Dimitry writes:
first
Dimitry | 02.19.08 - 9:58 pm | #

Misean writes:
Cities going BK

Hoocooldanode,

Cheers,
Misean | 02.19.08 - 10:03 pm | #

outhouse writes:
". . . the excessive future retirement benefits . . . "

Excessive? By what measurement/criteria/perspective?
outhouse | 02.19.08 - 10:07 pm | #

homedad43 writes:
Now extrapolate that across CA, AZ, NV and FL.

And what happens when the state can no longer afford to step in and help?
homedad43 | 02.19.08 - 10:07 pm | #

Viewing with alarm writes:
We addressed this in the discussion last night. Defined benefit pension plans probably need a 9% yield on investment to stay funded. Where are they going to get that in today's market? This is the first of many similar headlines.
Viewing with alarm | Homepage | 02.19.08 - 10:11 pm | #

energyecon writes:
outhouse,

I think the criterion under discussion here is 'sustainability' - not sure how the article intends it - but that is the recurring theme I can identify from multiple threads.
energyecon | 02.19.08 - 10:12 pm | #

4822 writes:
These folks aren't in the California retirement system, Calpers?
4822 | 02.19.08 - 10:13 pm | #

Viewing with alarm writes:
Sounds like a city run police and fire system.
Viewing with alarm | Homepage | 02.19.08 - 10:15 pm | #

energyecon writes:
Misean,

Think I saw him by the water cooler with Whodathunk...
energyecon | 02.19.08 - 10:15 pm | #

peritropoi writes:
There was a lot of new building in Vallejo - there might be a lot of foreclosures. Impose a massive tax on bank-held property. Munis should hit back at the banks that ruined their credit before its too late.
Having grown up there, I can say that there probably aren't that many people in the neighborhood who understand the connection though.
peritropoi | Homepage | 02.19.08 - 10:15 pm | #

Harsh Realty writes:
There's 1,000 ghost towns in Texas. I think California is trying to be #1.
Harsh Realty | 02.19.08 - 10:17 pm | #

Misean writes:
energyecon,

What else to say but LOL.

Cheers,
Misean | 02.19.08 - 10:17 pm | #

NorkaWest writes:
They will blame Prop 13, of course.

The article ignored the fact that this city has been in political chaos for sometime:

1. They had an election in November. First, they announced that one candidate one. They swore him in as mayor. Then, they did a recount and announced that the other candidate won. They then swore this other guy in as mayor.

2. Everyone got lawyered up and headed off to court.

3. The recount guy is still mayor.

Needless to say, everyone has been concentrating on the city budget while this electoral circus has been going on.

I believe the "payouts" referred to in the article are accumulated vacation and sick leave for employees who retire, quit, or are fired.
NorkaWest | 02.19.08 - 10:18 pm | #

energyecon writes:
Hey did you all catch the Housing Wire link on the sidebar on the right?

Moody’s/REAL Commercial Property Price Indices fell by 1.5 percent in December — the fourth-largest monthly drop in the 84-month history covered by the price index.

energyecon writes:
Misean,

I have to fess up to being a bit out of touch on Cali - native son and all that - but I haven't lived there for...ummm...23 years?! and last visit was a long weekend in 2000.

Guess I am not dialed into how Cali hit the peak first and has been riding down for that irresistable budget contraction to meet that immovable entitlement...
energyecon | 02.19.08 - 10:22 pm | #

tj & the bear writes:
Excessive? By what measurement/criteria/perspective?

All of them.

tj & the bear | 02.19.08 - 10:22 pm | #

MaxedOutMama writes:
Outhouse:
Public safety contracts for police and fire services make up 80 percent of the city's general fund.

"We've been spending more than we've been making for 20 years and it's time to pay the piper," Gomes said.

Their workout plan is very funny, because it proposes to cut firefighter salaries by 15%, the most of any category, and apparently under the current contracts the police and firefighters must approve it. So now the city officials are offering the auto worker plan - lose everything or give big concessions.

Once the retirees go, they are going to have to come up with money for benefits plus at least some replacement salaries. They can't do it.

You will see a lot more of this in CA and in many states. In general I believe you have to actually go bankrupt to get out of most of these contracts, but laws may vary across the country.
MaxedOutMama | Homepage | 02.19.08 - 10:23 pm | #

jczrichards writes:
Vallejo is not a small dusty town either. It's right next to a I-80 and a big toll area. 100,000 people or so I believe.
jczrichards | 02.19.08 - 10:28 pm | #

tj & the bear writes:
MaxedOutMama,

The irony here is that the unions didn't see that they were killing themselves with those generous pensions, since the current dues-paying members are going to get nailed on jobs, pay & benefits just to cover for those pampered retirees. Think that'll fuel a little resentment in the ranks?

tj & the bear | 02.19.08 - 10:29 pm | #

MaxedOutMama writes:
Impose a massive tax on bank-held property.

Heh. There's a little provision in the US Constitution about bills of attainder which is generally interpreted to mean that you cannot aim laws at identity instead of action. You could impose taxes on rundown property, etc, but I doubt you can legally impose taxes by owner category.
MaxedOutMama | Homepage | 02.19.08 - 10:29 pm | #

sdtfs writes:
Damn. I thought San Diego with their billion dollar unfunded pension morass was going to be first. There's an outside chance SD could still scoop'em.
sdtfs | 02.19.08 - 10:33 pm | #

dryfly writes:
Hey I've always said - if you got lemons, make lemonade. If they fire enough firefighters they won't have a surplus housing problem for long right? Then prices go back up 'cause its all supply and demand and God ain't making anymore unscortched land... so no problem.

dryfly | 02.19.08 - 10:35 pm | #

Dale writes:
". . . the excessive future retirement benefits . . . "

"Excessive" in the sense that the future retirees, under the current plan, will NOT be expected to eat macaroni for breakfast, lunch and dinner.
Dale | 02.19.08 - 10:38 pm | #

w writes:
A friend of mine was telling me about a city budget meeting he attended where they were simulatneously talking about adding more police and fire with a new tax on phone service and how everyone else was going to have to absorb the coming 10% or whatever cuts from the state. Since police and fire make up near 50% of the budget it would be like everyone else taking a 17-18% cut while they hire more emergency services.
w | 02.19.08 - 10:39 pm | #

Yearning to Learn writes:
"God ain't making anymore unscortched land..."

now that is just R-O-N-G rong.

LOL.

God hath smote thee
Yearning to Learn | 02.19.08 - 10:40 pm | #

Outsider writes:
I remember when Bridgeport, CT filed or was going to file bankruptcy somewhere in the early 90s. As I recall, the mayor caught a lot of flack for this move, something about ruining bond ratings for the city or something. It might've been cutting edge to propose this at the time, but maybe Bridgeport actually was ahead of its time.
Outsider | 02.19.08 - 10:41 pm | #

w writes:
excessive means: you work until you are 50 and retire ~15 years before most people and receive 80% or more of the pay from your best YEAR with very good medical and go get another job to start building up your second retirement.
w | 02.19.08 - 10:41 pm | #

sportsfan writes:
. . . filing and pursuing Chapter 9 bankruptcy . . .

Okay, so there really is a chapter that isn't named 7, 11 or 13.
sportsfan | 02.19.08 - 10:41 pm | #

sportsfan writes:
w,

Don't forget claiming a disability on the way out the door in order to make those lifetime benefits tax free.
sportsfan | 02.19.08 - 10:44 pm | #

Winston writes:
Vallejo is a poor (by bay area standards) and crime-ridden (by any standards) city that lost the military base that gave it a reason to exist some years ago and hasn't really found a good substitute as many people find its combination of toxic pollution (from the nearby oil refineries) high crime and a punishing commute make it unattractive as a bedroom community. It isn't really a surprise to me that it is one of the first bay area cities to come close to bankruptcy.
Winston | 02.19.08 - 10:45 pm | #

Misean writes:
energyecon,

"Misean,

I have to fess up to being a bit out of touch on Cali - native son and all that - but I haven't lived there for...ummm...23 years?! and last visit was a long weekend in 2000.

Guess I am not dialed into how Cali hit the peak first and has been riding down for that irresistable budget contraction to meet that immovable entitlement..."

It's coming. Cali Muni's just keep spending until rev stops. Then they scream.

