Of course, the phrase the Seattle Times’ headline writers are searching for is “Planes, trains and automobiles,” but I guess they just couldn’t resist their pro-car/anti-rail bias, explaining why they left out the latter, while shifting the primary emphasis to “trains.” Yup, that was the top headline on the Times’ home page this morning, even though the article itself mostly focused on delays at airports, while making only a passing reference to yesterday’s story about the shorted-out surface tracks near JFK.
And not worthy of a prominent headline on the Times’ home page this morning…? The news that 2010 tragically saw a 39% jump in police fatalities, to 160 nationwide. The number one cause of death: traffic accidents.
Well look at this. NPR, focused on airport delays, too.
http://www.npr.org/2010/12/28/.....oast-storm
It seems New Jersey’s shiny new GOP Governor, Chris Christie, who (until yesterday) was already being touted as a presidential contender, is stranded at Disney World in Orlando while his state is buried under snow. At the same time, the occupant of the newly created office of New Jersey Lieutenant Governor, whose name I can’t remember (I think the sign on the door says “Occupant”), is in Mexico. Leaving a state senator in charge of that state’s emergency response. Obviously, this is a PR disaster for New Jersey Republicans, whose shiny new governor and lieutenant governor are laughingstocks. I’ll bet Greg Nickles could tell them a couple things about how lethal snow politics can be.
For A Few Dollars More
The stock market has been mostly sideways during the holiday season. That’s predictable, with many traders on vacation. I’ve been making only $100 or $200 most days, although that adds up over time — my tracking portfolio of $100,000 in hypothetical stock picks is up 5% this month, and that’s a lot in such a short time. So what’s going on? Well, for one thing, investors who have piled into bonds are starting to realize just what a crappy deal bonds are — you’re buying someone else’s debts and running big risks on nonpayment in the worst debt environment since the 1930s in exchange for 1% or 2% returns above underlying inflation. But the stock market recovery, it seems to me, has just about run its course. Throughout 2010, the market was easily spooked by currency and debt problems, and there are more of those just around the corner — a series of cascading meltdowns in the European Union has yet to fully unfold, and the big one — the gorilla in the woods — is China’s overheated economy and the raft of problems that country faces. Things in China are not nearly as rosy as raw numbers suggest, and there are major misallocations of capital in that economy that, sooner or later, will explode the Chinese bubble. And then there is continued sluggishness in the U.S. economy: Where will domestic profits and job growth come from? Answer: Our economy will have to huff and puff to post 2% GDP growth next year as Republicans block any further government stimulus, which is the only reason why we’re technically out of recession. Meanwhile, as investors distrust the Federal Reserve’s efforts to pump up growth by pouring $600 billion of ersatz money into circulation, which is likely to produce inflation instead of jobs, they’re flocking into commodities to hedge against this anticipated inflation, driving up prices of oil, steel, copper, and just about everything else. On top of that, you can expect chocolate prices to spike when the Ivory Coast plunges into civil war over the next few months. All in all, it’s not a pretty picture. I moved into blue chip dividend stocks early this year, and that turned out to be the best strategy for the 2010 market. My portfolio is now at its all-time high. But with stock prices handily up over the year, yields above 3% are getting hard to find. With the job picture what it is, and likely to stay that way, a Metro monthly pass doesn’t seem like a good investment right now. I think oil is topping out and I probably should sell my oil stocks soon. I think we’re going to see another early-in-the-year (January or February) selloff so if I’m sitting on cash I could pick up a 5% to 10% bonus by buying stocks on the dip. The trouble is, with Tea Partiers calling the shots in Congress — and we all know these guys are absolutely wrong about everything having anything to do with economics — no investment is safe, except maybe stockpiles of shotgun shells and survival food for when the new GOP congress pushes us back into depression. Not content with single-digit unemployment, expect them to introduce a bill to put us back on the gold standard as soon as Congress convenes in January, to be followed by re-introduction of tariffs on foreign goods and re-deregulation of banks to pick off the banks that survived 2008-2009. Conservatives, as you know, are all about nostalgia and they won’t be happy until we’re all reliving the 1930s, to be followed by reintroduction of horse-drawn buggies and whale-oil lamps. Perhaps the best investment play for 2011 is buggy whip manufacturers.
Of course, the Northeast’s cities aren’t going to invest in snowplows, because they don’t have any money. I wouldn’t buy their snowplow bonds, if I were you, because you’ll never see your money again.
