Bloodthirsty Liberal

Not oceanography, silly—public finances:

The Northern Mariana Islands, a U.S. commonwealth, lie 5,000 miles off the coast of California, but they sent a shock wave across the Pacific last month when their public pension fund declared Chapter 11 bankruptcy. Legal experts say this is the first time a retirement fund has declared bankruptcy and could establish a precedent.

Cities that can’t pay their bills because of soaring pension costs can file for bankruptcy under the Chapter 9 municipal code as Vallejo, California did in 2008. If a municipal pension fund runs out of money, the city can use Chapter 9 to restructure its retirement obligations and other debts. See Prichard, Alabama and Central Falls, Rhode Island.

But Chapter 9 wasn’t an option for the Marianas because the islands are a commonwealth, not municipality. With its pension fund set to run dry in 2014, Chapter 11 seemed to be the only recourse since retirees wouldn’t accept a cut in benefits.

The Mariana case isn’t very different from broken-down cities like Central Falls and Detroit. In the 1980s and ’90s the Marianas used a tax windfall from a surge in foreign investment to boost public workers’ compensation. Government workers earn nearly three times as much as their private counterparts and can retire at age 60 with an annuity equal to 75% of their final salary. Their grandchildren are eligible for survivor benefits.

Wait, what?

Their grandchildren are eligible for survivor benefits.

If that isn’t a perfect symbol of public services run amok. All of us, I believe, want to leave our children secure, able to take care of themselves and their families. Maybe we even have enough to carry that on another generation or two—see superstar athletes and performers and titans of business and industry. But a grade 13 clerk in the Department of Public Records leaving his retirement benefits to his grandchildren—to be paid for by someone else’s grandchild? They’re kidding, right?

Wrong:

Actuaries warned a decade ago that the retirement system was unsustainable, but lawmakers delayed reforms and skipped their pension bills. In 2006 they shifted new workers to defined-contribution plans, but immediate savings were sparse since more workers were retiring than being hired. The growing retiree-to-worker ratio has sent the pension fund into a death spiral.

Chapter 11 would ensure that retirees get pension checks in a couple of years. However, benefits will likely have to be cut by more than half. Such was the case in Prichard and Central Falls. All of this is a lesson that public employees have much more to lose than gain from thwarting pension reforms.

Of course they do—anyone can see that. Anyone who hasn’t come to expect a check, that is. But then, even they can do the math—they just expect someone else to carry the one (i.e. themselves).

To my knowledge, the point was first made by Mark Steyn: so-called “generous” benefits are anything but. They are paid for by someone else (making that person, at least in part, a slave to the beneficiary), and they are unsustainable. Your “generous” benefits are generous to you alone. Your kids won’t see them, and sure as hell your grandkids won’t. What European socialists (not to be redundant) call “austerity” is actually just minding the GAAP (Generally Accepted Accounting Principles). If Reverend Wright will allow me: Europe’s chickens (and America’s, soon enough) are coming home to roost.

Further to Aggie’s and my points below, Rick Santelli—who else?—explains:

I don’t listen to Rush as much as I used to (if I’m out, I use an iPod, which gets only FM), but his point today was one he (and I) have made before. This development serves Obama two ways: he can trumpet a lower unemployment rate (as Santelli noted, that’s how the networks have treated the story), while also driving people into dependency on government largesse. It will take him two terms to transform the country into the projection of his own ego that he’s always imagined, but this news is as cynical an attempt at winning reelection as I could ever imagine.

No, not the one of him tucking into a feast cocker spaniel au vin, or catching crickets in his mouth. His defenders would just celebrate him as a man of many cultures (which indeed he is).

And not even this video, a longer version of which is making the rounds of the Internet (hat tip reader Judi).

No, the video Barack Obama doesn’t want you to see—more embarrassing than a sex tape with Tonya Harding, more damning than a youthful clip of him with a clip—is this clip right here:

Be afraid, Democrats. Be very afraid.