Cheers,
Misean | 02.19.08 - 10:46 pm | #

w writes:
Oops, thats a good one sportsfan. If you have to much pride for that one you can just take your turn being rotated into the Captain/Chief position for one year to pull max benefits. If you aren't qualified for that you can just take your turn working massive overtime for one year to hit that number.
w | 02.19.08 - 10:48 pm | #

MaxedOutMama writes:
TJ, the autoworkers didn't quite grasp it either. I guess everyone believes it will work out somehow until you find yourselves 3 months from insolvency in the middle of a muni-bond crisis.
MaxedOutMama | Homepage | 02.19.08 - 10:49 pm | #

w writes:
I hear they cannot get Gray Davis to stop grinning.
w | 02.19.08 - 10:50 pm | #

Peter writes:
MaxedOutMama: You will see a lot more of this in CA and in many states. In general I believe you have to actually go bankrupt to get out of most of these contracts, but laws may vary across the country.

Nope. Chapter 9 is interpreted by the Feds as being based on the 14th Amendment: Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. That part has routinely been interpreted as meaning that existing contracts and debts must be paid. Somehow.

Companies have used Chapter 13 to get out of their pension obligations. Chapter 9 filers (states, counties and cities/towns) may not.

http://en.wikipedia.org/wiki/ Fou...es_Constitution

This may be the first city to take the BK hit, but I've been hearing about some towns in the rust belt where >20% of their tax revenue goes to pay for pensions. It is going to be painful for a lot of municipalities.
Peter | 02.19.08 - 10:50 pm | #

crispy&cole writes:
Dont forget about the other BA city on the brink:

Half Moon Bay is wrestling with unpleasant options for responding to a court ruling that officials say threatens the "very existence of our city government" - a $36.8 million judgment against the city for turning a proposed housing development site into wetlands.

Under the worst-case scenario, officials say, Half Moon Bay would become the first Bay Area city forced to dissolve, and the coastal town's land would become an unincorporated part of San Mateo County.




http://bakersfieldbubble.blogspo...ke-flies- i.html
crispy&cole | Homepage | 02.19.08 - 10:52 pm | #

crispy&cole writes:
So now we have a competition for which BA city will be the first to go BUST. All of us CA's keep hearing how the BA was different. I guess it really was!
crispy&cole | Homepage | 02.19.08 - 10:53 pm | #

dryfly writes:
Okay, so there really is a chapter that isn't named 7, 11 or 13.
sportsfan | 02.19.08 - 10:41 pm | #

And what's Chapter 10? Give it back to the indians and go to work in their casino for trinkets and shiny beads?

dryfly | 02.19.08 - 10:53 pm | #

dr strangemoney writes:
We are all bankrupt now!
dr strangemoney | Homepage | 02.19.08 - 10:53 pm | #

sdrenter writes:
sportsfan, w,

I suppose in your jobs you send your bonuses back to the shareholders?
sdrenter | 02.19.08 - 10:53 pm | #

crispy&cole writes:
We are all BA now!
crispy&cole | Homepage | 02.19.08 - 10:54 pm | #

Tom Stone writes:
Vallejo is not entirely without Amenities,they have Marine world and a pretty good Denny's.
Tom Stone | 02.19.08 - 10:54 pm | #

w writes:
sdrenter,

I am my shareholder.
w | 02.19.08 - 10:55 pm | #

w writes:
I was wondering the other day if there is any way private companies would be able to staff and run a fire department?
w | 02.19.08 - 10:59 pm | #

MaxedOutMama writes:
Peter - I phrased that badly. I meant that they are not normally something that a govmt entity can get out of. If a govmt is genuinely insolvent, no one can force it to pay money it doesn't have. In some busted areas, unless the state steps in there is no way to pay the benefits.

An interesting NY Times article on the subject claims that some governments are cutting them anyway and touching on the various issues. We'll see. It is definitely a problem for state and local governments around the country, and of course also for those who are dependent on the benefits!
MaxedOutMama | Homepage | 02.19.08 - 11:01 pm | #

sportsfan writes:
w, sdrenter,

In my little corner of California, getting on the fire department is a huge coup. You have to know people and wait for years. The reason is lifetime security with plenty of time off and a generous retirement.

BTW, I have a lot of respect for police officers and don't begrude their dipping nearly as much.

However, even the polic are pampered and uberwealthy compared to what we expect of and do for our military.
sportsfan | 02.19.08 - 11:05 pm | #

MPinCO writes:
This has been in the making for years. A Cato study found public sector compensation packages 30% above the private sector. That cannot be sustained. The public sector was already teetering at the edge of a cliff. The credit issues just pushed it over the cliff.
MPinCO | 02.19.08 - 11:06 pm | #

dryfly writes:
TJ, the autoworkers didn't quite grasp it either.

In one of the classes I took for my masters we had BOTH a CEO of a very large corporation (Top 100 in the USA) and the head of the state AFL-CIO lecture us on the same night then together they came to the podium to answer questions. It was a WOW night.

There were some differences for sure but one thing they BOTH agreed to was that it was stupid and wrong to expect your average retail stockholder or low to mid level worker (union or mgmt) to understand the long term ramifications of a contract agreement.

If you expect that then you are placing trust in the wrong place. They both agreed the only ones with enough info & visibility are management and union leadership.

Unfortunately the stockholders & workers are the ones who will suffer the most from the bad decisions made by management & union leadership.

And then who chooses those managers & union leaders? The same folks that get hosed by the people they choose.

Its almost unfixable - it was designed for failure.

dryfly | 02.19.08 - 11:06 pm | #

MaxedOutMama writes:
PS: Peter, the pension issue is one reason that I believe munis are more risky than many think. Of course many localities are very solvent, but the upcoming retirement issue has the potential to push over some of the weaker entities.
MaxedOutMama | Homepage | 02.19.08 - 11:06 pm | #

jo6pac writes:
They only go to ever paid their fees for the month.
jo6pac | 02.19.08 - 11:07 pm | #

Brian writes:
I had a heart attack when I read the headline. There is a city called California City, it is in Kern county (if I recall correctly) close to Barstow and the junction of Highway 14 and 395. Cal City is an awesome destination for Off Highway Vehicles. It would be rough out there on a holiday if the local police were not around to keep out the few percent of knuckleheads that ruin it for the rest of us.
Brian | 02.19.08 - 11:08 pm | #

sportsfan writes:
w writes: I am my shareholder.

As am I. If I give myself a bonus, do I get to deduct it and declare it at the same time?
sportsfan | 02.19.08 - 11:08 pm | #

crispy&cole writes:
Does anyone know how much debt this city has outstanding? I wonder if its AAA rated - :). They will be downgraded the day after they file chapter 9!
crispy&cole | Homepage | 02.19.08 - 11:08 pm | #

Ken writes:
Anyone know who insures their bonds? Could this be the other shoe dropping on the monolines?
Ken | Homepage | 02.19.08 - 11:09 pm | #

dryfly writes:
As am I. If I give myself a bonus, do I get to deduct it and declare it at the same time?

If you own a corporation & the corporation actually pays your salary - then 'yes'.

dryfly | 02.19.08 - 11:11 pm | #

Dean writes:
I think there will soon be a BK-city-o-meter!
Dean | 02.19.08 - 11:11 pm | #

dryfly writes:
They will be downgraded the day after they file chapter 9!

Also - what actually happens (process) during chapter 9? Do they roll out a huge stone squeezing blood making machine or what?

We need an uber post...

dryfly | 02.19.08 - 11:13 pm | #

ccc writes:
Probably the most significant thing about this story is that Vallejo is the home of E-40. look out for the new album: "The Ball Street Journal"
ccc | 02.19.08 - 11:14 pm | #

barely writes:
DICK Cheney said deficits don't matter. I wonder if Vallejo operated their fine city using those principles. DOminos are falling everywhere.
barely | 02.19.08 - 11:15 pm | #

MaxedOutMama writes:
Dryfly - I think you are a bad influence on me. I just found myself wondering if the CA state govmt wouldn't decide to pass a local option gambling ordinance to bail some of these places out.

It could, in theory, happen.
MaxedOutMama | Homepage | 02.19.08 - 11:16 pm | #

FT Woods writes:
Just about the sole reason Cato exists is to issue reports that favor privatization.
FT Woods | 02.19.08 - 11:17 pm | #

OkieLawyer writes:
I was talking about the coming municipal bankruptcies over a year ago.

To be fair, so was Charles Smith at the Of Two Minds blog.
OkieLawyer | Homepage | 02.19.08 - 11:19 pm | #

AllenM writes:
W-Rural Metro provides contract fire and meatwagon services.

