demonstrating they have a plan to become profitable, or be forced to repay." Deleveraging can save jobs 12/18/08   Government "One part of the solution to the current crisis is for Congress and the Treasury to restore, temporarily, the option for companies to deleverage by retiring debt at a discount without incurring tax liability. Tax-code and regulatory changes in the 1980s limited this option by treating the difference between the original issue price of debt and the lower amount for which it's repurchased as taxable income. The resulting tax liability on this "phantom income" decreases liquidity and blocks necessary restructuring of distressed corporate balance sheets. It also creates a perverse preference for bankruptcy that destroys asset values, jobs and customer relations. Finally, it puts American companies at a disadvantage relative to their competitors in nations with more accommodating tax structures, such as Germany and France. We believe American enterprises should be encouraged to deleverage, whether by exchanging newly issued or existing stock for debt, or using cash from asset sales. This is the worst possible time to impose a tax liability on companies trying to avoid layoffs by reducing their interest payments on debt. Freed from a tax on phantom income, thousands of companies will become stronger through deleveraging." Counterfeiting vs. monetary policy 12/18/08   Government "The justifications for Federal Reserve Act of 1913 was to prevent bank failure and maintain price stability. Simple before and after analysis demonstrates that the Federal Reserve Bank has been a failure. In the century before the Federal Reserve Act, wholesale prices fell by 6 percent; in the century after they rose by 1,300 percent. Maximum bank failures in one year before 1913 were 496 and afterward, 4,400. During the 1930s, inept money supply management by the Federal Reserve Bank was partially responsible for both the depth and duration of the Great Depression." Pan Am dies, America lives 12/18/08   Government "The whole financial crisis is about the death of responsibility: the buck stopped nowhere. Everyone profited from toxic paper. Bernard Madoff, he of the alleged multibillion-dollar Ponzi scheme, is only the latest example. Irresponsibility has also characterized Detroit. I don.t see how you restore responsibility with a bailout." Fat discrimination tax 12/16/08   Government "It made the financial news, because everyone knows it's not really about health. But even the numbers don't add up. New York Governor, David Paterson, has proposed a 15% tax on sugar-sweetened sodas, calling it an obesity tax. That makes it sound like it has a noble intention of public health concerns over obesity, when, as the Financial Times noted, it's really just a way to raise money to help address the state's $13.3 billion deficit. But even that's pretty sorry math." Housing goals we can't afford 12/11/08   Government "The Community Reinvestment Act was passed in 1977 when bank competition was sharply limited by law and lenders had little incentive to seek out business in lower-income neighborhoods. But in 1995 the Clinton administration added tough new regulations. The federal government required banks that wanted .outstanding. ratings under the act to demonstrate, numerically, that they were lending both in poor neighborhoods and to lower-income households." Help Mississippi, not Michigan 12/07/08   Government "Yet if GM represents all that is bad about the American economy, particularly manufacturing, it does not represent the breadth of our industrial landscape. Indeed, even as the dull-witted leviathan sinks, many nimble companies have shown remarkably resiliency." Capitalism: the remix 12/04/08   Government "The nastier this recession gets, the more people will talk about the discrediting of markets and the failure of deregulation. So the next time the Dow dives off a cliff, splash your face with ice water and remember two things: This end-of-capitalism talk is bunk, and it distracts us from the debate we should be having. The real question is how to manage the necessary shift in the balance of our mixed economy. Outlandish though it may sound now, red-blooded capitalism must be part of the answer." Economists have abandoned principle 12/03/08   Government "Practically every day the government launches a massively expensive new initiative to solve the problems that the last day's initiative did not. It is hard to discern any principles behind these actions. The lack of a coherent strategy has increased uncertainty and undermined the public's perception of the government's competence and trustworthiness." Fueling up the next bubble 12/01/08   Government "The market normally dispatches the grim reaper to punish foolish entrepreneurs and credulous investors on a slay-as-you-go basis, returning talent and salvageable assets to the fertilizer heap. When played right, only the participants in the game lose their shirts. The cautious crowd gets to watch and say 'Tsk-tsk, they should have known better.' Sometimes, just sometimes, a crazy idea works. When it does, the lucky, smart and bold earn rich rewards. This rare dispensation of disproportionate wealth, along with the knowledge that failure is rarely fatal, is what motivates the thoughtful risk taking that propels genuine progress. Welcome to capitalism in its purest form. When the grim reaper's hand is staid by the twin forces of mass delusion and public policy, the game of capitalism mutates." Corporate jets and congress 11/27/08   Government "This is the age-old story of those in sin throwing the first stones. And they do so without shame because they assume we are so ignorant we will not see them as the hypocrites they are. So what is going on here? Once again we of the public are being played for fools. Our politicians who are in total disarray on the economy are taking cheap shots at those who are helpless and hopeless." Fed commits $800 billion more to unfreeze lending 11/25/08   Government "The Federal Reserve took two new steps to unfreeze credit for homebuyers, consumers and small businesses, committing up to $800 billion. The central bank will purchase as much as $600 billion in debt issued or backed by government-chartered housing-finance companies. It will also set up a $200 billion program to support consumer and small-business loans, the Fed said in statements today in Washington." Citigroup gets guarantees 11/24/08   Government "Citigroup Inc., facing the threat of a breakup or sale, received $306 billion of U.S. government guarantees for troubled mortgages and toxic assets to stabilize the bank after its stock fell 60 percent last week. Citigroup also will get a $20 billion cash injection from the Treasury Department, adding to the $25 billion the company received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend." The new deal didn't always work 11/22/08   Government "Many people are looking back to the Great Depression and the New Deal for answers to our problems. But while we can learn important lessons from this period, they're not always the ones taught in school." Just say no to Detroit 11/17/08   Government "Over the past decade, the capital destruction by GM has been breathtaking, on a greater scale than documented by Mr. Jensen for the 1980s. GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998." Treasury may purchase stakes in insurers 10/26/08   Government "The Financial Services Roundtable, a trade association of the 100 largest banks, securities firms and insurers, pressed Treasury to broaden its guidelines so that insurance companies, broker-dealers, automobile companies and institutions controlled by foreign banks could also sell stakes to the government." Repeal the Glass-Steagall act 10/15/08   Government "I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010" [from 1999 ...] Paulson urges banks to deploy capital 10/14/08   Government "Treasury Secretary Henry Paulson urged banks receiving $250 billion in capital injections from the government to use the funds to spur economic growth. 