PS: The longer version of the first video correctly points out that in order for America to fail, Americans first have to want her not to succeed. That is accomplished by underplaying America’s successes and denigrating her history. The education system has been handling that for decades, and generations of young voters coming into the system are responding to a president who preaches the same message they’ve grown up to believe is true.

The title is even more of an oxymoron than you can imagine:

When Europe’s finance ministers meet for a group photo, it’s easy to spot the rebel — Anders Borg has a ponytail and earring. What actually marks him out, though, is how he responded to the crash. While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.

Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. The recovery started just in time for the 2010 Swedish election, in which the Conservatives were re-elected for the first time in history.

Liberals often point to the welfare states of Scandinavia as an alternative to the stricter free market economies.

Yeah, right:

‘Sweden was a textbook case of European economic sclerosis. Very high taxes and huge regulatory burden.’ An economic crisis in the early 1990s forced Sweden on the road to balanced budgets, and Borg was determined the 2007 crash would not stop him cutting the size of government.

‘Everybody was told “stimulus, stimulus, stimulus”,’ he says — referring to the EU, IMF and the alphabet soup of agencies urging a global, debt-fuelled spending splurge. Borg, an economist, couldn’t work out how this would help. ‘It was surprising that Europe, given what we experienced in the 1970s and 80s with structural unemployment, believed that short-term Keynesianism could solve the problem.’ Non-economists, he says, ‘might have a tendency to fall for those kinds of messages’.

Oh my, whoever could he mean?

He continued to cut taxes and cut welfare-spending to pay for it; he even cut property taxes for the rich to lure entrepreneurs back to Sweden. The last bit was the most unpopular, but for Borg, economic recovery starts with entrepreneurs. If cutting taxes for the rich encouraged risk-taking, then it had to be done. ‘In most cases, the company would not have been created without the owner,’ he says. ‘There would be no Ikea without [Ingvar] Kamprad. We would not have Tetra-Pak without [Ruben] Rausing. They are probably the foremost entrepreneurs we have had in the last few decades, and both moved out of Sweden.’

But they were not rich, I say, when they were starting out. ‘No, but they were becoming rich. If you have a high wealth tax and an inheritance tax, people emigrate because it becomes too costly to own a company. Ownership is a production factor. Entrepreneurs are a production factor. Yes, these people are rich and you can obviously argue that we want to encourage social cohesion. But it is also problematic if you drive out entrepreneurs from your country, because they are the source of job creation.’

For pete’s sakes, Obamabots, even Sweden has wised up. Obama’s alleged smarts are anything but—and they’re forty years out of date. He sounds like the Ramparts magazines of my youth. He is President Bell-Bottom, the Sideburn-in-Chief of the United States.

We cover this stuff a lot, but it can’t be repeated often enough:

So let’s figure the actual percentage of Americans working, overall.

January 2009: According to the Bureau of Labor Statistics, the Workforce Participation rate when Obama took office was 65.7%. That means 34.3% of the workforce wasn’t even trying to participate, through discouragement, disability or whatever case applied. Add to that the 7.8% unemployed, and you reach a figure of 57.1% of the American workforce actually working.

October 2009: At this point, the “low point” of the Obama recession, the participation rate was an even 65% just in time for unemployment to hit an even 10%., 55% of the American work force was working.

January, 2012: As unemployment stood at 8.3%, the workforce participation rate was 63.7% – the lowest since records have been kept. That means that overall employment in the American workforce is now a whopping…

…55.2%.

That’s a fifth of a percent higher than it was at the lowest point of the Obama recession.

Almost two full points lower than it was when Barack Obama took office.

(And five full points lower than June of 2003, the worst month of George W. Bush’s presidency. That’s five percent lower employment overall. Six and change if you take one of Bush’s better months).

As I never tire of pointing out, the recession technically ended in June of 2009. We’re going on three full years of “recovery” with 0.2% growth in the workforce participation rate. As I also too frequently observe, you have to wonder if that’s a feature and no mere bug.