One of the contributing factors to the budget crisis in Arizona is the high required contributions to the Arizona State Retirement System. While benefits are quite nice if you survive long enough to vest the cost is *extremely high*. The current contribution rate is 9% EMPLOYEE- matched by the EMPLOYER. Oh yeah, plus you have to pay social security on top of the pension contributions.

So every employee costs 32% of BASE PAY FOR MANDATORY RETIREMENT CONTRIBUTIONS.

Funny thing though, ASRS is at 95% funding for it's liabilities.

Now, we get to see what brilliant solutions our legislature manages to brainstorm to clear the budget hurdles.

Someday this war's gonna end...
AllenM | 02.19.08 - 11:20 pm | #

dryfly writes:
Dryfly - I think you are a bad influence on me.

Thats what everyone says.

BTW I live in the shadow of an indian casino - housing values DO NOT go up near casinos for long. Crime does though. Just sayin'.

dryfly | 02.19.08 - 11:20 pm | #

jj writes:
4822 writes:
These folks aren't in the California retirement system, Calpers?

4822: if i'm not mistaken, calpers is health + retirement benefits for state employees (mandatory?) and also for some local municipalities that elect to sign up w/ calpers for one or both health and retirement benefits.

i'm guessing vallejo opted to invest on its own, as many local municipalities do
jj | 02.19.08 - 11:21 pm | #

sportsfan writes:
If I give myself a bonus, do I get to deduct it and declare it at the same time?

If you own a corporation & the corporation actually pays your salary - then 'yes'.

dryfly,

With an S corp it doesn't matter since it all passes through anyway.

With a C corp it would matter, but who would want to be a C corp in California? They have this little thingy called the Franchise Tax Board and they just love to tax franchises.
sportsfan | 02.19.08 - 11:21 pm | #

AllenM writes:
dry- has the local pawnshop upgraded their neon yet?

I think they are the only winners of the casino sweepstakes;-}

Someday this war's gonna end....
AllenM | 02.19.08 - 11:22 pm | #

DaveJ writes:
If they go bankrupt, it is no big deal. Their bonds are backed by MBIA and they have a AAA rating. So no worries.
DaveJ | 02.19.08 - 11:24 pm | #

dryfly writes:
w writes:
I was wondering the other day if there is any way private companies would be able to staff and run a fire department?
w | 02.19.08 - 10:59 pm | #

Thats how fire depts started in places like London, NYC, Boston... hundreds of years ago... they were extensions of insurance companies!

But there was always the question of what might happen if you didn't pay for their protection. Was the risk of a future fire just the result of random bad luck? I think you can see why it eventually evolved into impartial gov't civil servants.

But we see that too wasn't without cost.

No easy answers.

dryfly | 02.19.08 - 11:26 pm | #

crispy&cole writes:
Where is Robert Cote? He has been saying this would happen since we first my on the housing bubble blog in 2005.

Where is the Dawg when you need him?
crispy&cole | Homepage | 02.19.08 - 11:26 pm | #

caveat writes:
Any Wonder why the "Market Makers" ain't making market on the Muni's anymore?

Maybe for once, they got this one right.

All levels of government have been taxing and spending freely throughout the Great Fiat Ponzi Money and Credit Bonanza over the past 25 years or so and none seem to ever have been held to account and maybe it is time.

My way of moving away from this "Twilight Zone" of "New Reality" over the past several years is just buying and putting away physical precious metals and now i think it is time to just fundamentally add more to the pot as when this truly implodes, i don't think any banks or debt instruments will have any real value.
caveat | 02.19.08 - 11:27 pm | #

dryfly writes:
With a C corp it would matter, but who would want to be a C corp in California? They have this little thingy called the Franchise Tax Board and they just love to tax franchises.

I run my company as a 'C corp' but most years cashflow it like an 'S' - gives me more flexibility to hold/surge cash if needed.

But we don't have a 'franchise tax' so S vs. C a wash for me. Another good reason to not move to California... though tonights windchill warnings makes a guy think about it once in awhile.

dryfly | 02.19.08 - 11:30 pm | #

Billy Shears writes:
Speaking of Cato, we haven't heard many politicians proposing privatizing social security lately. Indexing hasn't worked too well the past 8 years.
Billy Shears | 02.19.08 - 11:31 pm | #

sdrenter writes:
w, sportsfan

Well, good for you guys. And I'm sure you're your own fire department and police force too, so I won't even ask that.

I do wonder how anyone can pay attention to what gets posted here and still think privatization is the answer. Do you really want the geniuses who "streamlined" the mortgage lending industry driving around with guns?
sdrenter | 02.19.08 - 11:32 pm | #

MaxedOutMama writes:
I thought this might belong here. CR commenters (a dedicated, indeed nearly obsessive crew) have posted regarding Rhode Island's problems before. They came up with a brilliant idea on judicial pensions:
About a third of the state’s judges will retire all at once if the legislature adopts Governor Carcieri’s proposal to slash judicial pensions by the amount of Social Security benefits they’re due to receive, the head of a state judges’ association predicts.

By the end of the current fiscal year, 23 of the state’s 59 judges will be eligible to retire with pensions equal to either 75 percent or 100 percent of full pay, a courts spokesman said.

I think the judges might be in a crabby mood and it might be wise to stay out of the state.
MaxedOutMama | Homepage | 02.19.08 - 11:35 pm | #

dryfly writes:
I do wonder how anyone can pay attention to what gets posted here and still think privatization is the answer.

We will only privatize if something becomes profitable ... Profit is a constitutionally sanctioned God given private right. Losses on the otherhand are open for negotiation.

dryfly | 02.19.08 - 11:36 pm | #

Peter writes:
Some public employees are not covered by social security, and as such they might not be receiving SocSec if they work their entire life as state/muni employees. Or, if they (or their spouses) have worked and paid FICA, they'll have their SocSec benefits cut by 2/3 of what their public pension pays. If their municipality defaults on pension payments, they might not be able to get the difference in SocSec reinstated from the government pension offset. One can thank the Social Security Act of 2004 for this monstrosity.

This concerns me because I'm planning on running for office this fall, and this may end up taking a bite out of my retirement.
Peter | 02.19.08 - 11:46 pm | #

Francois writes:
". . . the excessive future retirement benefits . . . "

Excessive? By what measurement/criteria/perspective?"

How about the capacity of the taxpayer for one?

But hey! Not that it matters right?
Francois | 02.20.08 - 12:00 am | #

dynamitejacket writes:
I work for a municipality in CalPERS, we do not pay into social security. As it stands today, we have an unfunded liability of 3M on retirement and healthcare benefits. there are 6 rather well paid old guys retiring in the next 3 years, and i talked to a couple today who were previously planning to work till 60 but are now thinking they better get out while theres still some money left- the guys like me, with 20 years or more left to put in, are not so hopeful...

yeah, i do feel a little guilty about the prospect of 80% of my best years salary @55 years old. if i live to collect, of course
dynamitejacket | 02.20.08 - 12:04 am | #

RickG writes:
Isn't it fascinating that folks who see great moral hazard in foreclosure relief, and those practicing "walk aways" don't seem to grasp that pensions etc, are contractual obligations as well. If the municipality was going to fall short on the ability to pay, it had an obligation to start making up the shortages in the funds.

Lack of foresight? No, the unions knew that their members would retire some day and a pension plan that actually paid something might just come in handy! That dog doesn't hunt!

What we see here is financial mismanagement and probably a lack of any effective oversight.
RickG | 02.20.08 - 12:06 am | #

Keep It Simple, I'm Stupid writes:
But we don't have a 'franchise tax' so S vs. C a wash for me. Another good reason to not move to California... though tonights windchill warnings makes a guy think about it once in awhile.

The wind chill is half the reason I live here in Minnesota. Keeps the Californians away.
Keep It Simple, I'm Stupid | Homepage | 02.20.08 - 12:08 am | #

Rob Dawg writes:
crispy&cole writes:
Where is Robert Cote? He has been saying this would happen since we first my on the housing bubble blog in 2005.

Where is the Dawg when you need him?

[blushes.] When the CA municipalities thmselves finally understand what I've been saying for [more than] 3 years I have to find a new prediction.

This one is actually something like five predictions coming true at once.
Rob Dawg | Homepage | 02.20.08 - 12:09 am | #

dryfly writes:
What we see here is financial mismanagement and probably a lack of any effective oversight.

Bingo.

dryfly | 02.20.08 - 12:09 am | #

dryfly writes:
The wind chill is half the reason I live here in Minnesota. Keeps the Californians away.

