Out of Money
In December of 2010 the NYT ran an article describing what happens when a government runs out of money to pay pensions that are required to be paid by law.
PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.
Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.
Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”
Such dire scenarios were brought to mind by a California commission’s report that in order to save the State’s public pensions, California state and local governments had to “roll back pensions for existing employees, dump guaranteed retirement payouts and put more of the pension burden on workers”. This, despite the fact that the “Courts have ruled that pensions are legally protected property and that government has a contractual obligation to follow through with them.”
The message is clear. In any collision between the laws of government and the laws of arithmetic, arithmetic wins. So California Governor Jerry Brown told the Legislature that unless taxes were increased, he would have to find some way to cut $25 billion from the State’s budget.
For the first time Thursday, Brown seemed ready to include discussion of pension changes as part of the budget negotiations. He sparred with Assemblywoman Diane Harkey (R-Dana Point), asking if she would support the tax package if it were coupled with a plan to curb pensions.
Meanwhile, the public sector unions said they would take their fight to keep the pensions behind closed doors because they have “friends in high places” they do not want to embarass. Reuters reported “California state employee unions will fight bills aimed at cutting their pensions, but will wage battle behind closed doors, unlike the public struggle over collective bargaining rights in Wisconsin.” And they are confident that, despite the financial difficulties of the state, some way may be found to square the circle.
Steve Maviglio, a Democratic consultant and former aide to top lawmakers, said the bills were “dead on arrival.” “The notion that there will be wholesale change to the pension system is a political nonstarter,” he said…
Despite the sense of urgency, California’s public employee unions can rely on the support of Democrats to block proposals for major changes to pensions.
In addition to the support of Democratic lawmakers, the unions have a friend in Democratic Governor Jerry Brown. But he has signaled support for some pension changes.
And with good reason too. Brown, having ruled out additional borrowing to cover budget shortfalls, knows that if the pensions are held sacrosanct then the pain of covering the shortfall must be spread over everyone else. That means Brown can only buy peace with the unions at the price of starting a beef with the rest of the State’s stakeholders.
Rahm Emmanuel in the other Blue stronghold of Chicago was saying things that could have come directly from California’s Little Hoover report. Emmanuel was said to favor cutting benefits not just for new hires, but for existing employees.
while nobody expects a showdown with the unions as bitter as the one gripping neighboring Wisconsin, observers see coming painful negotiations with municipal unions similar to those other Democratic-leaning big cities and states have had to engage in recently.
According to published accounts, the 51-year-old Mr. Emanuel, who takes office May 16, said in a private meeting with union heads in December that he favors cutting pensions of all city employees, not just the new hires.
Like their California counterparts, the Chicago unions expressed the hope that they would be but lightly touched for political reasons.
“Emanuel is a good Democrat. We know that President Obama has spoken out in support of collective bargaining for the union and has come out in opposition of Gov. Walker of Wisconsin,” said Ken Janda, a professor emeritus of political science at Northwestern University in the Chicago suburb of Evanston. “He’s not likely to take any action that will result in any substantial balancing of the budget on the backs of labor unions.”
And that means, according to the iron laws of arithmetic, that the budget has to be balanced on the backs of someone else, probably the tax payers. Neither Chicago nor California may see a replay of Wisconsin, but it will see something. Tolstoy, had he been a professor of political science, might have observed that “all solvent governments are alike; but all bankrupt governments are bankrupt in their own way.”
But the best commentator on humanity’s curious power to believe that patronage can triumph over nature is Mario Puzo. In the Godfather, Don Corleone visits a henchman who is dying of cancer. Yet Genco continues to believe that his disease can be “fixed” — he believes it because everything in his life hitherto could be “fixed”.
GENCO: Godfather, Godfather, it’s your daughter’s wedding day, you cannot refuse me. Cure me, you have the power.
DON CORLEONE: I have no such power…but Genco, don’t fear death.
GENCO: (with a sly wink) It’s been arranged, then?
DON CORLEONE: You blaspheme! Resign yourself.
GENCO: You need your old Consigliere. Who will replace me?
(suddenly)
Stay with me Godfather. Help me meet death. If he sees you, he will be frightened and leave me in peace. You can say a word, pull a few strings, eh? We’ll outwit that bastard as we outwitted all those others.(clutching his hand)
Godfather, don’t betray me.