Ask yourself (don’t bother, I’ll ask you) what these conditions accomplish: an unemployment rate low enough to have a chance at reelection; and enough people who rely (or fear they’ll need to rely) on government assistance, and vote accordingly. You think Obama’s team looks at the 50% federal income tax participation rate as a scandal? Hardly. They’d like to take it down to 40%, which would leave them a comfortable 60% who take from the system—and vote accordingly.

Too many working people vote to keep what they earn, so we can’t have too many working people.

That’s all, I promise:

Despite his record of picking losers—witness the failed “clean energy” projects Solyndra, Ener1 and Beacon Power—Mr. Obama appears determined to continue pushing his brew of federal spending, regulations, mandates, special waivers, loan guarantees, subsidies and tax breaks for companies he deems worthy.

Favoring key constituencies with taxpayer money appeals to politicians, who can claim to be helping the overall economy, but it usually does far more harm than good. It crowds out valuable competing investment efforts financed by private investors, and it warps decisions by bureaucratic diktats susceptible to political cronyism. Former Obama adviser Larry Summers echoed most economists’ view when he warned the administration against federal loan guarantees to Solyndra, writing in a 2009 email that “the government is a crappy venture capitalist.”

There it is, in a nutshell. Government is crappy at a lot of things, venture capitalism being merely one (though high on the list, admittedly).

What is more, government knows it is crappy at venture capitalism—it was told, if it didn’t know before. The first word of the excerpt above, “despite”, is probably poorly chosen. “Because of” or “Irrelevant to” would be better. Government is a tool (you can say that again) by which the First Tool can accomplish his dastardly and nefarious goals.

And “valuable competing investment efforts financed by private investors” sure as hell ain’t one of ‘em.

Obama says debt will be 1 TRILLION higher than previously promised.

President Obama on Monday unveiled a $3.8 trillion spending plan that seeks to pump billions of dollars into the economy while raising taxes on the rich to tame a soaring national debt now projected to grow significantly faster than previously forecast.

The president’s outlook for debt reduction has deteriorated markedly since September, when Obama told Congress that his proposals would hold annual deficits well under $600 billion after next year and permit the debt held by outside investors to rise to $17.7 trillion by 2021, or 73 percent of the overall economy.

The new 10-year blueprint shows annual deficits exceeding $600 billion every year except 2018. And the portion of the debt held by outside investors would grow to $18.7 trillion by 2021, or 76.5 percent of the economy — a full $1 trillion higher.

I’m very calm about this.
“Why are you so calm, Aggie?” you ask.
Because long ago I accepted the fact that elections have consequences. Furthermore, we are about to elect the dope again. So rather than despair, I feel grateful that the laws of physics haven’t changed, nor have the laws of simple math.

- Aggie

Hahahahahaha!!!! Hohohohohoho!!!! Heeheeheehee!!!

Too funny:

Five years after NStar became the first Massachusetts utility to allow customers to buy electricity supplied by a wind farm, its Green program has failed to catch on. Less than 1 percent of the company’s nearly 900,000 customers have enrolled.

The dismal response resembles lackluster participation in similar renewable energy programs offered by other utilities, worrying state officials as they push toward a goal of generating 20 percent of electricity from renewable energy by 2020.

The NStar program has faltered because of the recession and falling fossil fuel prices, which resulted in a greater surcharge for wind energy. Environmental activists are frustrated and question whether utilities have done enough to publicize the programs.

Just take the first two utilities, which are the overwhelming majority of customers. Barely 0.6% use “green” energy (so-called because it costs more). And it’s not for want of trying:

Ed Loechler, an activist from Brookline, knows first-hand the challenge of trying to persuade people to put their money where their environmental ideals might be.

For several years, the Boston University biology professor has been going door to door in his neighborhood to plug the NStar program. When a door opened one night last week, he urged a young man to sign up. “This is the single, simplest way you could cut a lot of carbon dioxide from your household,’’ Loechler said.

