Another sign of the times...

Today's news: Dow tumbles 634 points on recession fears -- the sell-off comes in reaction to the downgrade on U.S. debt by Standard & Poor's...

(LA Times): "President Obama tried to reassure the world that U.S. leaders could put aside the political disputes that put the country on the brink of default before a last-minute agreement to raise the debt ceiling. 'Markets will rise and fall, but this is the United States of America,'" Obama said in a midday speech from the White House. 'And no matter what some agency may say, we've always been and always will be a AAA country.' But his comments failed to stop the market slide, which came on the heels of the Dow's 512-point shellacking on Thursday."

Someone let us know when "The Recovery" is over. Let us up -- we've had enough...

"Debt man, talking" -- Obama at today's news conference...

(h/t: Instapundit, bumpersticker; R. Limbaugh, caption)

Who really pays?

More like -- we know who will really pay our debts.

Related item: What's Wrong with Making Future Generations Pay for our Debt?

They've left their minds, in San Francisco...

Spending money that isn't there...

If you think things are bad on the public employee pensions front for California, or even the U.S., check out what's happening in The City By The Bay.

To be honest, everyone - including SF's most "out there" boosters - admit the city is in the midst of a severe financial crisis. What most people aren't aware of is just how bad things have turned for "Baghdad By The Bay."

A story in The Bay Citizen lays it out for readers: "San Francisco's public-employee pension fund is in weaker shape than many people realize, according to an analysis by Professor Joe Nation released Tuesday. It is underfunded by some $6.8 billion, Nation's report finds. The city's pension fund is officially underfunded by $1.6 billion. Nation's study argues that the pension fund is relying on a 7.75 percent annual rate of return that is unrealistic over the long term. The study argues for 6.2 percent, which it says was the average rate of return in the capital markets from 1900 through 1999."

If you want a sneak peek at what is going to happen to California, check out San Francisco. If you want an advance look at what is going to happen to the U.S., keep an eye on California. And if you'd like a real-time view of what's ahead for everyone else, look at Greece.

Public Pensions Are Killing The Golden Goose/State...

California, like most of the other states, has a bevy of problems/issues making the possibility of economic recovery look dimmer and dimmer each day.

One thing that does separate California from the rest - besides its huge economy (about the eighth largest in the world) - is the dark and expanding cloud representing “unfunded liabilities.” These are currently estimated to be somewhere between $100 billion and $650 billion-plus. In other words, that’s money the state doesn’t have yet will be obligated to pay out. (And let’s not forget - unlike the federal government, states can’t print money they don’t have.)

Most of these unfunded liabilities are (state) public employee pensions and benefits, long-promised to hundreds of thousands of retirees and their survivors. Promised by law.

So what is a state like California to do?

Calls have been going out, near and far, for the governor and legislature to cut spending. But the truth is, the huge Democratic majority - and chief executive - are beholden to so many groups benefiting from entitlement programs and what can be considered “earmarks” of sorts, that any cutting that’s being done is superficial...at best. (Governor Jerry Brown is pushing a tax increase on coming special ballot in June, which if passed will cement California’s claim as the most-taxed state in the nation. The money will help pay-down the annual debt - about $25 billion - but it won’t make a dent in the unfunded liabilities column.)

Reason has a new piece up, “Farewell, My Lovely: How public pensions killed progressive California,” which explains why all the planning, light-handed cutting and increased taxation aren’t the true solutions to the state’s fiscal woes.

“As 72-year-old Jerry Brown enters his second governorship, he has an agenda to match that power, with visions even greater than those that haunted his two-term administration of the 1970s and ’80s: building 20,000 megawatts of renewable power, laying a new high-speed rail network that will connect the state’s major cities, forging a statewide infrastructure for alternative energy, hiring thousands of green employees,” author Tim Cavanaugh, writes at Reason. “The new governor’s environmental agenda is ambitious, untenably expensive, and indelibly popular with voters and lawmakers. Yet when Brown looks out on Democrat-controlled California, he seems less like Caesar at the Rubicon than Wojciech Jaruzelski at the Gdansk Shipyard. Brown is champion of a workers’ party with monopoly control, yet all his plans are being derailed by a labor movement nobody can harness.”