But there are somethings nobody can really fix. And one of them are inexorable sums of positives and negatives. We all of us wished we could make the totals read what we want. But we can’t. Like Genco, the day comes when the fires of financial hell cannot be held back.
“No Way In” print edition at Amazon
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W:
I love it. The same stupid CA politicians and public sector union bosses that got us in this mess have still not acquired the equivalent of a grammar school education. They still think money to support their greed will appear on the table by some means of “cashmosis”. Instead of working to protect rank-and-file members, they seem more interested in protecting their “vig”.
If the “big one” that destroys most of the state turns out not to be geologic in nature, but instead is economic it will also be ironic.
James Taranto at WSJ has the lyrics (?) of a hardcore punk rock band’s new song in support of the Wisconsin strikers:
“Here are some of the new song’s lyrics:
When the boss comes callin’ we gotta organize
Let em know
We gotta take the bastards down
Let them know
We gotta smash them to the ground
Let em know
We gotta take the bastards down
Is this what the SEIU means by ‘civil discussion’? The song does not identify the bastards we gotta take down, but there are only two possibilities: the taxpayers of Wisconsin or their elected officials.”
http://online.wsj.com/article/SB10001424052748703408604576164391424480436.html?mod=WSJ_Opinion_MIDDLETopOpinion
This is happening when Republicans are controlling the House, so that the mob can’t simply loot the family patrimony. The Democrats however are sitting in charge of the Senate and the White House and Chicago and NYC and the Democrats are sitting in the Governor’s chairs in CA and NY and IL and MA and CT and RI and MO etc. when this goes critical. Rove you Magnificent B*st*rd!
P Lease g-dfather, let us drill and pump oil, surely the residuals will let us live.
Ace has some scary charts from a venture capital firm that analyzes the federal government as if it were a business:
http://minx.cc/?post=312544
The full 266-page “U.S.A., Inc.” report can be found here: http://www.kpcb.com/usainc/
Ace’s co-blogger notes: “To the extent that the Kleiner Perkins partners have political leanings, they are decidedly moderate to liberal; Al Gore is one of the partners there, and John Doerr, the best-known partner at KPCB, was in the group that met with President Obama last week. Which is what makes this document so fascinating, since it makes it very clear that the US cannot sustain its current economic path, particularly with regards to entitlements.”
The rational thing to do is to forget the “social proof” — the assurances of credentialed human beings and celebrities who claim that you can keep getting something from nothing. Only math and reality count. This is the keystone of Western thought. Authority means nothing without math and reality behind them. And the math says the gravy train is out of gas.
Therefore the entitlements have got to fall. And the sooner the process of orderly withdrawal begins, the less draconian the final retreat has to be.
The other side of the equation is that productivity cannot be held back forever to pander to Green fantasies that are unaffordable. It doesn’t matter how much George Monbiot and Tim Flannery and Al Gore want to burn carbon credits at the feet of Gaia. Their little cult is throttling the world’s air supply. They have got to let go. Now. The faster productivity is unleashed, the less severe the sacrifices will be.
Everybody who has had to balance a household budget knows what it takes make ends meet. But politicians were somehow above it all. It was something they didn’t have to learn. They deluded themselves with catchphrases like “investment” and “Keynesianism” and “quantitative easing” when all they were really doing was spending what they didn’t have.
They thought they were special. Only they were just stupid.
They started with such an immense design margin it took them decades to ruin it all; during that time they soared above the clouds like tin-pot gods; running from one celebrity bash and tv talk show to another; beings beyond the mere laws of gravity.
They slaughtered millions of future taxpayers on the altar of special pleading. Abortions for all! Pensions for all! Healthcare for all! They cheapened education to employ their substandard hacks. They promised a world of no enemies, no nuclear weapons at the wave of a wand, the better to dismantle the walls to obtains bricks for the monuments to themselves.
And now they find themselves surprised, opening one cupboard after the other, peering into one jar after the next, unable to comprehend that the sugar is truly and finally gone.
“Where’s the stash? Where’s the stash? C’mon guys, quit kidding around. Where’s the stash?”
And there ain’t no stash. They’ve done blown it all.
And that means, according to the iron laws of arithmetic, that the budget has to be balanced on the backs of someone else, probably the tax payers. Neither Chicago nor California may see a replay of Wisconsin, but it will see something.