'We must restore confidence in our financial system,' Paulson said in a statement in Washington. 'The needs of our economy require that our financial institutions not take this new capital to hoard it, but to deploy it.'" U.S. will buy bank equity 10/10/08   Government "U.S. Treasury Secretary Henry Paulson said the U.S. will buy equity 'as soon as we can' in banks and other financial institutions to restore market stability and revive economic growth." They warned us about the mortgage crisis 10/10/08   Government "Some states, including North Carolina and Georgia, passed laws aimed at deterring rash loans only to have federal authorities undercut them. In Iowa and other states, mortgage mills arranged to be acquired by nationally regulated banks and in the process fended off more-assertive state supervision. In Ohio the story took a different twist: State lawmakers acting at the behest of lenders squelched an attempt by the Cleveland City Council to slow the subprime frenzy. A number of factors contributed to the mortgage disaster and credit crunch. Interest rate cuts and unprecedented foreign capital infusions fueled thoughtless lending on Main Street and arrogant gambling on Wall Street. The trading of esoteric derivatives amplified risks it was supposed to mute. One cause, though, has been largely overlooked: the stifling of prescient state enforcers and legislators who tried to contain the greed and foolishness. They were thwarted in many cases by Washington officials hostile to regulation and a financial industry adept at exploiting this ideology." We have the tools to manage the crisis 10/10/08   Government "First of all, there is now clear recognition that the problem is international, and international coordination and cooperation is both necessary and underway. The days of finger pointing and schadenfreude are over. The concerted reduction in central bank interest rates is one concrete manifestation of that fact. More important in existing circumstances is the clear determination of our Treasury, of European finance ministries, and of central banks to support and defend the stability of major international banks. That approach extends to providing fresh capital to supplement private funds if necessary." Central banks cut rates in coordinated move 10/08/08   Government "The Fed, ECB, Bank of England, Bank of Canada and Sweden's Riksbank each cut their benchmark rates by half a percentage point. The Bank of Japan, which didn't participate in the move, said it supported the action. Switzerland also took part. Separately, China's central bank lowered its key one-year lending rate by 0.27 percentage point. Today's decision follows a global meltdown that sent U.S. stock indexes heading for their biggest annual decline since 1937" Fed to purchase U.S. commercial paper 10/07/08   Government "The Federal Reserve will create a special fund to purchase U.S. commercial paper after the credit crunch threatened to cut off a key source of funding for corporations." Cities are cutting back projects 10/01/08   Government "Cities, states and other local governments have been effectively shut out of the bond markets for the last two weeks, raising the cost of day-to-day operations, threatening longer-term projects and dampening a broad source of jobs and stability at a time when other parts of the economy are weakening." U.S. House rejects rescue plan 09/29/08   Government "The financial-rescue plan intended to restore confidence in the U.S. banking system collapsed in partisan wrangling as the House of Representatives voted down the proposal backed by the Bush administration and congressional leaders of both parties." Breakthrough on rescue plan 09/28/08   Government "Companies that sell debt to the government will issue stock warrants to the government so that taxpayers 'can gain as companies recover' from economic difficulties, Conrad said. " Fate of bailout plan remains uncertain 09/25/08   Government "The talks broke up in angry recriminations, according to accounts provided by a participant and others who were briefed on the session, and were followed by dueling press conferences and interviews rife with partisan finger-pointing. In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr. literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to 'blow it up' by withdrawing her party's support for the package over what Ms. Pelosi derided as a Republican betrayal. "I didn't know you were Catholic," Ms. Pelosi said, a wry reference to Mr. Paulson's kneeling, according to someone who observed the exchange. She went on: "It's not me blowing this up, it's the Republicans." Mr. Paulson sighed. "I know. I know." It was the very outcome the White House had said it intended to avoid, with partisan presidential politics appearing to trample what had been exceedingly delicate Congressional negotiations." A disability epidemic among a railroad's retirees 09/23/08   Government "Virtually every career employee - as many as 97 percent in one recent year - applies for and gets disability payments soon after retirement, a computer analysis of federal records by The New York Times has found. Since 2000, those records show, about a quarter of a billion dollars in federal disability money has gone to former L.I.R.R. employees, including about 2,000 who retired during that time. The L.I.R.R.'s disability rate suggests it is one of the nation's most dangerous places to work. Yet in four of the last five years, the railroad has won national awards for improving worker safety. 'Short of the gulag, I can't imagine any work force that would have a so-to-speak 90 percent disability attrition rate,' said Glenn Scammel, long one of Capitol Hill's top experts on railroads. 'That defies both logic and experience.'" Ban the shorts? A BIG mistake! 