Sunday, August 11, 2013

Progression Test: Vallejo, Detroit, ?...L&C

Not familiar with Vallejo, Ca.? It is in the San Francisco Bay area. It has served twice as the capital of California. It became the largest city to file for bankruptcy in the state in 2008. In the short time period since then, Vallejo lost its infamous recognition to Stockton, California, when it filed in 2012.  It did find more insufferable recognition by being named the most miserable US city in 2013.
What needs to be said that hasn't been said already? I think the Tigers will win the pennant and they have a good chance to win it all. The Lions will probably be a five hundred team. The court system is rigged in favor of the rich over the poor which translates to the labor unions getting kick again. The real problem will be the "aha!" moment by the workers in Detroit and in the state of Michigan and in the country. They will suffer by having their pension cut. Their emotions will be steaming over the fact that the government bailed out the banks. There will be protests and strikes. Not good. There will probably be violence which could erupt because this awareness will have sympathy across the US. If this connection is coupled, the labor movement will awaken after 50 years or more from a comatose position. This could be a blessing, especially if a new political party is formed to which I advocate. However, this is a long shot and it will be very difficult to tell the difference between the candidates, whether, good, bad or ugly, if the opportunity surfaced.
These things take time and time is exactly what the status quo utilize. How recent were the financial problems of Spain and Italy? It was just last July when the European Central Bank President, Mario Draghi vowed to do,"whatever it takes..." to keep the euro from collapsing and the membership intact. At the time short-term interest rates in Spain and Italy were rising to 7%, but with the ECB buying their bonds, rates fell. The stock markets in both of these nations has risen, although both economies are in recession with unemployment rising. Go figure?
When will Europe have their aha moment? Where does Europe go after the reelection of Angela Merkel in September? I have no idea, however the global situation will determine the EUs continuation in its present form. I think the present state of currency fires will arise from India which will be the spark that lights the weapons of financial destruction or derivatives
Meanwhile, in the US the national scene will continue to talk with gridlock over our many issues, but few will draw attention to the progression of financial troubles that are emerging within our state governments. According to Moody's, there are only fifteen states that are credit worthy to cover their costs for state pension workers. By the way the threshold number that Moody uses is 80% funded. Simple math tells you that we have a serious financial problem that is looming for 35 states. The federal government will not help for many reasons with number one being that they cannot afford to help. There is no money. These people never look ahead, plan for a rainy day. This is reflected in our national debt.
are given for everything. Not-with-standing my predictions for the two Detroit professional teams, but here, dear reader, I'm talking about financial estimates. Does anyone in the media bring up the fact that the Fed stated that our recession would be over by now back in 2008? They predicted that the stimulus would give us 3.5% to 4% GDP. Didn't happen. In fact the Fed along with the Obama administration have been wrong about every financial estimate for our economy which at present, is less than half of what was forecast. Not good. This leads to the question, is there a trend? If there is a trend, where is it going?
is the fifth largest state with 12,875,255 people. The state government has made its forecast too, especially about state pension workers. The state government has only funded 43% of its needs. It has a very serious problem. It owes for 350,000 past workers and another 500,000 present workers. This means the taxes for the twelve million will go up for the 800K state workers and all will be well. It could happen except that the people running these pensions always give rosy numbers like all government workers, but fail when the due date results are counted. The state pension people said that they would receive 7.84% growth rate when they only got 5.6%. This difference in percentages is small, but in real money the shortfall is in the billions which only adds to lower the 43% funded amount. Consider multiplying the number of years to retirement along with the aspect of new regulations on state mandates to fund pensions and the discrepancy reaches 57%. Sadly, this state will be the first to fall. When? Can't say, but the debt is rising with every passing moment.
Liars and Crooks: goes to China and all those who call for free trade. China was found by the WTC to have illegally taxed US chicken exporters of chicken parts, legs, breasts, etc,(very sexy)to the tune of 105.4%. Ouch! This is a tariff. No wonder that they run a surplus with us. In fact, the average Chinese tariff on US products is 25%. There is no such thing as free trade.  Tax all imports! End the Fed!