The problem for the Dems is they can’t rely on enough support if they try t0 balance the budget on the backs of those someone elses. For a long time they relied on getting voters stirred up about cultural matters so they could loot the taxpayers while everyone was squabbling about abortion or gay marriage or flag burning. Not that those things don’t matter, it’s just that the Dems manged to split the taxpayers along morality lines so that a large enough chunk of taxpayers – who would ordinarily have voted against the Democrat-Gov. Union scam – voted D out of “fear” that the Republicans would ban sex and good music. They had a coalition of parasites and counter-culture rebels. And race-mongers. The country being wealthy, the rebels had enough money they took it for granted and were happy to let the parasites loot the economy in exchange for help smashing traditional society. For the parasite’s part, they didn’t give a damn about morality as long as they got their loot. The race-mongers were just clueless and easily decieved by people willing to decieve.
Well, the economy has tanked, the unions have been too greedy, and the Dems have a huge, huge lead in the Culture wars. All that is dissolving their coalition. The counter-culture rebels have gotten nearly all of what they wanted. A growing number of them are now appaled by what it’s brought and, while perhaps not quite ready to repeal it all, are at least no longer pushing for more “gains”. An even bigger chunk of the rebels still believe in their cultural vision, but the money-culture equation has flipped and they now take thier cultural gains for granted but want the economy fixed so they can buy groceries again. “C’mon,” you can imaging them telling each other, “George W. McBiblethumper was President for eight years and abortion is sitll legal, so what’re we worried about?” One way or another, issues like abortion have dropped out of the Pri 1 slot for a sizeable group of formerly reliable Dem voters, and Tax-and-spending issues have moved into the top spot.
The race issue is just about out of steam. Too many high profile embarrassemnts, coupled with a black guy being elected President and then acting, ahem, stupidly on matters of race. Every attempt to play the Race Card since Obama’s election has been a political disaster.
So all the Dems are left with in their coalition are the Parasites, and those are on display in all their Purple-Shirted glory in WI. Our schools are a joke and everybody knows it, so badly lettered signs demanding support for teachers AWOL from their classrooms aren’t going over very well. And even the idiotics among the Dems know better than to try and gain sympathy for DMV clerks.
Well, they have the Greenies too, but the AGW fraud has done a lot to kick that leg out from under the stool, and in the end eco-nuttery will always take a back seat to economic comfort, and most of the people still economically comfortable enough to be Greenies are already part of the Parasite class.
The Administration will try to support CA, IL, etc. thru the back door as much as they can, but the GOP, at least now, will knock down any overt stimulus package to bail em out. But what happens when we reach the end point/ Will the GOP actually let CA go under?
It seems that there’s still a lot of denial out there, and there will be until something really bad happens. I’m having a hard time believing Ca will come to grips with their problems absent an almost total collapse, which would be devastating for our and the worlds’ economy. But the collapse will happen anyway.
Any politician who tells the truth will be toast. The fact is, we are all looking at a very large retreat in our standard of living, and nobody wants to face that. They won’t, until they have to.
As you sow so shall you reap.
Once upon a time I worked in a unionized steel mill with the same sort of pensions government workers are now struggling to keep. Long story short dozens of US steel companies went bankrupt in the 1990s taking the pensions for hundreds of thousands of workers and their families with them into oblivion.
The democratic party did not care. I know this because they sent us a letter telling us so, signed by Bill Clinton and our local US congressman. Of course the letter wasn’t quite so blunt but that what it meant.
Fast forward to now. Most of the people who lost their promised pensions when the US economy moved to China, Mexico, and elsewhere are still alive and likely poorer. They of course make do as best they can.
But if their reaction is anything like mine I doubt many of them will shed a tear if the governments unions get obliterated and the lazy, arrogant, incompetent leeches that comprise them get thrown out onto the street right on their worthless asses.
Perhaps events would be different today if the democratic party of the 1990s had acted to prevent the bankruptcy and/or emigration of so many American corporations and the jobs they provided- but they did not.
Today- at long last- the slow collapse of the American economy has finally touched people they care about. Too bad for them that is no longer enough people to matter.
Last year, it was surreal to watch the Dems putting every last bit of their energy into passing Obamacare when it was obvious that their beloved welfare state (social security, Medicare, Medicaid) were about to succumb to the reality of arithmetic. It felt like Hitler’s obsession with taking Stalingrad, oblivious to the great counter-offensive that was about to be unleashed.
I recomend a Japanese movie called Twilight Warrior. In it you will get a look at one of the major jobs of the Samurai, accounting.