Ya but what can we do to keep the cheese heads out [ducking fast & looking about - dryfly married a cheese head]...

dryfly | 02.20.08 - 12:12 am | #

Keep It Simple, I'm Stupid writes:
Ya but what can we do to keep the cheese heads out

Tell them the beer tap just ran dry, and keep the Summit for yourself.
Keep It Simple, I'm Stupid | Homepage | 02.20.08 - 12:13 am | #

dryfly writes:
Tell them the beer tap just ran dry, and keep the Summit for yourself.

LOL!!! Summit is so good I consider it a food group.

dryfly | 02.20.08 - 12:17 am | #

KirkH writes:
I'm probably one of the younger whipper snappers here at 29 but most of my friends assume a few things.
1) We're not going to get social security when we're old.
2) We're going to work until we die.
3) What's a pension?
4) Hordes of baby boomers are going to retire/get fired and vote for tax increases.

I don't think older people realize the prevailing mindset among people my age. We're in software, bio-tech, teaching, etc. so it's not like we're planning on retiring flipping burgers.
KirkH | 02.20.08 - 12:18 am | #

Anonymous writes:
http://tinyurl.com/3xhtll

"Freddie Mac, the government-sponsored mortgage financier, said on Thursday it had changed some of its rules relating to private mortgage insurers in a bid to support the troubled sector."

“We’re trying to help the mortgage insurers,’’ Freddie Mac said.

FRE was setup to support the "American Dream", but taxpayers dollars are now being diverted to help MTG, RAD and PMI.
Anonymous | 02.20.08 - 12:21 am | #

Keep It Simple, I'm Stupid writes:
1) We're not going to get social security when we're old.

Your other assumptions may be right, but this one needs some modification. Worst case projections are that the Social Security taxes will be able to pay out about 75% of the projected benefits. Maybe the trust funds don't get honored, but unless you think someone is going to be able to divert current FICA taxes (at whatever time point you care to mention) to the general fund, you'll get something out of the system.
Keep It Simple, I'm Stupid | Homepage | 02.20.08 - 12:23 am | #

Keep It Simple, I'm Stupid writes:
LOL!!! Summit is so good I consider it a food group.

Summit, as a premium brew, isn't a good example, but one of the things I really like about the Upper Midwest (defined as Minnesota and the home of those damned cheese lovers) is that G. Heilman was never able to buy all of the local breweries. You can still get a really good, cheap beer. I'm partial to Grain Belt, but there are plenty of other good choices.
Keep It Simple, I'm Stupid | Homepage | 02.20.08 - 12:25 am | #

ron writes:
OT

TOKYO, Feb 20 (Reuters) - Japanese stocks extended losses on Wednesday with investors spooked by a report that KKR Financial Holdings (KFN.N: Quote, Profile, Research) had delayed repayment of billion of dollars of commercial paper for a second time. The Financial Times reported that KKR, the listed affiliate of private equity group Kohlberg Kravis Roberts & Co [KKR.UL], had begun a new round of talks with creditors and deferred repayment of debt due last Frida
ron | Homepage | 02.20.08 - 12:25 am | #

jg writes:
I'm sure our resident muni bond expert, Robyn, saw this coming.

Burn, baby, burn. One down (almost), thousands to go.

It will be great to return to limited, rational government at all levels, ultimately.

Unfortunately, there will be great pain on the journey.
jg | 02.20.08 - 12:26 am | #

MarkS writes:
Eh, just another run-of-the-mill deadbeat, ron. Why can't those people just pay their coupons on time?
MarkS | 02.20.08 - 12:28 am | #

RE writes:
Notice to All Citigroup Customers Who Invested in Auction Rate Securities from the Securities Law Firm of Klayman & Toskes

NEW YORK, Feb. 19 /PRNewswire/ -- The Securities Law Firm of Klayman & Toskes, P.A. ("K&T")(http://www.nasd-law.com ) announced today that it is investigating the sales practices and supervision by Citigroup (NYSE: C) with regard to its trading of Auction Rate Securities. Auction Rate Securities are typically represented to be safe investments which are akin to money-market funds. However, in the collapse of the credit markets, Auction Rate Securities may become illiquid and difficult to value. As a result, several customers of Citigroup have sustained heavy losses in Auction Rate Securities sold by the firm.

If you purchased Auction Rate Securities from Citigroup, or if you have information relevant to our investigation, please contact Lawrence L.Klayman, Esquire or Steven D. Toskes, Esquire of Klayman & Toskes, P.A., at 888-997-9956. You may also visit us on the web at http://www.nasd-law.com .

Klayman & Toskes, P.A., an experienced and nationally recognized securities litigation law firm, continues its representation of investors throughout the world in securities arbitration and litigation matters against major Wall Street brokerage firms.
RE | 02.20.08 - 12:33 am | #

dryfly writes:
'm probably one of the younger whipper snappers here at 29 but most of my friends assume a few things.
1) We're not going to get social security when we're old.

You'll get SS - demos will likely be more sustainable again after boomers die off... unless the whole population dies off. better demos might even mean it works for you folks - depends on how much the population booms.

2) We're going to work until we die.

No that will be the fate of most boomers - boomers got no savings & inflation will eat pension & SS value like breath mints. it will be work or starve... SS after inflation will buy a latte.

3) What's a pension?

That all generations going forward will share - boomers too (who stole my pension)...

4) Hordes of baby boomers are going to retire/get fired and vote for tax increases.

Vote for what? More inflation? You can't eat what doesn't get grown... anything else is just a monetary phenomenon. So vote for taxes or not - won't matter if the society doesn't produce.

I don't think older people realize the prevailing mindset among people my age. We're in software, bio-tech, teaching, etc. so it's not like we're planning on retiring flipping burgers.
KirkH | 02.20.08 - 12:18 am | #

Most Xers ARE NOT in biotech, sw, etc. maybe your peers but not most. I live & travel in communities where I see the other half and there are gazillions of them slogging in McJobs. They'll either flip or die...

I have no doubt many will look at their 'elders' as the cause of their grief - many boomers did the same as did the generations before them.

Ever hear the line 'Never trust anyone over 30?' Those were boomers who weren't talking about boomers.

BTW my kids look at Xers as selfish old fart wannabes - clueless 80s droids.

Same shit happens every generation - people live, grow old & die. Be the same for the boomers & then Xers in their turn. Won't stop folks from looking for scapegoats - that's the first thing people do when they don't think they got theirs.

Nothing ever changes under the sun.

dryfly | 02.20.08 - 12:34 am | #

KirkH writes:
Here in San Diego they're proposing installing parking meters in front of my house. I think they see the writing on the wall. Driveways are next.

"you'll get something out of the system."
I fully believe that whatever I put into Social Security I'll get out. I just hope it'll buy me a hot dog at a Padre game by then.

I know a Kohlberg family member(KKR Financial Holdings). She travels to exotic locales in a leer jet. I have a feeling they'll make it through without getting hungry for some reason.
KirkH | 02.20.08 - 12:36 am | #

dryfly writes:
I'm partial to Grain Belt, but there are plenty of other good choices.

Schells right from the brew house rathskeller... I did a rugby party there once in the 70s... they had to drag us out through the garden like we were so much cord wood.

dryfly | 02.20.08 - 12:37 am | #

dryfly writes:
I fully believe that whatever I put into Social Security I'll get out. I just hope it'll buy me a hot dog at a Padre game by then.

You are askin' a lot - ball park concessions being what they are.

dryfly | 02.20.08 - 12:39 am | #

Keep It Simple, I'm Stupid writes:
I did a rugby party there once in the 70s

You did a rugby party, and can remember it? Boy, the didn't make rugby players like they do now.

Schell's is pretty damned good, but not as cheap as Grain Belt.
Keep It Simple, I'm Stupid | Homepage | 02.20.08 - 12:42 am | #

dryfly writes:
You did a rugby party, and can remember it? Boy, the didn't make rugby players like they do now.

LOL. Remember some of them... others I was told about later. I did my share.

Actually that evening I helped get our guys out before they trashed the gardens - if you've been to New Ulm you know how nice they are and don't need to imagine what eight drunken ruby teams could do to them. That was the last year Schell's sponsored rugby tournaments there.

dryfly | 02.20.08 - 12:48 am | #

KirkH writes:
I don't blame old people. I blame Moore's law... for automating the living hell out of pretty much every paper shuffling job that allowed capitalism a brief respite from the hunger pangs of the masses.