09/19/08   Government "For all the talk of capitalism now being dead given the government's plan to likely assume much of the banking industry's mortgage-related illiquid assets as well as the takeovers of Fannie Mae, Freddie Mac and AIG, the SEC's action is far more ominous for those who believe in free markets." Florida's big insurance problem 09/13/08   Government "When Hurricane Ike took a left on Sept. 8, heading away from Florida, locals breathed a sigh of relief. Not only are their homes on the line with each burst of violent weather but their pocketbooks are increasingly at risk, too. Over the past four years, Florida taxpayers' vulnerability to a major weather catastrophe has grown. The quasi-governmental company that was conceived as an insurer of last resort, Citizens Property Insurance, has become Florida's top underwriter of homeowners' insurance. Citizens now has more than $433 billion of property exposure on its books, and Florida has exacerbated that risk by getting into the reinsurance business as well." Paulson, Bernanke resisting aid for Lehman 09/13/08   Government "Henry Paulson and Ben S. Bernanke may have to weather more speculative attacks on financial institutions as they resist using public funds to aid the sale of Lehman Brothers Holdings Inc." Abnormal returns from the U.S. senate 08/18/08   Government "The actions of the federal government can have a profound impact on financial markets. As prominent participants in the government decision making process, U.S. Senators are likely to have knowledge of forthcoming government actions before the information becomes public. This could provide them with an informational advantage over other investors. We test for abnormal returns from the common stock investments of members of the U.S. Senate during the period 1993--1998. We document that a portfolio that mimics the purchases of U.S. Senators beats the market by 85 basis points per month, while a portfolio that mimics the sales of Senators lags the market by 12 basis points per month. The large difference in the returns of stocks bought and sold (nearly one percentage point per month) is economically large and reliably positive." U.S. turns away from decades of deregulation 08/01/08   Government "The housing and financial crisis convulsing the U.S. is powering a new wave of government regulation of business and the economy. Federal and state governments alike are increasingly hands-on in their effort to deal with failing businesses, plunging house prices, worthless mortgages and soaring energy prices. The steps add up to a major challenge to the movement toward deregulation that has defined American governance for much of the past quarter-century since the "Reagan Revolution" of the early 1980s. In fact, some proponents today of a bigger oversight role for government are Republican heirs to the legacy of President Reagan." The Fed can't fix home prices 03/12/08   Government "Where are the speculators, vultures and hedge funds? Where are the big money players willing to buy the exotic but still substantial mortgage-backed securities for which markets have ceased? The Fed's liquidity rush seems only to have convinced them the time is ripe for staying on the sidelines. To get to a real solution, speculators and investors need to believe that home prices are hitting bottom, that any mortgage debt they might buy today for 80 cents on the dollar today won't be worth 30 cents tomorrow. Then the vultures will pile in: The transfer of wealth from the overleveraged banks and hedge funds to those who kept cash handy will be shocking, ugly and cathartic -- but it will also be relatively quick. Credit markets will begin to function again. The economy will grow." Canada's total government fiscal performance 02/28/08   Government "To enable international comparisons, the OECD publishes National Accounts data for the total government sector. For Canada, the figures include the federal, provincial-territorial and local government sectors, as well as the Canada Pension Plan and the Qu bec Pension Plan. Based on OECD data, Canada's fiscal position is stronger than that of the other G7 countries (United States, United Kingdom, France, Germany, Japan and Italy). *The OECD expects Canada to record the largest budgetary surplus as a share of GDP in the G7 in 2007, 2008 and 2009. *It projects that Canada's total government net debt-to-GDP ratio, which has been the lowest in the G7 since 2004, will continue to decline in future years. *Canada is on track to eliminate its total government net debt by 2021. By doing so, it will be able to count itself among the few OECD countries that are in a net asset position." Advice gets interesting 02/27/08   Government "In the United States, with its plethora of tax-assisted vehicles, from 401 (k) to Individual Retirement Accounts to Roth IRAs, the calculation of where to put what asset to get the best after-tax yield has elicited some debate and a lot of actuarially inclined mathematics. Now it comes to Canada. A few years ago, when the capital gains inclusion rate was reduced the question became pointed: Why put assets that would yield capital gains in an account whose withdrawals would be taxed as interest? Still, it was a two-option universe, subject to asset allocation decisions: bonds inside and stocks outside. TFSAs change that simple calculation. Why not put interest and dividend-paying assets in the TFSA? There's no tax on withdrawals. What about stocks? As with an RSP, there's no potential for deducting capital losses. So the emphasis will be on finding steady performers with low volatility. This is where advice gets interesting is in determining the balance and types assets among all three accounts: open, registered and tax-free." Canadian budget in brief 02/27/08   Government "Maintaining strong fiscal management and continuing to reduce debt. Planned debt reduction for 2007.08 is $10.2 billion, and a total of $13.8 billion over the budget-planning period (2007.08 to 2009.10)." California exodus turns to stampede 02/22/08   Government "Based on data from moving companies, California had the second-highest domestic population out-flow of any state in 2005, according to the report, "despite the beautiful weather, beaches, and mountains." The bad news for California is that it faces a $14 billion deficit this year, despite boasting one of the highest tax burdens in the nation. The report, published by the American Legislative Exchange Council shows jobs are not just leaving the country - they are moving from state to state, with the population following. "States are in direct competition with each other for human capital and business investment. State governments that think they can attract jobs and people, and grow their economies, by taxing their citizens at a higher rate than their neighbors are sadly mistaken," said Democratic Arkansas state Sen. Steve Faris, ALEC's 2008 national chairman." Rich states poor states 02/22/08   Government "State Winners and Losers, details the migration of thousands of Americans from areas with high tax burdens to places where they can experience greater economic freedom. States with a high propensity to tax and spend are fi nding their most wealthy and productive citizens moving across borders into areas that impose less of a financial burden." Bush's bad mortgage medicine 12/07/07   Government "The Bush Administration's plan to rescue the housing market and keep the economy from slipping into recession took flak yesterday for freezing interest rate hikes for a mere fraction of subprime, adjustable-rate borrowers. But there's a bigger risk: It could deepen and lengthen the credit crisis." The history of labor