“He was a good Damiyo, he stored rice, salt, dried fish, millet, and gold in case of bad harvests or war.”
” If the cost of one sword is equivalent to the price of a thousand spears, buy the spears.”
Finally their is that old saw, “Amatuer generals talk about strategy, professionals talk about logistics.”
We have a leadership that has to take off their shoes and their cabinet officer’s shoes to figure out how many states their are.
Wretchard:6,
Extraordinarily well said, sir!!
Good point, Lord. Good name, too.
Why is there always talk of universally cutting programs before the work is done to clean them up first, which would address extraordinary amounts of waste? This is a general question, I know. But while I also know from much experience in politics and disability social services that waste dominates large swaths of these expenditures, I don’t know how much of the financial crisis could be solved by transparency and housecleaning. I’m no economist.
And from what I know of politicians, I know that many are elected precisely on the grounds of sustaining the corruption itself, and that one answer. But why do the reformers seem to avoid this particular?
A little too much trust in the power of numbers. The left can easily get everything it wants, it’s only a matter of budget cuts go against someone else. Cut essential services, keep salaries, benefits and pensions. We’re seeing basic chimpanzee politics- if your authority is threatened, make a dominance display. Why shouldn’t it work now? It has worked great for 80 years. The only way it doesn’t work is if people get tired of it and stop responding. A screaming, charging, spitting chimpanzee can rip you limb from limb; a screaming, charging, spitting has no such strength.
The thing is this marks a fundamental change in the psychology and psychological orgainzation of western society. For the modern period, certain groups have screamed for their benefits; the people in power have patiently explained to us that we must, in good conscience and decency, submit and grant these benefits. When people stop fearing power and moral authority, you get the French Revolution.
13. Tina Trent: I believe it is a matter of proximity; If we were governed as it was intended constitutionally, the federal government would only concern themselves with the enumerated powers as charged. All other citizen’s needs would be handled locally. It is a lot easier to keep your eye on how your taxes are spent when they are spent locally. If you find your taxes increasing too highly you can address your local governmnent first for relief then, if necessary, vote to change the officials. When taxes go into the black hole of the fed, the collective interest is siphoned off as boodle and much waste is factored in just to handle the transactions. There are few problems around today that reverting back to strict constitutional governance could not solve more efficiently. That is why I believe in and support the Tea Party movement. It is only about equal traetment under the laws as written, not interpreted to justify socialism (and theft).
Unless we are eternally vigilant, the Obama administration will find a way to bail out Illinois and California. There will be a stimulus jobs or infrastructure grant, a surreptitious Medicaid payment, something. Or maybe they already have bailed them out via the Wall Street and banking bailout. There is always a way to hide the rabbit with a sleight of hand.
This will play out on the backs of all taxpayers, one way or another, unless we have a flood of bean counters eyeballing every fiscal transaction.
Hmm. There’ve been two interesting papers in the last few weeks from the folks (and/or institutions) nominally aligned with the left. This “USA, Inc.” paper and Clayton Christensen’s paper on “Disrupting College Education.” Wonder if there’s a larger strategy here we’ve yet to see or are these just left-leaning folks deciding they have to say the obvious in order to forgive themselves.
Maybe Mr. Doerr has recognized that entrepreneurial activity is inversely proportional to (1) percentage of GDP spent below-the-line (on government of all sorts, any activity not subject to a market’s discipline asserted by a free people voting with their wallet) and (2) the centralized planning otherwise known as regulation. Seems we have evidence all around us but few have been willing to point it out. Empirical evidence doesn’t seem to agree with political correctness. Perhaps (free market created) inequality drives innovation and improved quality of life. Perhaps Europe has no successful entrepreneurial class for a reason. Perhaps Russia has contributed little to the advancement of humankind besides some brilliant authors and a few weapons systems for the same reason.
Would be interesting to see if a sim-city like model could be created that tracked the current disaster, starting with, say, FDR. And then change the model to reflect a largely free-people and their (free) enterprise operating with only the discipline of the market. Where tragedies are met by local community charity, not “entitlements.” I suspect that we could find a measure of goodness – average wealth and welfare that would astound people – if only due to the differing rates of innovation – i.e. life pre-penicillin v. post built into the model where the rate is slowed from “fastest random walk”, if not stopped, by the current centralized planning model. And then dare the left to build their own that reflects different – and use the lack of individual freedom that must be coded into their model to make our point. Where we can be responsible and free (and then even those in the poor part of their life experience will be rich compared to the less free). Or we can be controlled and poor.