But after he explained that enrolling would add between 15 percent and 30 percent to his neighbor’s electric bill, the 22-year-old thanked him for promoting what sounded like a good idea. “But it’s probably too much,’’ the man said.

But I thought renewable energy was cheap, free, plentiful, and freshened breath! No?

See the Milton Friedman clip below. The 22-year-old was no dummy (which is rare for someone of that age!). When offered the choice to save the planet or save even a few bucks, he told Gaia to go [bleep] herself. Odds are that he was an Obama supporter, looking forward to those lower tides The One promised. But just in case, he opted for the coal/oil/nuclear axis over the airy promises of wind power.

The market will not be fooled.

PS: Don’t get me wrong: I would love to get all the energy we need from wind, solar, etc. I’m just not naive enough to think we can wish it into being. I was in France last year, and the legendary countryside was littered with hundred of turbines. Thousands, even. We’re about to build a whole “wind farm” in Nantucket Sound, ruining a seascape as beautiful as any. All to produce a few paltry kilowatts to make ourselves feel better, at prices people don’t want to pay. The only redeeming feature of Cape Wind is that the view of the Kennedy compound and a few other liberal weenies on Martha’s Vineyard will be destroyed. That’s almost enough, believe me.

Jonah Goldberg posted this at The Corner on NRO. My thoughts follow.

Of course Phil Donahue is a horse’s ass—everyone gets that. But I do feel he and Milton Friedman are arguing past each other. Friedman is absolutely right that “greed” (or enlightened self-interest) is the motivator that makes people get up off their duffs and earn a buck (or billion). Adam Smith told us that. And he’s also right that free enterprise is the best (really only) system to raise the masses out of poverty.

But Donahue is not wrong to point out that income disparity is a byproduct of capitalism. Not every poor person is poor out of laziness or incompetence; not every tycoon is an economic genius. We all agree that everyone has to pay his “fair share”. That’s the argument should be.

Which is why I never get tired of re-posting this clip:

Taxing for purposes of “fairness” (whatever the [bleep] that is) is so stupid, it’s the Paul Bunyon of stupidity. It’s the B-52 of stupidity. It’s the giant sequoia of stupidity. It’s Barack Obama’s stupidity.

The Euro in hell.

So, no way to tell for sure if the title is German or not, but close enough.

By now, it’s obvious that adopting the euro was a colossal blunder. It may rank as Europe’s worst policy mistake since World War II. The virtues of the common currency — it reduced transaction costs and the uncertainty of fluctuating exchange rates among national monies — were temporary. Its vices seem permanent or, at least, semi-permanent: the mounting economic costs of saving the euro; the growing nationalism from arguing over who’s to blame.

Do not expect some magical “solution.” Europe has entered an economic and political purgatory from which there is no early escape. On paper, the crisis countries (so far: Greece, Portugal, Ireland, Italy and Spain) might benefit from abandoning the euro and resurrecting national currencies. They could then devalue these currencies, spurring exports and tourism. But in practice, this choice is dangerous and maybe impossible.

Any hint that a country might dump the euro would trigger runs on banks, as depositors sought to withdraw their euros. Banks would collapse. Deprived of buyers for their debt, countries would default. This would impose further losses on banks inside and outside the defaulting country. Without viable banks, borrowers would be starved for credit. There would be capital controls restricting the shift of funds abroad. If one country (say, Greece) left the euro, it might precipitate runs and capital flights elsewhere. Writing in The Financial Times, Citigroup chief economist Willem Buiter sketched this grim outlook:

“Disorderly sovereign defaults and eurozone exits … would drag down not just the European banking system but also the North Atlantic financial system. … The resulting financial crisis would trigger a global depression that would last for years, with GDP likely falling by more than 10 percent and unemployment in the West reaching 20 percent or more. Emerging markets would be dragged down too.”

In other words, Europe has the potential to drag us into WWIII! We’ll all be in der Holle.

- Aggie