I realize is obnoxious for someone sub 30 to quote smart people but Schumpeter was the man... from Wikipedia:
"Whilst he is sympathetic to Marx's theory that capitalism will collapse and it will indeed be replaced by socialism, Schumpeter concludes that this will not come about in the way Marx predicted. To describe it he coined the famous phrase "creative destruction," a process in which the old ways of doing things are endogenously destroyed and replaced by new ways."
KirkH | 02.20.08 - 12:50 am | #

Hazard writes:
If these places have pensions with COLA included and no caps on retiree medical they may as well default on their retiree obligations today (ie, drastic cuts).
Hazard | 02.20.08 - 12:52 am | #

dryfly writes:
Kirk - I'm a huge fan of Schumpeter. The other side of that destruction is opportunity. The software tech world we built up in the 80s & 90s out of the ashes of rust belt is whats cratering now... probably will for 10-15 more years... then there will be a new wave. What that is - who knows... probably resource related (energy, food, water).

Too late to help the boomers like me in retirement - our retirement will coincide with the bottom before the next wave.

But the kids coming up AFTER the Xers should be in the sweet spot job wise and Xers will benefit from their productivity like the greatest generation's retirement fortunes benefited from the 80s & 90s productivity boom.

That's a big reason why I think Xers are going to be pleasantly surprised by SS... boomers not so much, we'll get money worth not much.

dryfly | 02.20.08 - 12:59 am | #

SiliconFiend writes:
Vallejo never really recovered when the naval shipyard at Mare Island closed. They've just been pushing off their liabilities for the last 20 years.

Vallejo is one of the three big cities in Solano county (Fairfield and Vacaville are the other two). Solano county is subprime (as are we all, now...) Here's an interesting data point about house prices--we used to own a house in Suisun (next door to Fairfield). Prices for SFH at the low end (where our house was) have fallen from a peak of almost 400k down to 200k now (half-off sale, anyone?). We paid 240k for our house in 2002... I expect prices there to fall even further this year.
SiliconFiend | 02.20.08 - 1:02 am | #

tj & the bear writes:
I read Mauldin's "Bull's Eye Investing" back in 2004 and got a real eye-opener regarding pensions, both public and private. Wonder how long before the first really major city will hit the skids.

p.s.: Yes, I know SD has been bouncing around for years now.

tj & the bear | 02.20.08 - 1:04 am | #

Marcus Aurelius writes:
The only people I know who are truly ‘retired’, in the traditional sense of the word, are ex-government workers, ex-military, and a couple of corporate execs. No one else seems to have the job security/tenure that allows benefits to accrue to the point that they don't need supplemental income or a drastic downward change in lifestyle.

That said, the burden of pensions on corporations would seem to be much lower (not counting exorbitant ‘retirement’ packages given to executives - same as other forms of compensation).

As for private industry running emergency/law enforcement functions, we’re probably better off with things the way they are. Privatization would lead to diminished performance and increased costs (read: exorbitant executive salaries), without the social benefits of pensions being paid at all (due to high turn-over in the workforce).

Tangentially, the destruction/compression of the middle class will leave the upper class as the only viable source of tax revenue.

Why will we tax the rich so heavily? Because that’s who will have the money.
Marcus Aurelius | 02.20.08 - 1:11 am | #

tj & the bear writes:
BTW, Mauldin also had some interesting thoughts on future demographics too (that DryFly may remember I mentioned previously).

Current retirement needs are usually calculated based on current living costs projected out and adjusted for inflation. However, given that they'll be far fewer workers per boomer retirees, the workers will be able to command a greater share of boomer retiree assets in return for their services (and the elderly will need those services).

So, even if SS isn't there in the end, the younger generations will be able to suck the boomers dry beforehand.

tj & the bear | 02.20.08 - 1:11 am | #

FFDIC writes:
FT - A voice in the wilderness who won't be quiet (Jeremy Grantham)
http://www.ft.com/cms/s/0/ dd20b9...00779fd2ac.html
FFDIC | 02.20.08 - 1:12 am | #

tj & the bear writes:
Marcus Arelius,

Agreed that privatizing police & fire services isn't the way to go. However, some sanity has to be returned to the process of determining public servant salaries & benefits. As of now, it's pretty much the foxes guarding the henhouse.

tj & the bear | 02.20.08 - 1:17 am | #

FFDIC writes:
ANB Financial of Rogers, Arkansas needs capital due to large loan losses. $388 million in non-performing compared to $39 million a year ago / 22% of bank's loan portfolio is non-performing...
http://www.nwaonline.net/ article...anbtroubles.txt
FFDIC | 02.20.08 - 1:27 am | #

KirkH writes:
Good points. My only disagreement is that the growing wealth divide is a side effect of growing productivity/inflation.

In other words the average income will grow but the median income will decline. That trumps demographics in my opinion - the point about divesting geezers would apply only to those with jobs.

Inefficiency was acting as a mechanism of wealth redistribution from the upper class. Now that the inefficiency is dying (thanks to the internet, more brains, etc.) voters are going to replace it with a more direct form of wealth transfer. Hopefully one compatible with capitalism.
KirkH | 02.20.08 - 1:40 am | #

other Jim writes:
I was wondering the other day if there is any way private companies would be able to staff and run a fire department?

Nothing wrong with setting up a volunteer department either. It's more work to keep the members motivated and trained but response times and quality of care can be equal to or better than any paid department.
other Jim | 02.20.08 - 1:47 am | #

tj & the bear writes:
Hmmm... NIKKEI off -447.54, starting out under and downhill pretty much most of the day. U.S. futures red, too. Should be an interesting day tomorrow.
tj & the bear | 02.20.08 - 1:49 am | #

tj & the bear writes:
other Jim,

If I were part of a small town community I think being a volunteer firefigher, deputy and/or EMT -- maybe even all of the above -- would be a great thing. Here in LA? Not so much.

tj & the bear | 02.20.08 - 1:53 am | #

other Jim writes:
Some of the older towns back east have volunteer departments dating from the
Ben Franklin days. I can't imagine anyone volunteering to be a cop though.

No doubt the county will provide police services until they crumble under the additional workload as well...
other Jim | 02.20.08 - 2:01 am | #

This is the Zodiac Speaking... writes:
In answer to your asking for more details about the good times I have had in Vallejo, I shall be very happy to supply even more material.

I have become very upset with the people of San fran Bay Area. They have not complied with my wishes for them to wear some nice + buttons. I promised to punish them if they did not comply, by anilating two years of appreciation in a month.


Z
This is the Zodiac Speaking... | 02.20.08 - 2:04 am | #

ELS writes:
"the excessive future retirement benefits . . . ."

Ahem, no.

Most likely the problem is that the City, rather than paying a little bit toward retirement funding every year (a la how one funds their 401K account), chose instead to fund the retirement benefits on a current basis. In other words, they would pay the bill as it came due rather than paying some into a pension fund to be invested and generate returns so that when people retired, there was already a pot of money from which to draw the retirement funds. (Apologies for the run-on sentence.)

Recall also that government wages are typically below market compared to the private sector, but that government can attract talented people who are willing to forego money today for better retirement benefits later.

This is especially true during recession or other fiscally difficult times (e.g., the OC bankruptcy). Government will often freeze raises for a few years, but offer to make it up with better retirement benefits. I call this "The Wimpy Rule" because the public entity is offering to gladly pay the employee Tuesday for a hamburger (or work) today.

Some food for thought that the folks on The Register's editorial board never considered.
ELS | 02.20.08 - 2:36 am | #

w writes:
Just got back on and read thru comments...

I agree that private police is a bad idea. but Fire dept. seems like a very workable model like ambulance service and hospitals. You could push more overtime and a lower hourly rate to improve profitability. if someone told me I could do a job for 24 hours at a time and I had to cook, work out, wash my truck and sleep during the shift I might find that attractive.
w | 02.20.08 - 2:47 am | #

Anonymous writes:
The Financial Times reported that KKR Financial (NYSE:KFN) Holdings, the listed affiliate of the private equity group, has delayed repayment of billions of US dollars of commercial paper for the second time and begun a new round of restructuring talks with creditors.??????
Anonymous | 02.20.08 - 2:55 am | #

Weather Helm writes:
sportsfan: "Okay, so there really is a chapter that isn't named 7, 11 or 13."

Well, at least 7, 11, and 13 are prime numbers. That would make the city of Vallejo, ahem, subprime.

Yuck yuck.
Weather Helm | 02.20.08 - 2:57 am | #

Anonymous writes:
This was back in August (20th) of last year!!