A pity Ms. Meeker didn’t spend more time on comparing corporate infrastructure / back-office / services costs to what we see in government (and institutions not disciplined by competition and a market). Corporate America escaped from the industrial age architecture back in the 70s and 80s. Those costs are now less than 10% what they were (with a significant percentage used by the boards of directors of that era as salary incentives for the executive office to shed their perqs and headquarters staff – something that Japan Inc. hasn’t been able to do since they can’t actually pay execs what they are worth because of social constraints – so that compensation is below-board, and as such is largely corrupting). This is when U.S. exec office salaries moved from 6 to 7 figures. Note that Wall Street financial companies are a special case. If they were allowed to fail and forced to compete their salaries wouldn’t be in the 8 and 9 figures. Again, the challenge of regulatory capture – and thousand page regulations v. one general rule (perhaps one page) to fit all.
It just occurred to me that Wretchard’s famous Three Conjectures not only apply internationally but also domestically, and in virtually every country, including the USA.
We are at a point where we can either fix the problems with some pain for many or wait and let the pain become catastrophic for nearly all.
Recently the new Gov of Florida rejected the Obama High Speed rail funding – and both California and New York eagerly stepped up to take the money. Everyone knows that money will not build a viable high speed rail system in those states but instead be used to stave off the inevitable collapse. If the get the money in a couple of years they will be yelling they did not get enough and arguing that the billion$ spent so far will be wasted if they don’t get more funding right away. But they are still running the same old playbook, even though they know it does not work.
It’s like that old Woody Allen joke: “But we needed the eggs.”
Ari Tai
There’ve been two interesting papers in the last few weeks from the folks (and/or institutions) nominally aligned with the left… Wonder if there’s a larger strategy here we’ve yet to see or are these just left-leaning folks deciding they have to say the obvious in order to forgive themselves.
It’s always worth being suspicious of Leftists at all times because they lie brazenly in pursuit of their goals, and like to set up sub rosa operations that play out over the long term, like termites infesting a house. Everything looks more or less normal from the outside, until suddenly your foot goes right through the floorboards.
On the other hand, leftists also have a habit of publicly detailing their secret plans in various books and manifestos. Many of them make it their life’s work to do so. Saul Alinsky, Francis Fox Piven, Karl Marx, Adolf Hitler, all these socialist strategizers put their plans down in black and white long before they were ever implemented. I suppose it’s something inherent in the psyche of people who like to plan everyone else’s lives that they have to document their grand plans so everyone can appreciate their brilliance.
At any rate, though there have been many, many grand conspiracies of the Left, I don’t think there have been any that weren’t pre-announced in print. Leftists have just always counted on the rest of us not taking them seriously. It’s worked for them so far.
But back to the two papers Ari Tai mentioned. I haven’t seen any new grand schemes announced that these would fit into, so my assumption is there’s no underlying strategy, that instead it’s just people realizing they can’t sustain the lie any longer and looking for some way to salvage credibility. But it’s worth being suspicious, definitely worth being suspicious.
Edit: addendum: I should also remember that leftists are perfectly capable of reciting truthful facts and then reaching completly nonsensical conlusions based on them, especially when it comes to economics. They are the party of Keynesianism after all.
Lord Acton @ 10 said:
“Last year, it was surreal to watch the Dems putting every last bit of their energy into passing Obamacare when it was obvious that their beloved welfare state (social security, Medicare, Medicaid) were about to succumb to the reality of arithmetic. It felt like Hitler’s obsession with taking Stalingrad, oblivious to the great counter-offensive that was about to be unleashed.”
That analogy was tickling the back of mind but I didn’t see it until Lord Acton said it. It’s going to be “interesting” to see what happens after the Chosen One disappears and the Senate is reclaimed.
We don’t like to trust in anything so ephemeral as national spirit, or the human spirit, individual and collective. So we trust in “science”, the sure thing, something you can point to. So we imagine all issues working in a material fashion. Education is a contraption, maybe like a large meat grinder. You put the kids in, and pay someone to turn the handle. Out come educated kids. Once that machine is operational there’s plenty of time to unionize to work on teacher salaries, pensions, unjust disciplinary action against kids, and teachers, unjustified ethnocentrism, sexism, etc. Because the kids are gonna turn out all right so long as someone cranks the handle. Meantime kids’ spirits are broken, but what’s a spirit anyway? You can’t point to it.