day 09/03/07   Government "Most of the world marks Labor Day on May 1 with parades and rallies. Americans celebrate it in early September, by heading to the beach or firing up the grill. Why the discrepancy? Here's a hint: The answer would have been a great disappointment to Frederick Engels." The escape of the enablers 08/20/07   Government "Wall Street loves to talk about letting financial markets weed out the weak. But when the Street itself gets in trouble, it sticks out its little tin cup, asking for help. And gets it. The subprime-mortgage-market meltdown is a classic example of the way small fry get devoured, but the whales of Wall Street get rescued. Here's the deal: People with crummy credit who took out mortgages are being allowed to fail in record numbers. The mortgage companies that made those loans are being allowed to fail. The Street itself? It's bailout city. Even before the Fed made a symbolic half-point cut in the discount rate, it and other central banks from Switzerland to Singapore were trying to rescue the Street by injecting hundreds of billions of dollars into the financial markets and announcing they will put up more, if needed." Dead men farming 07/25/07   Government "Here's a fact that supporters of the Farm Bill might want to consider as the legislation is deliberated on the House floor this week: Between 1999 and 2005, the U.S Department of Agriculture paid $1.1 billion in farm payments to nearly 173,000 people who weren't alive. Nothing illegal--just Washington business as usual. Under certain conditions, estates can receive farm payments for up to two years after a recipient's death. But according to a study released Tuesday by the Government Accountability Office, 40% of the deceased who received payments from 1999 to 2005 had been dead for at least three years. In one instance, someone who died in 1995 got $400,000." The OSC fraud squad 07/10/07   Government "Wow. Stop the presses. Suspected scam artists are being asked to take a two-week summer holiday. Meanwhile, the organizations in question are still lining up potential suckers." How to run a budget like an idiot 06/18/07   Government "Before every red-blooded tax loather spits on this page in disgust, consider the context. Over the past six years we've borrowed nearly $2 trillion to cut taxes for the wealthiest during a time of war, meaning we've slipped the bill for our war and our tax cuts to our kids. How do the candidates - who also claim to be "fiscally conservative" (not to mention devotees of "family values") - square all this?" Mississippi fails to learn from history 02/16/07   Government "In the 1840s, the state of Mississippi faced economic problems. Governor Alexander McNutt resorted to an easy out: he blamed the state's troubles on foreign investors, and, invoking Judas and Shylock, closed a budget gap by repudiating Mississippi's bonds and debts. Mississippi courts at first refused to recognize the repudiation, but investors who trusted the rule of law were ultimately out of luck: an 1853 referendum refused to raise taxes to pay the obligations, and an 1875 amendment to the state constitution prohibited the state from paying back the bonds. Mississippi had successfully bilked its creditors (including the family of William Wordsworth, who wrote a sonnet about the injustice) for short-term gain, but the victory was Pyrrhic: cut off from the credit markets, the state economy has languished behind the rest of the nation ever since." Hot air in Essex County wind power 02/06/07   Government "In fact, countries in Europe that have installed wind power as base load find they end up buying power on the spot market when the wind isn't blowing and then selling their wind power at a loss when the wind is blowing (but air conditioners aren't being used as intensely). Denmark is often considered a leader in wind energy but according to Lee it ends up selling 84% of its power at a loss. "European countries that have put in a lot of wind power end up subsidizing their neighbors," says Lee. "Wind power has not yet enabled the closure of a single fossil-fueled generating station anywhere in the world." The German energy agency recently suggested that increasing the amount of wind energy in that country would increase the cost of electricity to consumers almost fourfold and that a reduction in greenhouse gases could be achieved more cheaply by installing filters and condensers on existing fossil-fuel plants. According to Lee, it's often been suggested that the theoretical maximum for the amount of base load that can be derived from wind power is 15%, but even that seems to be a stretch. A more likely percentage seems to be 3% or 5%, says Lee." Dairy industry crushed innovator 12/11/06   Government "In the summer of 2003, shoppers in Southern California began getting a break on the price of milk. A maverick dairyman named Hein Hettinga started bottling his own milk and selling it for as much as 20 cents a gallon less than the competition, exercising his right to work outside the rigid system that has controlled U.S. milk production for almost 70 years. Soon the effects were rippling through the state, helping to hold down retail prices at supermarkets and warehouse stores. That was when a coalition of giant milk companies and dairies, along with their congressional allies, decided to crush Hettinga's initiative." The New, Soft Paternalism 12/08/06   Government "But what if it could be shown that even highly competent, well-informed people fail to make choices in their best interest? And what if the government could somehow step in and nudge them in the right direction without interfering with their liberty, or at least not very much? Welcome to the new world of 'soft paternalism'. The old 'hard' paternalism says, We know what's best for you, and we'll force you to do it. By contrast, soft paternalism says, You know what's best for you, and we'll help you to do it." Junk-food jihad 04/19/06   Government "So, we've found a new enemy: obesity. Two years ago, the government discovered that the targets of previous crusadesbooze, sex, guns, and cigaretteswere killing a smaller percentage of Americans than they used to. The one thing you're not allowed to do in a culture war is win it, so we searched the mortality data for the next big menace. The answer was as plain as the other chin on your face. Obesity, federal officials told us, would soon surpass tobacco as the chief cause of preventable death. They compared it to the Black Death and the Asian tsunami. They sent a team of "disease detectives" to West Virginia to investigate an obesity outbreak. Last month, the surgeon general called obesity "the terror within" and said it would "dwarf 9-11."" Soft paternalism 04/07/06   Government "Its champions will say that soft paternalism should only be used for ends that are unarguably good: on the side of sobriety, prudence and restraint. But private virtues such as these are as likely to wither as to flourish when public bodies take charge of them. And life would be duller if every reckless spirit could outsource self-discipline to the state. Had the government deprived Coleridge of opium, he might have been happier. Then