And therein lies the problem.

If California ever has any hope of digging out of the mess it’s now in, everyone is going to have to feel the pinch...make sacrifices. Even groups the Democratic party is beholden to.
Especially the public employees unions.

Read the whole article here.

Bonus graphic: If you don't live in California, you can see (from the chart below) how your state's fiscal situation stacks-up against the Golden State's.

Why Harry Reid has reversed course and started cooperating...

Because he sees the writing/poll numbers on the wall...

Going off the rails...

Just when you thought they couldn't spend our tax dollars any faster, they put them on a high-speed train to nowhere...

A lot has already been written about the multi-billion dollar folly that is the administration's national high-speed rail proposal (HSR). At a time when the nation is staggering under the attack of the twin cancers of budget deficits and debt, Team Obama suggests that pouring even more tax dollars down a rat hole (aka: HSR) is what will make America strong again.

Choo-Choo Charlie: Vice President Joe Biden (aka: Amtrak Joey) has led the charge for the administration...

Thankfully, numerous experts, citizens and leaders (such as Florida Gov. Rick Scott, who canceled his state's high-speed boondoggle but continues to get pressure from the Feds) are standing up to this ridiculous notion that a 19th century form of transportation is the best way to travel...especially because it can only survive with the help of ridiculous amounts of tax supported subsidies. The forces behind HSR are strong and well-financed, but the state of the economy - combined with the opposition's good sense - has this train Dead On Arrival....

The pipedream...

The following video, produced by Reason, is a terrific primer on why HSR is a train to nowhere...

In case you missed 'em...

A few choice news items:

"Leaked Documents Shed Light on Afghan War" - more and more resembling another failed effort (Vietnam) -

What is really going on over there?

"Smart diplomacy?" White House backed release of Lockerbie bomber (documents undermine Obama's reaction of surprise)...

Gone but not forgotten...

No big deal...it's just your taxes at work/waste - Congress Spent $604,000 on Bottled Water, $397,000 on Catering...

John Kerry's S.S. Ketchup scandal sails on. Says he will pay if ‘taxes are owed.’ (He means Tah-ray-zuh pays, right?)...

"Captain Tax Dodge, reporting for duty!"

$8 billion Calif. rail project results In fewer public transportation users, billions more coming for high-speed rail...

More great news from the administration's Recovery Summer™: "White House Predicts Record $1.47 Trillion Deficit"...

Add Recovery Summer™: For those folks enjoying "Recover Summer," you can attend President Obama's birthday bash for a mere $30,000...

"Recovery Summer?" Heck, no...the Summer of George!

California - it's worse than you think...

The new Great Seal? (Graphic/POLITICAL VANGUARD)

The big talk right now is that California has a $20 billion-plus budget gap. Not only is that not true, but it also is misleading when it comes to the bigger picture.

To begin with, the budget deficit actually tops $36 million. Here's the breakdown:

-$21 billion in general fund
-$7.3 billion in money owed Unemployed Insurance Fund
-$3 billion in unsold assets, like San Francisco's Cow Palace, the LA Memorial Coliseum and the State Compensation Fund.
-$5 billion in lost lawsuits, unable to pay due to lack of cash (there is at least another $5 billion in lawsuits pending)

The bigger problem, though, is California's debt. Currently, the state is at least $600 billion in DEBT (not deficit). Some state officials - on both sides of the political aisle - actually put the number above the $650 billion mark.

This debt includes:

-More than $200 billion in unfunded liabilities at CalPers (the public employees retirement system).
-$48 billion in unfunded liabilities in CalStrs (the state teachers retirement system).
-$110 billion in unfunded health care.
-In addition, there are billions owed to state trust funds (the state Recycling Fund, for instance, is owed $500 million in money that's been borrowed by the governor to cover deficits).
-California owes $8.8 billion in short-term loans that have to be paid off by June and almost $120 billion in outstanding bonds and interest that will be paid over decades.