There’s a story this week in Colorado about a 5th grade boy with ADD. He sees a therapist who tells him whenever he is upset in class to draw pictures. Boy draws stick figure of himself with a gun shooting teachers. He crumples up the drawing and throws it in the trash. That evening, two police officers show up at the boy’s home and arrest him, handcuffing him, and refusing to let the parents go with him to the station, where he is evaluated for something like 72 hours. http://www.39online.com/news/local/kiah-online-dish-boy-arrested-stick-fig-drawing-story,0,2586197.story
I don’t know why Jerry Brown decided to take the helm one last time at 72 years of age. Vanity? Lust for lost youth? Who knows?
He didn’t take the job to do nothing. One would expect some attempt to balance the California budget, at least for the short term period of his term of office. Tax increases as a solution were a certainty. Real cuts in pensions and other government expenses will also occur, because a traditional “Tax and spend” policy alone will result in rapid “Tax and Bankruptcy”. The bills just won’t be paid, including those bi-weekly checks due to government union workers.
One could say (and I’ve posted as much) that the only hope for true cuts in entitlements and spending in California is if a Democrat leader respected by the left such as Jerry Brown takes the lead. Unfortunately, that news report tells us that the Democrats will attempt to resolve the problems by half measures, i.e. raise taxes, cut pensions and spending at the margins, and just continue to bleed California’s wealth producers for as long as possible by forcing the “entitled” to sacrifice as little as possible.
That effort will fail. California’s biggest problem now is that it’s hemorrhaging businesses and productive workers. The seed corn is leaving the state, and won’t be impressed enough by a state in permanent economic anemia to stop leaving. The only changes that will stop the business and middle class exodus are the changes Democrats would never make, e.g. restore water to the Central Valley to let the farmers live and the fishies die, drill for oil anywhere and everywhere now, build 20 new Nuclear power plants NOW, cut business taxes and regulation EVERYWHERE, attack illegal immigration, relax AQMD standards and build a thousand miles of new freeways, and so forth. Until California’s economy grows again, nothing will improve on any balance sheet, not for middle class wage earners, not for investors, not for the unions and government union employees, and not for the state budget.
None of this will happen under Brown. Economic opportunity for California will continue to decline, and won’t improve at least 15 years. Think post-unification Berlin. There too much debt, too many regulations, too many barriers to business success or personal opportunity. California’s gone for 15 years, and I’m out of here in six months.
Old Salt
http://market-ticker.org/akcs-www?post=180999
have a laugh!
http://market-ticker.org/akcs-www?post=181000
have a cry!
http://sipseystreetirregulars.blogspot.com/
…scroll through, the Irregulars are all over and deep into –even to the point of setting up sting to prove the ATF was illegally leaking to the SPLC –the “gunrunner” scandal.
This thing is, from the scant coverage it has gotten, much bigger and much more sinister than i’d thought.
Frankly, it looks to me like another case of this administration having come into office with a hit list on various elements of American life, and having developed central ‘reichstag fires’ for each of them, item by item.
bl…
WRT the AIG payout at 100%…
Apparently Max Keiser is unaware of the boiler plate in the insurance world. Insurance is regulated state by state. One aspect of the industry is trigger linkage between the various entities controlled by a monster insurance company like AIG.
Namely that a default by a ‘distant’ arm = loss of license/ right to operate pretty much everywhere. Further, the insureds are promptly thrown into default WRT their bond indentures. Here we are talking about municipalities that have raised funds to build this or that — which must also carry insurance IN GOOD STANDING at all times as part of the bond underwriting boilerplate.
PLUS there is a provision WRT change of ownership of AIG. That’s why it stopped just below 80% of the common equity. Any further ownership — even by the Federal Government — would have voided an ocean of policies!
BTW, one needs regulatory approval to effect a change in ownership control of insurers. Thus such deals take many months to fully take effect. Every state has to sign off. This long tail aspect of deal making is never talked up in the financial press. Instead investors are assured that the experts will always get ‘er done.
The foreign banks absolutely counted on AIG when reporting to their own regulators. They really needed the full payout to stay solvent. The gearing of the giant European firms is insane. Ultimately the ‘Irish solution’ is going to occur even in Berlin.