again, there might have been no 'Kubla Khan'." Card Money in New France 03/25/06   Government "The French were constantly at war with the Iroquois. In 1684, new soldiers had arrived from France for another campaign against them. However, in the fall of that year, the annual appropriations failed to arrive. The intendant of the colony, Jacques de Meulles, had no funds to pay colonial officials and troops. (The intendant was what could be called the top bureaucrat in the colony, second only to the governor who represented the king.) In June 1685, he decided to issue his own credit notes. Because good paper was rare, he collected the playing cards in the colony and, with his seal and signature, issued them in various denominations as paper money. By an ordinance, the cards became legal tender and merchants had to accept them." More than a notional improvement 02/17/06   Government "For much of the past 25 years, most discussion of state pensions has been about funding: getting today's workers to save now in order to pay for their own retirement later. Systems in many countries have moved from pay-as-you-go financing, in which today's workers pay for today's pensions, towards individual accounts in which workers accumulate their own cash." The tip of the scandal iceberg? 02/17/06   Government "An acquaintance who works for a welfare office in Ontario was recounting over dinner recently her experiences dealing with recipients who obtained benefits fraudulently. Pausing momentarily, she said: "But our internal auditor has found worse stuff." "He says some recipients were sending their welfare payments to designations in Iraq. He is so appalled that he is ready to go public." I contacted the auditor indirectly (through the acquaintance) to try to ascertain the details, but his ardor for whistle blowing is wavering as he reflects more seriously on the possible repercussions to career and family." False hope 01/31/06   Government "Mind you, the soothing platitudes are undoubtedly met with exuberant joy by one group: the con artists. Placated and passive investors make great customers. When the investments fail, blame is placed on anything but lax financial reporting requirements." Annuity anxiety 01/12/06   Government "Will insurance companies be able to sell variable annuities to anyone over 60 anymore? With Sarbanes-Oxley and the Financial Accounting Oversight Board firmly in place, U.S. regulators are zeroing in ever more closely on other issues they see as the next big threat to investors' wallets. One is executive pay. The other, not yet garnering the same headlines, is the selling to retirees of variable annuities, the long-term, tax-deferred investment plans that have stirred controversy over alleged dubious sales practices across the insurance industry." SEC slaps standards on corporate fines 01/04/06   Government "Standards settle years of debate between those who want lighter fines and those who want mega ones." The States' tobacco addiction 01/03/06   Government "Philip Morris is America's largest maker of cigarettes, a product legal to use but problematic to merchandise legally. Cigarettes are stigmatized by common sense and all state governments. But because those governments are increasingly addicted to cigarette tax revenue, the governments must be careful not to make cigarettes so expensive they do not sell well." Drowning in fines 12/08/05   Government "As an example of the record of state regulators, take the office of New York's attorney-general, Eliot Spitzer. New York received $100m in a settlement with Merrill Lynch, after the equity-research furore, and $40m in another with Canary Capital, over mutual-fund trades. All of it has been funnelled into the state's general fund. None has yet gone back to the investors who had been ripped off." Moral hazard 10/14/05   Government "A suprising thing happens when the government dishes out heavily subsidized pension insurance: People use it." Can government build cities? 09/19/05   Government "A disturbing trend after Katrina was summed up in George Bush's promise to have the federal government completely rebuild the Gulf Coast better than before the storm, and do so with taxpayer money. Can we really expect government to create quality cities using redistribution, government programs, and regulations?" Not in my backyard 09/07/05   Government "Extensive damage wreaked on Gulf of Mexico oil refineries last week by Hurricane Katrina has spurred talk of spreading out the nation's key oil refineries. But the word around the industry is that oil companies would just as soon keep taking chances on occasional hurricane damage rather than take on the hurdles of exorbitant costs and regulations that accompany new construction." How to create a shortage 08/29/05   Government "Legislatures rarely repeal bad laws just as presidents refuse to admit that their military adventures are mistakes. The oil and gasoline price controls of the 1970s began with an executive order in 1971 (as part of Nixon's "Phase One" wage and price freeze that accompanied the collapse of the Bretton Woods international monetary system), and were around for a decade before they were eliminated. One hopes that Hawaii's new system will not be in existence that long, but don't be surprised if legislators continue to ignore the free market and spit into the wind." Hardly in the public interest 08/07/05   Government "mutual fund investors now have to act much more quickly if they feel they've been a victim of financial assault. For unsophisticated investors, seniors, retirees, widows, non-English-speaking immigrants and others the new Act can spell economic disaster." The gang of 17 05/27/05   Government "Just how convoluted are the regulations that govern the investment industry? Suppose we used the industry's model to regulate the way we buy and drive cars. First, force every driver in Canada to get a driver's licence and licence plate for every province and territory, even if they don't live there or own a vehicle there. Then, force them to display all 13 plates on their bumpers. After that, require everyone to pay a fee to another agency to regulate speed. Then, set up another agency to enforce traffic rules. To top it all off, have an Association of Car Dealers decide what reckless driving is. The association should also fine salespeople who harm their clients, but let dealers collude on new vehicle pricing. Does that sound crazy? It would sound fine to anyone in the securities business." The regulators' best friend? 