In his lame duck State of the State address, Gov. Arnold Schwarzenegger noted that the cost of state employee pensions rose 2,000 percent during the last decade, while state revenues have increased only 24 percent. In addition to this alarming figure, government itself is one of the few "growth industries" in the state. The private economy has to deal with high unemployment and small business bankruptcy rates that grew 81 percent (2008-09) but f"at and happy state workers" were able to grow their ranks (by 1 percent).

"California is deeply in debt. You could say that it's bankrupt," Attorney General - and presumptive Democratic gubernatorial candidate - Jerry Brown told a group of young Democrats earlier this month. Likewise, GOP U.S. Senate candidate Carly Fiorina talked about the possibility of bankruptcy during a recent chat with SoCal business owners.

This isn't new territory: last year, the state issued close to a half-million IOUs to vendors as well as to residents waiting on their state income tax returns. It also halted construction on thousands of infrastructure projects. Another cash shortage this summer will result in additional IOUs and delayed payments.

The state has the lowest credit rating of any state in the nation, although it still is above junk-bond status. If the state falls to junk status, some investors would be unable to buy state bonds, making it even more difficult for the state to borrow money and infuse cash into its coffers. Either way, it now costs the state more to borrow the money it needs to function. The state Constitution mandates that debt service has the second highest priority for payment, after only education, and the state continuously receives tax revenues. The state treasurer plans to sell $10 -$14 billion in bonds this year, with the first sale of $2 billion scheduled for early March.

If states weren't prohibited from declaring bankruptcy, California would have (had to) long ago.

It is, however, for all intents and purposes...insolvent.

(Sources: CA Political News, Sac Bee/Dan Walters, LA Times, governor's web site, KSFO, SF Chronicle)

Predictions abound…

Now that 2010 is officially here, it’s time to trot out the Magic 8 Ball™ for our annual BlissIndex© New Year’s Predictions®.



*Even though the ObamaCare Healthcare er, Insurance Reform bill will continue to languish in Congress, the Democrats will trumpet having written a bill that contains more pages than all the Harry Potter books put together.


I see dead trees...

*Some of the changes that will be proposed in the Democrats’ House-Senate Conference Committee will mean that health care will not be rationed, per se. Medical procedures, however, will be approved by that stingy guy who doled out gruel in “Oliver.”



More - please? Anything??

*America’s military will continue to become more deeply involved in Afghanistan, but few Americans will give it much consideration (due to the fact that the education of many Americans is so poor that most are unable to locate Afghanistan on a map – let alone be able to spell it).


I know where that is...

*President Barack Obama will refocus his efforts on jobs and the economy. His efforts to improve the current situation will include a second Stimulus package, a raft of new taxes, and an innovative way to beef-up the U.S. Treasury: $10 piggyback rides on Joe Biden.


There is a weight limit...

*As the pressures of the job continue to wear on him, the president will become even more fanatical about getting out on the golf course. His handicap will improve by a couple strokes but the number of cigarettes he burns through will increase inversely.

Smoke 'em if you've got 'em...right Mr. President?

*The federal government will continue to print worthless money…and we’ll continue to spend it.


Spending it like there's no tomorrow...

*Hillary Rodham Clinton, our current Secretary of State, will contemplate resigning after catching heck for the State Dept. not doing more to prevent the Christmas terror incident in Detroit. It will be OK by her, making her next run against Obama that much easier.


Hillary - getting ready for another run?

*Janet Napolitano, Department of Homeland Security secretary, will continue to catch heck for her handling of the Christmas terror incident in Detroit. She will remain on the job but George W. Bush will be fired for the gaffes.


Ja-No...

*The swine flu epidemic will subside, but after another worthless season of horrible programming on NBC, it will be renewed for another run.


Hit me with your best shot...

*You’ll be stuck with another year of…me.

Happy New Year!

Course corrections?