Consider the case of KKR Financial Holdings..., a powerhouse Wall Street operator. KKR Financial raises money by issuing asset-backed commercial paper ... used by large investors to temporarily park funds — and invests most of this money in longer-term assets. So the company is acting as a kind of bank, one that offers a higher interest rate than ordinary banks...

It sounds like a great deal — except that last week KKR Financial announced that it was seeking to delay $5 billion in repayments. That's the equivalent of a bank closing its doors because it's running out of cash.

http://delong.typepad.com/sdj/20...- capitalis.html
Anonymous | 02.20.08 - 3:00 am | #

Weather Helm writes:
"Hmmm... NIKKEI off -447.54, starting out under and downhill pretty much most of the day. U.S. futures red, too. Should be an interesting day tomorrow."

Oh great. Here comes another "surprise" cut from the Fed.
Weather Helm | 02.20.08 - 3:01 am | #

rent_to_own writes:
'but I doubt you can legally impose taxes by owner category'

Sure you can - check out how Florida taxes property based on the definition of 'permanent resident' and 'non-resident' on their property. That is most certainly a distinction based on owner category, as many British citizens have discovered. http://www.myflorida.com/dor/ pro...efinitions.html

However, there is no question that the banks will fight any attempt of a mere local community to gain revenue based on the bank's ownership of foreclosed property, and continue that fight with vaster resources than any nearly bankrupt community could muster.
rent_to_own | 02.20.08 - 3:16 am | #

BrantW writes:
"Excessive? By what measurement/criteria/perspective?" - outhouse

Excessive based on their ability to meet their commitments. San Diego is in the same boat. They made a lot of retirement promises (to settle a labor dispute I think) which were based on endless extrapolation of trends at the time. Come to think of it...GM did the same thing as well.

Stupidity having such company is not a good thing. Makes me think of terms like 'critical mass' and 'self reinforcing trends'.
BrantW | 02.20.08 - 3:41 am | #

eh writes:
Maybe as a result of all this something will finally be done to curb the absurdly generous retirement etc benefits given to public employees.
eh | 02.20.08 - 4:43 am | #

kieiwi writes:
AllenM writes

One of the contributing factors to the budget crisis in Arizona is the high required contributions to the Arizona State Retirement System. While benefits are quite nice if you survive long enough to vest the cost is *extremely high*. The current contribution rate is 9% EMPLOYEE- matched by the EMPLOYER. Oh yeah, plus you have to pay social security on top of the pension contributions.

in Australia, 9% of my wage was whisked away into my compulsory retirement fund, and this was true for all other wage slaves.

GWB's deputy sheriff over here drew the line when it was scheduled to rise eventually to 15% and that aint happened yet.

but our equivalent of the Wall St sharks welcomed this bit of socialism becos all that money coming in every week had to find a home and they were more than willing to do the dd, or not, the fees were the same.

some even said it was the equivalent of the greenspan put in terms of propelling the Aust sharemarket to new highs

unfortunately, it appears the sharks dabbled in US toxic sludge, so that 9 per cent is now 7 with an option to lower numbers

so

looks like 9 per cent was expensive to me, since i let the sharks get their piece of the action, and as allenm sez my philanthropic boss took a hit too....

deputy sheriff unavailable for comment, lost his seat in a democratic election, don't think he is affected by all this being in a taxpayer funded defined benefit superann scheme (think CEO golden parachute)
kieiwi | 02.20.08 - 5:36 am | #

Yal writes:
http://www.bloomberg.com/apps/ne...5jug& refer=home
Yal | 02.20.08 - 6:32 am | #

sterlingerl writes:
More on the KKR news, which might be one reason for the Japanese stock declines.

"The news, brought to wider attention by a Financial Times report, dragged Asian shares lower and dragged the dollar lower against the yen, traders in Tokyo said. In Europe, the news knocked jittery credit markets hard, with the widely watched iTraxx Crossover index breaking above 600 basis points for the first time."

http://www.reuters.com/article/ o...054296720080220

Bankers in trouble, what a shame...
sterlingerl | 02.20.08 - 6:43 am | #

blowncue writes:
Indymac CC call summary link:

http://insurancenewsnet.com/ arti...c0c0cd3a01c283c

Full CC transcript on that website. CEO made a very good presentation. Emphasized heavy reserving for future losses, all financing completely through the bank.

(excerpt)

3. Home Builder Portfolio: 1. Is out of this business and it never was a core business. 2. Has not grown it over the years. 3. At one point when Co. was a mortgage REIT, it was about 20% of total assets. 1. It is now about 3.5% of total assets. 2. It is a business that every ten plus years is subjected to a tsunami of credit losses that often wipe out the profits made for that entire ten-year period. 3. Is diffusing down this portfolio. 4. Builder construction NPAs rose to $480m or 40% of outstandings from $106m at 3Q07-end and almost nothing in non-performers at 2Q07-end. 5. Basically between 2Q07 and 3Q07, builders in Co.'s portfolio were selling about 600 units a qtr., which declined by 73% from 2Q07 to 3Q07.
6. Hired a nationally recognized independent consulting firm to review portfolio. 1. As a result of Co.'s desire to really get this portfolio behind, it put an additional $100m in reserves in 4Q07 and now has $199m in total reserves. 2. Those reserves represent 17% of entire portfolio and 41% of NPAs. 7. Will put away another $40m or so in 2008 forecast and is projecting a loss in the builder division this year. 1. Due to this $40m Co. is going to put away, plus the fact that almost half of their assets are not earning interest, yet they have a cost of carry for those assets
blowncue | 02.20.08 - 7:02 am | #

blowncue writes:
re: KKR

KKR Fin has extendible ABCP which allowed them to postpone payment until 2/15/08.

Loonie Central Bank Head on the wire as saying that CB's intent last year re: ABCP was to provide sandwiches and no more (my words)
blowncue | 02.20.08 - 7:05 am | #

energyecon writes:
Well this will be interesting to see how it is reflected in the ABCP outstandings when they get updated tomorrow...especially as they have contracted the last three weeks running (total CP outstanding contracted the last two weeks).

Not nearly the trend we had last year (yet?!) but bears watching...
energyecon | 02.20.08 - 7:18 am | #

Carlomagno writes:
OT:

What's going on with mortgage applications? 22.6% down on previous week. Wasn't there supposed to be a boom in refi applications recently?

http://www.mortgagebankers.org/N...enter/ 60135.htm
Carlomagno | 02.20.08 - 7:28 am | #

sterlingerl writes:
From CNN, article on defaults spiking.

"Subprime loans defaulting even before resets...It turns out that massive interest rate spikes aren't the problem -- many borrowers couldn't afford these mortgages even at the low, introductory interest rates."

http://money.cnn.com/2008/02/20/ ...sion=2008022005
sterlingerl | 02.20.08 - 7:33 am | #

Big ? writes:
More people are tapping their 401(k) for cash
http://www.msnbc.msn.com/id/23241606/
Big ? | 02.20.08 - 8:08 am | #

Anonymous writes:
If the municipality was going to fall short on the ability to pay, it had an obligation to start making up the shortages in the funds. Just like a private employer. Problem is, everyone believed the fund managers who extrapolated ~10% returns.

Some of us with decent, government pensions and large 401k savings believe we'll see little from SS because one of the likely way for them to cut costs 20% is to means test benefits. I don't begrudge those who never made enough money to save, but I do sometimes feel that I'll be penalized for putting ~20% of my income in my 401k.

I can't imagine anyone volunteering to be a cop though.
And yet in a number of cities they do. eg: http://dcpolice.jobs/ volunteer_p...e_reserves.aspx Of course not enough to replace paid officers, in the same way that in an urban area there would never be enough volunteer firefighters to staff a department.
Anonymous | 02.20.08 - 8:17 am | #

number2son writes:
And just down the road from Vallejo, the city of Oakland has been struggling for years to provide adequate services. Most notably is the understaffed police force. I've read estimates that Oakland has about 50% the size of the police force it needs.
number2son | 02.20.08 - 8:22 am | #

number2son writes:
What's going on with mortgage applications? 22.6% down on previous week. Wasn't there supposed to be a boom in refi applications recently?

Check the rise in the long bond rates (e.g., 10-year). That's what is behind the drop in mortgage activity. Indeed, 30-year rates are now higher than they were before Bernanke dropped the Fed rates 1.25%.

He helped banks, maybe (or maybe not), but Joe Sixpack is still under severe stress.
number2son | 02.20.08 - 8:25 am | #

borkafatty writes:
Vegas is not doing any better...hey want to play connect the dots.

http://www.foreclosurepulse.com/ ...ref=patrick.net
borkafatty | 02.20.08 - 8:27 am | #

Jas Jain writes:
--
Goal of Bankrupters is to bankrupt people and govts via Pushing Debt.