03/31/05   Government "According to one of the European Commission's pettifogging regulations, cucumbers sold in the single market cannot be too curvy. According to another proposal, packets of coffee and chicory must conform to weights specified in Brussels." Money for nothing 12/15/04   Government "While it is true there is no actual EI fund (the premiums collected go straight into the government's consolidated revenue fund), the impact of this over-collection is by no means theoretical. Economic studies suggest that for every 1% increase in employer-paid payroll taxes, there is a corresponding 0.32% decrease in employment. If Ottawa followed its own legislation, a case could be made for an EI-premium rate holiday for the next two and a half years. Think of the impact that could have on employment." Getting government money from your RESP 11/07/04   Government "The Registered Education Savings Plan (RESP) has become the cornerstone vehicle for saving money for children and grandchildren's education." The crime wave that wasn't 08/26/04   Government "One threat in particular stood out. The state prison system had become so crowded that the officials were exporting prisoners to private prisons in nearby Mississippi and Louisiana. The governor and his cronies often warned that failure to pass his tax increase would lead to the early release of many criminals. Voters were told that a cost of rejection would be a crime wave of unprecedented proportions. It was a threat worthy of "The Godfather." But the voters nixed the tax increases, like voters everywhere almost always do when given the chance. And the prison system did give early parole to many of its convicts. But that often mentioned crime wave never happened." OT pay: Winners and losers 08/22/04   Government "Don't know if you're owed overtime pay? You're not alone." Fair dealing's advisor committee takes summer break 08/09/04   Government "Despite his strong beliefs, De Goey concedes that he has lost the argument on outlawing embedded compensation and is now turning his sights on more and better disclosure, suggesting that prospectuses and fund statements contain large warnings about performance and risk, similar in tone to the stark warnings on cigarette packages." Who's dumping on American consumers? 07/14/04   Government "Do you like shrimp but wish it cost more? Need some bedroom furniture but hate getting a good deal on it? If so, you're very different from most Americans. You are, however, one of the few people who can rejoice in our national trade policies." The economics of water in the West 07/12/04   Government "The American West faces severe water shortages because of U.S. Government policies of this past century; the solution is not for the government to further assert itself, but rather to end the water socialism that it has imposed. The command system of economics that has led nations like North Korea and Cuba into ruin has also created the crisis in the West." In the shadows 06/19/04   Government "The informal economy is neither small nor benign" Pension pain 06/17/04   Government "Convincing young workers to support a population of retirees steadily growing proportionally as well as numerically is a tough political sell. Labor Department data for defined-benefit pension plans show that the ratio of contributors to recipients, which had exceeded 3 to 1 in 1980, now stands even at 1 to 1, and will dip even lower over the next several years." Real debate during the campaign? Don't hold your breath 05/27/04   Government "The problem is that policy debate requires a willingness to engage in honest discussion. How exactly might different policies work? How they might interact? Would some reinforce others, or weaken them? What are their weaknesses as well as their strengths? Smart politicians know these are legitimate questions. When in power, they ask such questions of themselves and their officials. But once a campaign begins, politicians must always present themselves to the public as promoters of policies that are 100-per-cent workable, wise and wonderful for all, even though they know that all policies involve difficult tradeoffs. Hard choices are not to be shared with the public." Snowdrifts of debt 04/06/04   Government "Debt is an institution in American government, long established and widespread. A cursory glance at debt statistics will quickly show that there has been a lull in the truth about debt, namely, that it cannot grow indefinitely at the rate at which it has been growingat least not without a serious revaluation of the dollar, something we are already in the midst of seeing." Sorbara is now damaged goods as finance minister 02/27/04   Government "The facts are as follows: Mr. Sorbara was a Royal Group director from the company's initial public offering in 1994 until he resignedlast fall. During that period, the building products company did tens of millions of dollars in business with company insiders, including most or all of the $32-million in sales to the controversial St. Kitts resort controlled by chairman Vic De Zen. Those deals touched off the criminal and regulatory probes the company confessed to Wednesday evening." Heading for a fall, by fiat? 02/26/04   Government "Perhaps, too, investors have been lulled into a false sense of security by the performance of central banks in recent years, and the independence that has been granted to many of them by governments. But this very aura of inviolability may be storing up problems, since it means that governments can borrow still more at cheap rates. And if governments then find themselves crushed by debt, you can rest assured that this independence will be taken away. And then, once again, the paper in your pocket will only be as good as a politician's promise." Fannie's and Freddie's big fight 02/26/04   Government "On Feb. 24, however, the gloves came off. Federal Reserve Chairman Alan Greenspan told the Senate Banking Committee that Fannie and Freddie have grown so large -- together they own or guarantee $4 trillion in home loans, or three-fourths of all single-family-mortgages -- that they pose an unacceptable risk to the entire financial system." Royal Group drops 02/26/04   Government "Ontario Finance Minister Greg Sorbara resigned from his position as a director with Royal Group Technologies Ltd. in October, 2003 to take up his post with Dalton McGuinty Liberal government. He was also on the company's audit committee." Investors looking to politicians for investment help 02/26/04   Government "Prime Minister Paul Martin and other politicians will receive a plea tomorrow to stop the abuse of small investors by the investment industry. That's how bad things are for small investors these days. To have any hope of being protected from bad financial advice, you have to complain to the prime minister." The buck doesn't stop here 02/18/04   Government "Why Treasury Secretary Snow can't prevent the dollar from falling, even if he wanted to." Ex-CIBC trader arrested in fund probe 02/03/04   Government "A former trader with Canadian Imperial Bank of Commerce has been arrested on criminal charges stemming from New York Attorney General Eliot Spitzer's investigation into mutual fund trading, people familiar with the investigation said Tuesday." Trashing money 01/22/04   Government "As the Dalton McGuinty government in Ontario recently made clear, it's full speed ahead for the province's plan to largely phase out trash. As with all utopian plans, this strategy (orchestrated mostly without public input by non-elected officials) will require lots of money and social engineering on a massive scale." In defense of bank failures 12/05/03   Government "The American people have not seen widespread bank runs since 1933. In that object at least, the Federal Deposit Insurance Corporation has succeeded. But at what cost? To