What all of the Money Trust ™ banks have in common is the ‘long con.’ Working as a cabal with their governments their hideous loses in real estate lending are swept under the sofa. Right now it’s riding six feet off the floor.
Red China is engaged in hyper-mercantilism — with a vengeance. She is destabilizing capital, credit, and trading markets globally.
It is imperative that she be kicked out of the WTO yesterday.
She is inflicting mega-deflation on all manufactured goods at such a tempo that all others are destroyed financially.
She then tops this off by looting all intangible property from every land on earth — even Russian military technology! Hence, Red China has become the dominant military power — not Russia.
Should Red China prevail against America she’ll then quickly swallow up Russia and NATO for a complete meal.
Putin is so dull that he doesn’t see the peril.
BTW, Pakistani and Nork arsenals are Red Chinese puppets. She’s getting them to scale up as a mechanism for going after America, Japan and Russia without getting Russia and America to counter build.
Pretty slick, no?
blert,
Extend your last. BHO signs a treaty with Putin, and rahms it through the Senate like it was on fire, that essentially disarms the US in return for Russian promises. That treaty comply ignores the real and growing threat of China and her web of alliances.
exactly so –it’s as if it’s the sixties and the whole game is USA and Russia. meanwhile, China repeatedly refuses to even accept USA’s invitation to ‘dialog’ on their weapons stockpile and procurement. What Obama signed us to even removes our flexibility to address any bad news of the Chinee build.
It’s almost as if Russia and China were working together –to freeze us, with the help of their agent Obama, against Russia (which intends to cheat at any rate, see Yamantau Complex and other no-go inspection sites, they can’t let China get ahead of them!), while China builds up an unopposed force.
blert, re AIG, all that good gray regulation is i exactly the ‘cover’ story of the Government Sachs explanation of why they never caught on to the ”rogue” (yeah right) London office of Financial Products boss Joe Cassano during that 18 months between dumping Greenberg and Cassano’s revelation of the amount of policy Cassano had sold. That GS was working so closely with AIG yet had no idea of tyhe books is exactly what Russia and Chiona are doing re Start II.
And in both cases, the notion that the US Government has no idea what they –the Dem party financial terror apparat and the Dem party military subversion apparat both –are doing is just breathtakingly naive and/or ostrich-like. It bothers me that the Pentagon is not leaking signals that it has the situation in hand. Maybe it is doing so, but nothing yet for John Q. Public. Lots of National Security professionals leaving and being replacce by Party Apparatchiks –i guess that’s a signal alright.
Then ya got yer drudge, and his side-by-siding headlines today (one from Chicago, the other from Denver Int. Airport, and ya think, “whew, it’s not nukuler missiles, it’s only the bubonic plague”
http://denver.cbslocal.com/2011/02/25/dia-travelers-warned-of-possible-measles-exposure/
http://www.bloomberg.com/news/2011-02-25/plague-kills-u-s-scientist-in-first-laboratory-case-in-50-years-cdc-says.html
…and don’t EVEN get me started on [ stern siga smallpox wikileaks ] searches, or anything like that.
i’m already afraid that any morning now i’m gonna wake up a lab rat who’s only been dreaming he was a human being.
…then i sees this today at the WSJ, and it reminds me of this, and both remind me that the Jet Set travels on private jets and won’t be around anywhere any unpleasantness is.
…and then i sees this today at the WSJ, and it reminds me of this, and both remind me that the Jet Set is so-named because it travels on private jets and won’t be around anywhere any unpleasantness starts.
(had to double post, forgot the second link befo’)
http://www.youtube.com/watch?v=FikZwgj89HI&feature=autoplay&list=MLGxdCwVVULXd_rnFREKd4Yg9Ps_PUlH3V&index=8&playnext=3
OUR TOWN
(Iris Dement)
***
ah hell. music for the Buckman Tavern.
–if i may presume to veer off into popular culture as a determinant of how all these troubles play out, and then go to the role of film as an important empirical artifact of that culture, and then opine that the work of the Coen Brothers is a strong deeply conservative current within, then i can post this and this from their latest, True Grit –a film about the spirit we need to remember we had, and can have again, even tho we may, like Rooster Cogburn, have to reach deep to resurrect what is there, and how really, if we are to protect for the young the opportunity of their future as good as our past, we must.
***
PS, …more of the music here, but the text accompanying gives away a lot of the plot, so, ‘spoiler alert’!