Goal of Fraudsters is to commit fraud via Pushing Scams, aka stocks.

What part of Bankrupters and Fraudsters of New York City (BFNYC), a term that I coined 5 years ago, don't people understand?

Everything that is happening now was fully predictable, unless one were a dope. The financial evildoers mean business and their business is collapse of America. They are shifting their capital more and more away from America and they will leave American People high and dry. There is cost of being dopes and Americans WILL pay the price.

Jas
Jas Jain | 02.20.08 - 8:35 am | #

Carlomagno writes:
Thanks number2son.
Carlomagno | 02.20.08 - 8:38 am | #

Fair Economist writes:
Carlomagno: From your link:
The average contract interest rate for 30-year fixed-rate mortgages increased to 6.09 percent from 5.72 percent

That will really cut into refinancing. Knocks 4% off the rent-equivalent value of every home in the country, too.
Fair Economist | 02.20.08 - 8:41 am | #

sterlingerl writes:
U.S. Jan CPI up 0.4%, core up 0.3%
By Greg Robb
WASHINGTON (MarketWatch) - The underlying rate of U.S. inflation accelerated in January, the Labor Department said Wednesday. The consumer price index increased 0.4% in January, driven by 0.7% gains in both energy and food prices. But other prices were also higher. The core CPI, which excludes food and energy costs, was up 0.3%in January, the largest gain since June 2006. Economists were expecting the CPI to rise 0.3% in January after a 0.4% gain in December. The core rate was expected to rise 0.2% after rising 0.2% in the previous month.
sterlingerl | 02.20.08 - 8:43 am | #

energyecon writes:
Are we going to see the market down and selling in the longer dated Treasury bonds?

ruh-roh
energyecon | 02.20.08 - 8:47 am | #

Mike in Long Island writes:
"dryfly writes:
I'm partial to Grain Belt, but there are plenty of other good choices.

Schells right from the brew house rathskeller... I did a rugby party there once in the 70s... they had to drag us out through the garden like we were so much cord wood."

Loose head prop then wing here. What position did you play? It's been about 18 years since I've played...

Yuengling was the favored refreshment before, during and after matches....
Mike in Long Island | 02.20.08 - 8:49 am | #

Jas Jain writes:
--
Financial markets are far more powerful than the Feds (Fed & USG)!

Bond market can kill the stimuli from Feds in their tracks. These Crooks and their agents can only harm the economy via their interventions, but politically impotent American People can't stop them. There is only one-way for Americans' living standard from here onwards -- DOWN.

Jas
Jas Jain | 02.20.08 - 8:51 am | #

MaxedOutMama writes:
FFDIC - thanks for the ANB Financial news
MaxedOutMama | Homepage | 02.20.08 - 8:55 am | #

Peter writes:
>other Jim:
I can't imagine anyone volunteering to be a cop though.
I've thought about becoming a reserve police officer (which is effectively a volunteer cop). I went to a police academy when I was younger; I had run out of money for college and dropped out, and wanted to make the world a better place. I "let" my family talk me out of becoming a cop. So. Maybe if I can lose this belly, I can at least try for the reserves. Not a regular cop, because that's a 50% paycut for me.
Peter | 02.20.08 - 9:19 am | #

TradingStats writes:
Our economy has a solid foundation,

amazing what you can believe when your wearing a quality pair of chest waders, and a clothes pin.
TradingStats | 02.20.08 - 9:23 am | #

Hiding in NM writes:
"stagflation" mentioned 5 times in 5 minutes on CNBC.

Where's our "Stagflation" commentator?

(Stagflation Mark?)

-- Hiding Out
Hiding in NM | 02.20.08 - 9:27 am | #

dryfly writes:
Loose head prop then wing here. What position did you play?

I played wing/forward, hooked and eighth man... in short I was too slow to run with the backs but not big enough to be a major 'force' among the forwards (~5'11 & about 190 lbs in my playing days). As a result I got run down and hurt a lot - caught by the backs and beat up by the pack. Story of my life. We had a number of forwards going 6' plus and 250 lbs in the league.

I did it for fun & never regretted playing except a few mornings now in middle age where I get out of bed and hear knees creak and crack. I damaged one of those... other stuff too.

dryfly | 02.20.08 - 9:29 am | #

Mook writes:
Inefficiency was acting as a mechanism of wealth redistribution from the upper class. Now that the inefficiency is dying (thanks to the internet, more brains, etc.) voters are going to replace it with a more direct form of wealth transfer. Hopefully one compatible with capitalism.

And the fundamental problem here is that your last two sentences directly contradict one another.

History has shown us that voters, and thus politicans, move in cycles between go-go capitalism and rah-rah populism. And it's hard to dispute that the pendulum these days seems to be swinging quickly back towards the latter.

Problem is, in an increasingly "flat" and borderless world, the top 1% - who always make the most irresistible targets in these sorts of class wars (they only have 1% of the votes, after all, right?) - are exactly the type who will up and leave, taking their billions with them, rather than act as the Peter to the bottom 50 percent's Paul.
Mook | 02.20.08 - 9:41 am | #

Rob Dawg writes:
#8 and scrum-half here and the fingers to prove it.
Rob Dawg | Homepage | 02.20.08 - 9:56 am | #

tj & the bear writes:
Recall also that government wages are typically below market compared to the private sector, but that government can attract talented people who are willing to forego money today for better retirement benefits later.

You obviously don't know much about California. In many cases the public wages are above the private sector, too.

tj & the bear | 02.20.08 - 10:07 am | #

Mike in Long Island writes:
Rob Dawg and dryfly,

You guys up for some bat races?
Mike in Long Island | 02.20.08 - 10:50 am | #

Anonymous writes:
TJ: Well at least for the Feds wages are typically MUCH flatter than those in the private sector. This means those on the bottom get paid more (and have great benefits) and those at the top get paid less. (and no paid Country Club memberships)
Anonymous | 02.20.08 - 10:51 am | #

beachblvd writes:
Law enforcement retirement plans in California generally pay 3%+ x highest salary x years served, eligible at 50. That is in addition to full health benefits for life and other goodies, like free body scans and so forth. You probably cannot find a deal like that for workers in the private sector.

I'm not making a judgment, it is tough to get out of a warm car on a cold night to fight with drunks.
beachblvd | 02.20.08 - 11:33 am | #

Bob Dobbs writes:
Late to the game, but I'm a home-town Vallejo boy. It never developed much industry or a great tax base, because Mare Island Naval Shipyard was the major employer for over 100 years. When the shipyard closed, nothing really filled the gap.

As for crime, I wouldn't tar it with a great big brush. There are tough parts of town and always have been. But the neighborhood I grew up in is just as good as it was 40 years ago. I have relatives who never left town, and they still like it fine.

The problems in Vallejo's case are 1) a poor tax base and 2) a pretty corrupt, old-boy closed in power structure that's kind of bled the town all these years without providing much benefit. If you want to go back far enough, I could point out organized-crime links to several of the reigning families.

There's always more below the surface. No two towns are like.
Bob Dobbs | Homepage | 02.20.08 - 11:38 am | #

Rudolf Lightcap writes:
Apologies if someone already posted it, but in light of the Vallejo news, here's the Mercury News salary database for towns in Silicon Valley:

http://www.mercurynews.com/salaries

The amount of money that people make in the Bay Area for public jobs is ridiculous and should make everyone who works in the private sector furious. It is quite common for a bus driver to be pulling down six figures. Think this is sustainable? Is there any precedent for salaries of public employees going down? I think that has to happen to make Bay Area governments solvent again. State government sure can't afford to help out this time.
Rudolf Lightcap | 02.20.08 - 11:42 am | #

Bob Dobbs writes:
"The amount of money that people make in the Bay Area for public jobs is ridiculous and should make everyone who works in the private sector furious."

Check out the cost of living.

That said, there's singular abuse of overtime, especially with regards to qualifying for higher pensions. (Since pensions are figured on annual total pay for the last 2-3 years of sevice, civil servants tend to load up on overtime during that period and retire at full base pay or more. Not what was intended.)
Bob Dobbs | Homepage | 02.20.08 - 11:44 am | #

Mike L writes:
I grew up and lived in Vallejo for my first 21 years. It is a crappy town filled with leftists (who may not even know it) and anti-white racists. It does surprise me that the council can't manage money... It's filled with Vallejoans!