insure deposits is to invite bad bankingand worse; it is to foster reckless speculation and unsound investments, help make inflation permanent instead of intermittent, obstruct the curative powers of economic contractions, and divorce freedom from responsibility." How we take from rich and give to poor 11/17/03   Government "It's time for that annual bit of nasty business -- the who-pays-who-gets update on the financial workings of Confederation. Once a year, after Statistics Canada produces its provincial economic accounts, we tally the manner in which Ottawa takes from the rich provinces and gives to the poor. The data tell residents of each province and territory whether they are a net contributor to the national public purse or a net beneficiary." Big 3 seek pension relief 11/10/03   Government "The proposal stunned a crowd of automotive executives gathered for a recent conference in West Virginia. Conservative David Stockman, the former Reagan administration budget czar and now head of a Metro Detroit auto parts maker, suggested the federal government take over the under-funded pension plans of U.S. automakers and auto parts suppliers." Hard money 10/15/03   Government "Money used to be backed by gold. Now it is backed by the promises of central bankers. Are these worth less than they were?" Sumner's forgotten classic 09/05/03   Government "Many of these problems are foisted on the Forgotten Man. Look at the healthcare debate, where various proposals are put forth for the government to pay or subsidize medical costs. The politicians and policy wonks get all the attention, as do the alleged beneficiaries of their programs, but no attention is paid to the folks who have to pay for it all.Sumner's Forgotten Men. As Sumner writes, "In all the discussions attention is concentrated on A and B, the noble social reformers, and on D, the 'poor man'. I call C the Forgotten Man, because I have never seen that any notice was taken of him in any of these discussions."" A mortality warning for motorists 09/04/03   Government "The impact of mispricing risk in public insurance systems is to shift collision costs to other drivers.primarily female, safer and older drivers.and to encourage too many risky drivers to take to the road." The failure of the social market 08/19/03   Government "In a January, 2003 commentary appearing in the Financial Times of London, professor Norman Barry opined, "the social market advocates were too relaxed; they believed the new order would produce enlightened people who would not need market incentives to behave responsibly. How wrong they were. Germans are normal, rational people. They will not work unless they have to. Now it often pays not to get a job and it is rational to stay in education until you are 30." Unless chained to reality by the forces of the market, the people and politicians have been free to bloat and expand the welfare state of Germany." Did price controls work? 08/15/03   Government "More than two decades ago, many of these same critics were claiming that oil was too important a commodity to be left to the market. The 1981 removal of price and allocation controls thoroughly discredited that belief. Likewise, given the awful government failures we have witnessed in creating energy policies, we can state unequivocally that electricity is so important that it must be left to the free market to produce and distribute it." Will conservation save us? 08/15/03   Government "With the disappearance of the "energy crisis" in the early 1980s-an event that coincided with the ending of price and allocation controls on the oil industry-many of us had hoped that the voices of "conservation" and "alternative energy" would have been stilled. Unfortunately, we have had no such luck, and in the wake of yet more government-caused energy problems, the political classes and their media allies are once again beating the drums of government-enforced "conservation." Their words are as fraudulent today as they were two decades ago." Denmark: A Case Study in Social Democracy 07/22/03   Government "In conclusion, we can say that neither on crime, education nor health do we see the favorable results we would have expected. Quite to the contrary. The prospects for being able to rely on government or family for social security are also rapidly diminishing. These are not very bright prospects indeed for a country where each working citizen are forced to sacrifice such a large share of his personal earnings to the common good." Inflation and the American Revolution 07/18/03   Government "How odd that the tax bills of many American families would fall during a period of exorbitant increases in federal spending due mainly to war. But once we discover the record levels of government debt accumulation, perhaps it is not so odd. It's the shell game of government finance at work." Government protects potential killers 07/16/03   Government "But anyone who looked at the law closely knew what was going on. The definition of disability was so vague that it clearly represented yet another massive encroachment of the government and its courts into the workplace. It made the disabled more expensive and more risky to hire. It made them more difficult to fire, and hence less likely to be hired. If anything, workplace discrimination against them has increased rather than decreased. Employers would rather find sneaky ways to keep them at bay than to risk unending lawsuits." Faster is not always better 07/11/03   Government "This Concorde was not just the proud enterprise of government, but even the product of a consortium of governments! Accounting being the imponderable, not to say fraud-ridden, sort of activity it is, we will of course never know just how much this grand project took both from the taxpayers supporting it and from the private aircraft manufacturers and airlines competing against it." No golden days 07/03/03   Government "Most American states have now closed the books on fiscal 2003, after a year of slashing spending and raising taxes. But their financial woes will not go away in 2004, especially in budget-less California, which is $38 billion in the red." Bring back the guild system? 06/25/03   Government "All of these examples of genuine exploitation amount to one of many reasons that free-market economists hold the beliefs that they do. The greater the scope of state activity, the greater the potential for each pressure group to use the state apparatus for its own enrichment, at the expense of the rest of society. Since the benefits that accrue to such pressure groups from their political agitation are sizable and concentrated, while their costs are dispersed and hidden, the tendency over time is for more and more of this kind of activity to go on at the expense of the ordinary person." Is the tax cut for real? 05/29/03   Government "Polls suggest that only 45 percent of the public backs the tax bill signed by President Bush, which means that a majority are against it, indifferent, or confused. Now, we can dismiss the idea that people don't want tax cuts. After all, if people wanted to pay taxes, we could just make them voluntary and be done with it. They are called taxes because people are being forced to pay for something they would otherwise not pay for. Asking people if they want a tax cut should be like asking if they want less mugging." $20 bill gets a facelift 05/13/03   Government "The $20 bill got a facelift Tuesday, complete with new colors, a new number arrangement and a new background, in the government's latest effort to thwart counterfeiters." Fraud quiz launched 04/30/03   Government "'Billions are lost to investment fraud every year,' Christine Bruenn, president of NASAA, added. 