For A Few Dollars Less
Seattle doesn’t need snow removal equipment, because pretty soon Seattle won’t have any streets:
“[A]verage gasoline consumption has fallen steadily since 2000 and will continue to fall, according to projections, meaning there will be increasingly less money available for the state’s transportation system.”
http://seattletimes.nwsource.c.....use28.html
Anyone who has driven in Seattle recently knows the potholes are so big you need a winch to get out of some of them, and bicyclists have been known to completely disappear into potholes, never to be seen again. But this solves the snow removal problem, because all you have to do is push the snow into the potholes. This serves the dual purpose of getting rid of the snow and filling in the holes – until the snow melts.
Filling potholes with snow also gets the bodies of bicyclists out of sight (and out of mind) and keeps them from decaying until proper burial or cremation can be arranged.
God-damned that conservative CNN for focusing on planes being stuck in the snow rather than cars!
http://www.cnn.com/2010/TRAVEL.....tml?hpt=T2
@7 Why don’t you amuse yourself by sticking a finger up your butt while waiting for your plane to take off? You may be there for several more days.
I am absolutely positive America will experience a financial/economic upheaval the likes of which we have never experienced (even in the Great Depression) and the likes of which most of us cannot even imagine. Our National Debt will soon be 100% of our GDP. As of October 16, 2009, there were 4 companies rated AAA by S&P–
Automatic Data Processing (NYSE:ADP)
Johnson & Johnson (NYSE:JNJ)
Microsoft (NASDAQ:MSFT)
ExxonMobil (NYSE:XOM)
Europe is a deck of cards, as are China & Japan. Devaluing our currency will not help.
The unfunded liabilities are approaching $120 Trillion.
I’d encourage you to develop a back-up plan ASAP. Roger Rabbit is bragging about his hypothetical Stock Market portfolio. Yet his government pension is also at risk.
But hey, keep your heads in the sand. Living in an Urban Area makes zero sense with the pending upheaval…you will recognize that way too late.
2011 will be the year of the Upheaval.
Take a look at the latest Housing Market numbers:
The Standard & Poor’s/Case-Shiller 20-city home price index, released 12/27, showed home prices falling 1.3 percent from September to October. For the first time since February 2009, every city on the list marked a decline in that period. Gas Prices are up over $3 nationally. Unemployment 10% and no relief in sight. Spending is up…but so is credit card debt for the holidays. There is nothing rosy out there. The DOW is up. Most folks could care less. We need to grow the economy…but local & state governments want to raise taxes to balance budgets and also impose more costly regulations.
Give me 2 reasons why things won’t explode in the next 12 months?
A good friend of my husband’s just sent us an e-mail on why he will continue to work part-time the next 2 years.
**Personal and dependent exemption, the value will increase by $50 to $3,700.
*** The standard deduction for married couples filing jointly will rise by $200 to $11,600. For single tax filers, the deduction will rise by $100 to $5,800.
***The income threshold that separates the 15-percent bracket and the 25-percent bracket will rise $1,000 to $69,000.
***Social Security contribution will drop to 4.2%
There are several other reasons why it makes sense to continue working because of extending the Bush tax cuts with a few other perks.
@9 “Yet his government pension is also at risk.”
No it isn’t. I retired in Washington, not New Jersey or California. Washington is one of only four states whose state pensions are fully funding (according to WSJ). Washington has one of the best-managed pension systems in the country. No Washington state or teacher retiree has ever failed to get his/her full pension check on time. It’s as reliable as social security. I’d much rather have my state pension than depend on private pensions or investments.
@10 “Gas Prices are up over $3 nationally.”
That’s good news! My Chevron stock is up over $20 a share since I bought it last spring.
I love capitalism! Free money sure beats working for the wages cheap labor conservatives want to pay.
@10 “local & state governments want to raise taxes to balance budgets”
Local and state governments are not raising taxes. Taxes are falling precipitously. Citizens are receiving gargantuan cuts in their local and state taxes. Here in Washington, residents are paying billions a year less in local and state taxes compared to a few years ago. That’s why we have budget crises at the city, county, and state levels.
@9, 10, 11
Shouldn’t you be hanging out over at Total Survivalist Libertarian Rantfest?
A few years ago we saw what happens when you let voters decide how much to spend on public services and how much to pay in taxes. We had side-by-side initiatives on the ballot to lower classroom sizes and increase teacher pay, and add a penny to the sales tax to pay for it. The voters approved the spending initiative and defeated the tax increase. Americans will vote for “something for nothing” every chance they get.
Give me 2 reasons why things won’t explode in the next 12 months?
Well i propose: One, that the American people have been reduced to fleckless sheeple who will go on about their business disregarding the bottom 20% that are homeless and starving (you just made that case in #11). Two, the wealthy are doing great and expect to concentrate more wealth in their hands, thus not wanting anything to change.