Think about how these contracts came into being... Local politics. These jerks on the school board / city council pander to the public employee unions to get elected. This is a case of individuals putting themselves over their constituents.
Mike L | 02.20.08 - 11:49 am | #

All Fall Down writes:
Everyone here that is suggesting pension cuts for public servants - Are you suggesting that it would be a good idea to REALLY upset retired cops? I mean, like you know, these folks have been trained to deal with unpleasant situations with, like, real FIREARMS and are accustomed to blood, gore and dead bodies. I'm not sure that starving these folks after a lifetime of service is a good plan.
All Fall Down | 02.20.08 - 12:05 pm | #

Rudolf Lightcap writes:
Cutting the benefits of retired public servants isn't ideal, but the pot of money we have to pay for basic government services isn't that big, and is actually shrinking. Would you rather cut the benefits of current employees? There aren't any easy solutions to this mess. You could raise taxes, but the current and retired workers have already stolen 9 trillion dollars of wealth from my generation, and I don't think I should have to pay for a lavish retirement for them as well. This will all get straightened out at the voting booth, of course.
Rudolf Lightcap | 02.20.08 - 12:20 pm | #

PeonInChief writes:
First, salaries for most public sector workers in California pay less well than equivalent private sector jobs. The Gov commissioned a study to show the "feeding at the trough" by public employees, in preparation for labor negotiations a couple of years ago. The Department of Personnel Administration then suppressed the study, as it showed that the public sector was woefully underpaid and that the pension/health benefits did not make up for it.

Second, California cities and counties are perpetually in crisis because the Prop. 13 limits on property taxes leave them dependent on sales taxes and user fees for revenue. This means that cities encourage expensive housing development and shopping malls. When development and mall consumption collapse, so does local government. Vallejo isn't a good retail center, so it can't siphon off sales tax money from shoppers in nearby cities. (You can compare that to the situation in Emeryville, where former industrial areas were turned into big box stores, obtaining revenue from shoppers from all of the nearby communities.)
PeonInChief | Homepage | 02.20.08 - 12:38 pm | #

w writes:
I call BS Peon in Chief. Besides, private employment for professionals is usually incentivised.
w | 02.20.08 - 12:45 pm | #

All Fall Down writes:
IMO, we are obliged to honor commitments that we make. This goes for mortgages and for promised benefits. It applies to society as a whole and to individuals that are members of the society. If benefits are to be cut, they must be cut at the new hire level and prospective employees can choose to work for the lower benefits or not. I may be old and out of fashion but it is my belief that broken promises are the root cause of the mess we currently face. All of it stems from dishonesty and lack of trust in each other. Fortunately, I can speak of most of my alloted time on this planet in the past tense and modern chemistry will help my through the rest. Think "Mothers Little Helper"
by the Rolling Stones.
All Fall Down | 02.20.08 - 12:47 pm | #

other Jim writes:
eh writes:
Maybe as a result of all this something will finally be done to curb the absurdly generous retirement etc benefits given to public employees.

Go spend a couple of shifts riding along with the "excessively paid" cops. Be there when they tell the family their loved one is dead from drugs/accident/abuse/etc. Be there when they deal with family violence. Answer the call at 2AM for "suspicious person" in a known drug hangout. Be there when they help scrape the remains of a drunk driver off the street. Listen to them complain about the cost of buying their own body armor because the city will only provide the low-bid stuff that won't stop a BB. Oh, by the way, talk to their spouses about the hours of work, un-voluntary overtime, time spent in court testifying on cases that get thrown out, wondering if today is the day the department chaplain and the chief stop by to tell you how wonderful your spouse was before they were killed.


Then ask yourself as the city council and mayor did, what can we do to attract qualified honest people to do this job? If the city pays what they can "afford", they will get cops who have something in mind other than public welfare.

Do you want the days of cops shaking down suspects and others just to pay the utility bill? As was noted above, the Bay Area is not a cheap place to live.
other Jim | 02.20.08 - 12:48 pm | #

messels writes:
can't they just tax more? i don't see the problem. sell some bonds to get the leverage needed. this isn't freaking brain surgery. there are tons of tools in the economic shed to leverage themselves out of the trap they're in and stirring the city into a frenzy isn't one of the better options...
messels | Homepage | 02.20.08 - 12:52 pm | #

foreclose_me writes:
All Fall Down:

One problem with keeping those promises: they are not capable of being kept any more than the FBs can pay their mortgages. Ponzi scheme over.
foreclose_me | 02.20.08 - 1:06 pm | #

Rob Dawg writes:
There is nothing left in California to tax. 9.3% Income Tax and 7.25% Sales Tax with near everything subject to both. High corporate taxes, high use fees, there's just nothing left to tax more.
Rob Dawg | Homepage | 02.20.08 - 1:07 pm | #

Winston writes:
Rob,

The tax take in California is just about average. You just leave out the very low property taxes and the fact that CA's income tax is very progressive. There is plenty of money to be had by lowering income thresholds for the various tax rates and from higher fees such as bringing back the hated VLF.
Winston | 02.20.08 - 1:43 pm | #

Mishkin_On_Skis writes:
Growing up in NoCal Vallejo is always associated in my mind with the Zodiac.

"This is the Zodiac speaking..." is a phrase that still gives me chills.
Mishkin_On_Skis | 02.20.08 - 2:08 pm | #

Rob Dawg writes:
Winston writes:
Rob,

The tax take in California is just about average. You just leave out the very low property taxes and the fact that CA's income tax is very progressive. There is plenty of money to be had by lowering income thresholds for the various tax rates and from higher fees such as bringing back the hated VLF.

This is one of those lies repeated often enough gaining credence. The 9.3% applies down to something like $46k. California is a very high tax State. Even our mythical 1% property tax doesn't look so good when prices are typically double that of other places.

http://www.statemaster.com/graph...otal-tax- burden

$86b burden for 35m people ouch.
Rob Dawg | Homepage | 02.20.08 - 2:16 pm | #

dav writes:
Winston, the tax per capita in CA is in the top ten. Not the worst, but not average.

And I wouldn't call the state income tax very progressive. Sure, there is a steep bracket system from 1% to 9.3%, but the highest 9.3% bracket applies at around $45k! (there's also a 1% additional tax if income is over 1 million)
dav | 02.20.08 - 2:51 pm | #

dav writes:
lol... gotta hit refresh before i post to a long thread!
dav | 02.20.08 - 2:53 pm | #

Rob Dawg writes:
Dav,
Additionally, the debt growth puts us right to the top if you take deficit spending NPV. Also everyone needs to understand that the tax burden is particularly maldistributed. The very poorest and the vast middle class get screwed while working poor and the rich get the cream.
Rob Dawg | Homepage | 02.20.08 - 2:55 pm | #

Mike L writes:
Everybody keeps writing like this problem can be solved. Like it some sort of financial problem... Bah. It's a people problem. Why would anyone want to run a city like Vallejo? What is the point of a city like Vallejo? The kids are stupid, the adults are smoking joints and drinking and the city council is wasting everybody's money. I expect that the city is falling apart in more ways than just economically.
Mike L | 02.21.08 - 1:17 am | #

joebedk writes:
California will not start getting serious until the citizenry demands that Calpers fund the deficits of the state and municipalities.
joebedk | 02.21.08 - 1:46 am | #

pat Ortiz writes:
I live in Southern California. I pay $11,000 a year in property taxes to live in a middle class home. I have taken off only 5 weeks of vacation in the last 9 years including 2 days when my daughter was born. I am in sales and am twice as likely to die than a cop or a firefighter. Look it up they are not even in the top 20 most dangerous jobs. I am tired of paying so many taxes so that public employees can work ten days a month (firefighters) or retire when their 50. I am having my property reassesed, as is everyone else who bought a home in the last 3 years. California will be bankrupt because of the lower property values. We have multi billion dollar deficit and the lower property tax revenue has not even been factored in. I would rather give my tax dollars to our military personel that puts there life on the line than to a fat cop who sits behind a bush waiting for someone to go 5 mph faster than the speed limit or some firefighter that gets to kick back with his buddies playing pranks on each other while they watch tv or sleep while they wait for 10 days of work a year. I'm sure that there are some good cops and firefighters. I'm sorry for the venom, I just need a break!
pat Ortiz | 05.25.08 - 3:48 am | #

majec writes:
That's a big reason why I think Xers are going to be pleasantly surprised .
rc helicopter
Tactical Flashlights
video game
majec | Homepage | 06.24.08 - 3:29 am | #