'From the Yukon Territory to Miami, con artists don't discriminate - they target men, women, the elderly and minorities. Investors need to be aware of the warning signs for fraud, where to turn for information and what protections they have.'" New poverty traps 04/25/03   Government "Millions of Canadians accept the homogenous advice of governments and the financial community and put billions into RRSPs. However, for many lower-income Canadians RRSPs are a terrible investment. They are victims of a fraud, however unintentional. Only when more Canadians are aware of the perverse treatment of lower-income citizens' savings will Ottawa be forced to develop measures that reward, rather than punish, their savings efforts." The suits inside the battledress 04/18/03   Government "Is collusion between government and big business increasing in America?" Convict leasing in Alabama 04/09/03   Government "In the early decades of the 20th century, tens of thousands of convicts -- most of them, like Mr. Cottenham, indigent black men -- were snared in a largely forgotten justice system rooted in racism and nurtured by economic expedience. Until nearly 1930, decades after most other Southern states had abolished similar programs, Alabama was providing convicts to businesses hungry for hands to work in farm fields, lumber camps, railroad construction gangs and, especially in later years, mines. For state and local officials, the incentive was money; many years, convict leasing was one of Alabama's largest sources of funding." Good money after bad 04/08/03   Government "America's Congress has voted to give the beleaguered airline industry more than $3 billion in aid, ostensibly to help it through the war in Iraq. But the airlines' problems predate the conflict and will continue long after the fighting stops." CDIC's $60,000 limit doesn't cut it any more 02/26/03   Government "Canada Deposit Insurance Corp., meet the nasty but unavoidable economic phenomenon called inflation. Inflation, say hello to CDIC." Retail investors unwelcome? 02/07/03   Government "Financial advisors are the gate through which most retail investors pass on their way into the markets, but industry and regulatory trends may be minimizing the advisor's role. Increasingly retail clients are being bundled into managed money products and are being discouraged from investing directly in the rough-and-tumble equity markets - for better or worse." FSA acts to halt stock sell-off 01/31/03   Government "The UK's financial watchdog is to relax solvency rules for life insurers to help them cope with falling stock markets." Social security shortchange? 01/09/03   Government "So Marti, a teacher's aide for 6 years, a job that gives her a small state pension, will get less than half of her social security - which she's paid into for 35 years. Instead of the projected $629 a month, she'll only get $252 a month when she retires." Rob Kyle's lonely battle 01/03/03   Government "The OSC's latest hearing on the matter was held in October - scheduled for three days, it ran into a fourth - as Kyle's lawyer, Mary Biggar, raised a host of fundamental questions about the nature and authority of the IDA. Is it a private association or an extension of government? If it's private, how can it be charged with defending the public interest, and does it have the power to levy fines? If it's public, does it have to observe statutory limits to its investigative powers and follow rules on how evidence is handled at a disciplinary hearing?" OSC: lawmaker, judge and executioner 12/08/02   Government "Does the current regulatory model, which has securities commissions functioning as lawmaker, prosecutor, judge and executioner, work?" Radical fund reforms pitched 11/17/02   Government "BCSC wants to raise 10% cap on owning firms, make public ask for disclosure data." RRSPs a long-term tax asset for Ottawa 10/25/02   Government "Part of Canadians' pool of retirement savings represents a $300-billion long-term asset for Ottawa and the provinces because they eventually will tax those savings as they are withdrawn from registered plans, according to a new study by the C.D. Howe Institute." Beware the embittered investor 09/25/02   Government "At first I felt disillusion, disenchantment and disgust. Next came anger. And in the end I came away with renewed resolve to fight the special interests that for years have ganged up on individual investors in Washington and on Wall Street." Single financial services ombudsman office established 08/28/02   Government "A single ombudsman service to deal with customer complaints for financial services has been established by the Canadian banking ombudsman , the Investment Dealers Association of Canada, the Investment Funds Institute of Canada, and the Mutual Fund Dealers Association of Canada." SEC charges Adelphia and Rigas family 07/24/02   Government "The Securities and Exchange Commission today filed charges against Adelphia Communications Corp.; its founder John J. Rigas; his three sons, Timothy J. Rigas, Michael J. Rigas, and James P. Rigas; and two senior executives at Adelphia, James R. Brown, and Michael C. Mulcahey, in one of the most extensive financial frauds ever to take place at a public company." The SEC's List 07/24/02   Government "The order requires the principal executive and financial officers of SEC-registered companies to each file with the Commission a sworn written statement in which the officer must personally attest that the company's most recent periodic reports are materially truthful and complete or explain why such a statement would be incorrect." -- Applies to companies with more than $1.2 billion is revenues. Apple concentrate tariff 05/03/02   Government "Apples might be a particularly tart example of U.S. anticompetitiveness, but they are hardly the only illustration of U.S. agricultural policies that hurt consumers, inflate prices, and alienate other countries." Moral hazard psychology expands 04/20/02   Government "Two weeks ago we noted that the presumptively conservative president of the Bundesbank, Ernst Welteke, proposed that the German central bank sell a portion of its gold reserve and invest the proceeds in European equities." Smoking gun 03/03/02   Government "Nearly two years after the popping of the Great American Asset Bubble, the US economy is still sputtering. Whatever the outcome -- double dip or anemic recovery -- it's far cry from the froth of the Roaring 1990s." Killing the stock market 09/27/01   Government Freedom is under attack in the U.S. as government activity is stepped up after the terrorist horror in New York.	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