@11 I don’t have to work part-time. Why should I? Work doesn’t pay. Work is disrespected in our culture. Americans admire people who get money without working for it. That’s what I do, I put capital to work in the stock market and get the money that used to go to workers but now goes to owners of capital. And I pay half the tax rate workers do. Only saps and suckers work for money. Working is punished in this country. Idle sloth is rewarded. I’m part of the Idle Class now. That’s the only thing that makes sense under our current system.
@9 “Our National Debt will soon be 100% of our GDP.”
So what? That’s what you’re supposed to do in a depression, to pull the economy out of depression. You got a better idea? Gold standard? Tariffs? Dismantle the Federal Reserve, privatize Social Security, cut off unemployment benefits to the unemployed? Every one of those things will shrink our economy — yet that’s what the Tea Idiot Party wants. They must hate their money.
@12–
Actually, I would assume you are PERS 1, which is far from fully funded.
Here is a study done by the UW released in early November.
http://www.washington.edu/admi.....-Costs.pdf
Food for thought.
@21 Hey, thanks for the link. Here are a couple of excerpts:
“Currently, Washington’s pension plans have a combined funded status of 99 percent, one of the highest in the nation.”
and
“Note that Pew determined that as of 2008, Washington State was one of only four states with an overall surplus across all pension funds.”
Yeah, I know the article talks about a 22% decline in the market value of pension assets in 2009. But the stock market losses of 2009 were more than recovered by 2010’s stock market rally. And current market value really isn’t relevant because these assets won’t be liquidated to pay pension obligations for many years into the future. And the truth is any discussion of a future shortfall in pension assets vs. obligations is conjectural because no one can accurately predict investment performance over such a long time span. These figures also depend on the accuracy of actuarial assumptions — how long the PERS 1 retirees will live — which also are somewhat speculative.
This article says there’s a 41% chance that PERS 1 and TRS 1 may enter “pay-go” (i.e., pay as you go) status by 2030, which means there’s a 59% chance they won’t. And by 2030 I’ll likely be dead anyway; or if I’m not, I’ll be so old that I won’t care about things like income or money, and how to pay for my bedpans will be someone else’s problem.
If the point of your bombast is to bash public pension plans, all I can say is, you’d be hard pressed to find a corporate pension plan that offers its retirees comparable financial security.
The more usual argument from conservative trolls is that state retirees have a cushier pension deal than we deserve, because private sector retirees don’t have it so go. How are we responsible for the fact unregulated capitalists squandered and/or stole private pension assets? We aren’t. And even if we have a better pension, that’s offset by the fact we worked for lower salaries. When you work for the state a larger part of your overall compensation consists of benefits instead of money. I’d rather have had the money. You can’t pay rent or buy groceries with extra vacation days, and you still have to do the same amount of work, which means you come in on the “vacation” days to work. I did, and my colleagues did. Every time they gave us another “day off” instead of a COLA, I shuddered. That was a scam, all right, but on state workers by taxpayers, not the other way around.
@22-
Read further.
They have an Actuarial Assumption of 8% Annual Return. My point is that when the economy tanks again in 2011, you will see a serious disconnect.
If things plunge as badly as some experts project, your pension will be in Jeopardy. PERS 1 that is. Seperate Fund from others that are fully funded.
Where will the money come from when the cash runs out?
@9
You talk about the US debt reaching 100% of GDP like that is some magic scary threshold. There is nothing magic about the number and the US actually has a fairly low debt/GDP ratio compared to most other OECD countries. It isn’t a problem as long as we can sell debt denominated in US dollars and people are willing to buy it at low interest rates.
When it comes to government pension or entitlement programs the whole “unfunded liablity” problem is at least partially an illusion of how you account for it. At the end of the day any obligations not covered by trust funds or current dedicated payments mostly are a question of political will to shift funding from something else, raise taxes, or increase debt.
In any case a solution overlooked by the deficit hawks, tea partiers, and austerity crowd is the idea of growing the economy. It fixes the debt/GDP ratio, increases tax receipts, boosts investment returns, etc. Deflationary economic policy is a recipe for disaster as it leads to positive feedback loops that make the problem worse.
Chris–
I agree with you that growing the economy is the best solution. But how do tax increases & costly regulations help grow the economy?
Seems like much of what is being suggested for our State shortfall is counterproductive to that strategy. Raising taxes by cutting so-called loopholes is still a tax increase with consequences. And none of the consequences are growing the economy.
Unfunded liabilities are a bigger problem than you gloss over. We are confusing cash flow with funding. The debts are for many years to come. Sure cash is flowing in now, but it’s not enough as the unfundeds are growing rapidly and eventually will swallow our economy.