We’re in tough times and there are lots of things that need fixin’…here are just a few:

Jay Hancock of The Baltimore Sun notes that “unemployment benefits fell to their lowest level since January. T. Rowe Price economist Alan Levenson looks at the data. New claims fell by 12,000 to 502,000 last week. Continuing claims fell by 312,000 to 5.8 million. (That's for two weeks ago.) Bottom line: Labor market healing trend continues into November, and the unemployment rate should reverse some of October's outsized gain. Nonetheless, the unemployment will tend to rise until monthly job growth is sufficient to absorb the flow of labor force entrance (roughly +110,000 per month); we don't expect a peak until mid-2010.” Gee, I feel better already…don’t you?

Bloomberg News adds, “Fewer Americans than anticipated filed claims for jobless benefits last week, signaling the worst employment slump in the post-World War II era is easing as the economy expands.” See, I told you we’d all feel better.

Of course, to fix all this, there’s always Super Obama to the rescue.

If the jobs news doesn’t do it for you, how about the deficit picture? “The federal government kicked off fiscal year 2010 by posting its widest-ever October budget deficit, the Treasury Department said Thursday. The $176.36 billion gap is more than $20 billion wider than the shortfall recorded in October 2008, driven up by lower tax receipts, stimulus-related revenue reductions and consistently high government outlays. Treasury’s monthly budget statement shows receipts were $135.33 billion in October, down 18% from a year earlier and at the lowest level since October 2002. Meanwhile, outlays were $311.69 billion, down 3% from a year earlier and at their second-highest monthly level on record.” As Hot Air notes, “What better way to kick off Barack Obama’s first full budget year as President than with a deficit that exceeded the White House’s own projections as well as analysts’ expectations? The federal government busted the budget worse than last October by $20 billion with a deficit of $176.36 billion for the month. That used to be considered a decent deficit target … for an entire year.”

And while some believe “the U.S. labor market is slowly healing [and] the declining number of monthly job losses and weekly initial unemployment claims show that. Yet President Obama still [feels] the need to announce a ‘jobs summit’ at the White House next month,” writes James Pethokoukis. “That’s compelling evidence that the White House doesn’t believe the job market is mending nearly fast enough to keep unemployment from trending higher — or Democratic electoral prospects in 2010 from trending lower.”

Oops!

Finally, the biggest course correction of the week: From the NY Times – “Published: November 11, 2009 Corrections: An article on Monday about difficulties for Muslims serving in the American armed forces described incorrectly the background of Michael A. Monsoor, a member of the Navy Seals. Mr. Monsoor was a Christian of Lebanese and Irish descent, not a Muslim. The article also described incorrectly the act that earned him a Medal of Honor. It was for falling on a grenade and saving at least three team members — not for pulling a team member to safety. (Saving a team member in an earlier incident earned him a Silver Star.) Complications Grow for Muslims Serving in U.S. Military (November 9, 2009)

We're from the government and we're here to help

(h/t: http://pajamasmedia.com/instapundit/ )

This week marks the 10th anniversary of a reason we’re in the mess we’re in: the GOP Congress and President Clinton repealed the Glass-Steagall Act. In short, it killed some pretty important aspects of banking laws dating back to the Great Depression. Restrictions on interplay between commercial banks and investment banks were essentially eliminated.

As reported in The New York Times, “’Commercial banks played a crucial role as buyers and sellers of mortgage-backed securities, credit-default swaps and other explosive financial derivatives,’ Demos, a nonpartisan public policy and research organization, wrote in a report discussing the problems it said were caused by the repeal of Glass-Steagall. ‘Without the watering down and ultimate repeal of Glass-Steagall, the banks would have been barred from most of these activities,’ Demos said. ‘The market and appetite for derivatives would then have been far smaller, and Washington might not have felt a need to rescue the institutional victims.’”

And the news just gets better: “U.S. deficit sets October record of $176.4 billion”

Is there a bigger idiot than Chicago Mayor Richard Daley? You’d be hard-pressed to find one.


King Idiot...

Finally, did you know that “More Stimulus Equals More Unemployment?” You do now…

Another day older...and deeper in debt

Here's an interesting look at what the deficits looked like under Bush (43) and what they look like now - and in the immediate future.