Posts Tagged ‘Welfare State’

Zeno’s Endgame in Greece

Friday, April 17th, 2015

It’s appropriate that Zeno (the paradox Zeno) was Greek, since Greece appears to have entered Zeno’s Endgame. The country edges ever closer to default, without actually defaulting. Or without the Greek government actually ceasing to spend radically more money than it takes in, because the ruling left-wing Syriza Party would rather destroy the Greek economy than give up their bloated welfare state. Their latest plan is to raid pension funds to keep that welfare state going just a little longer. “This is the last bit of cash that the Greek state has.” “Honey, let’s cash in our 401K so we can buy some heroin!”

Sorry if this sounds like every other update on the Greek debt crisis over the last six years. It’s a vitally important story, which is why I keep covering it, but it’s also the story of a host of people making the same stupid, easily avoidable mistake again and again rather than making the hard choices necessary to deal with the problem.

A few other links of interest on the Greek debt endgame:

  • So Greece went hat-in-hand to the IMF: Can we put off making some debt repayments? IMF: (Laughs) Oh wait, you’re serious! Let me laugh harder!
  • Speaking of the IMF, this should be good for a laugh.
  • Greece’s phony baloney budget surplus disappears.
  • Looks like Greece’s creditors have finally reached the depression phase of the Kubler Ross grief cycle. “Greece’s international creditors signaled they are losing hope that Athens will do what is needed to unlock bailout funds before it runs out of money.” Do tell.
  • A timeline of Greece’s bills coming due. “Debt interest payments are piling up. It has to pay off an €80m interest bill to the European Central Bank (ECB) on 20 April and €200m to the International Monetary Fund (IMF) on 1 May. But the one that is stirring jitters around Europe is a €760m (£550m; $810m) interest payment to the IMF that is due on 12 May.”
  • Gameplanning a Grexit.
  • Tune in next week! Same bankrupt time! Same bankrupt channel!

    Texas vs. California Update for April 15, 2015

    Wednesday, April 15th, 2015

    Hope you’ve finished your taxes already! Time for another Texas vs. California update:

  • Detroit and Stockton’s bankruptcies may signal further problems nationwide, says New York Fed President William Dudley. “While these particular bankruptcy filings have captured a considerable amount of attention, and rightly so, they may foreshadow more widespread problems than what might be implied by current bond ratings.”
  • The Texas senate approves a $211.4 billion biannual budget, which will need to be reconciled with the $209.8 billion House budget. Both budgets offer tax relief, but of different kinds.
  • The senate also zero funds two rogue agencies the Texas Racing Commission and the Travis County Public Integrity Unit. Expect Texas House Speaker Joe Straus, with deep ties to the gambling industry, to go to the mat to save the Racing Commission.
  • The Texas senate has also passed signifcant spending limit reform in Senate Bill 9.
  • CalPERS raises contribution rates by 6%.
  • California senate OKs yet another restrictive energy policy bill. Yet another in their continuing “Let’s send as much business to Texas as possible” acts…
  • Los Angeles Unified School District extends lavish employee benefits package another three years, despite existing underfunded liabilities. (Hat tip: Pension Tsunami.)
  • California sets aside $261 million for cost overruns on its already pricey high speed rail boondoggle.
  • California’s drought is something environmentalist liberal elites have brought on themselves: “Those who did the most to cancel water projects and divert reservoir water to pursue their reactionary nineteenth-century dreams of a scenic, depopulated, and fish-friendly environment enjoy lifestyles predicated entirely on the fragile early twentieth-century water projects of the sort they now condemn.”
  • More on the same theme.
  • San Diego builds a desalinization plant (Hat tip: Moe Lane.)
  • Central California is already starting to suffer water-related thefts.
  • In the wake of the Vergara ruling, California Republicans want to overhaul how teachers are hired and fired. Naturally teacher’s unions are opposed…
  • Judge rules that California must pay for sex change operations for prisoners on Eight Amendment grounds. “To contend that ‘forcing’ a prisoner to continue as a man violates the Constitution is absurd…It is nonsensical to grant imprisoned convicted felons health-care ‘entitlements’ that many law-abiding, hardworking taxpayers don’t enjoy.”
  • California prostitutes demand prostitution be legalized. You’d think they’d get a sympathetic hearing from California’s Democrat-controlled legislation, what with all they have in common… (Hat tip: Instapundit.)
  • Stanford student council candidate grilled over Colleging While Jewish. This could go in the regular LinkSwarm, but I noticed that both of these recent incidents took place in California.
  • Chicago Is Detroit Is California Is Greece

    Sunday, April 5th, 2015

    National Journal has a piece up by moderate lefty John B. Judis on all the problems plaguing Chicago.

    Perhaps more than any other major city in America, Chicago is facing a truly grave set of problems—problems that are essentially more extreme versions of the challenges confronting city governments across the country.

    But there’s a vital piece of information omitted from that sentence: “problems that are essentially more extreme versions of the challenges confronting city governments across the country run by the Democratic Party.” Though Republican cities are not immune to such problems, make no mistake that the very worst examples are cities run by the Democratic Party, most for a very long time (Detroit hasn’t had a Republican Mayor since 1962, Chicago since 1931), and most are in states with solid (if not overwhelming) Democratic Party majorities.

    The failure of America’s bankrupt cities is a microcosm of the failure of the Blue model of big government liberalism. And the reason I have spent so much time on covering California and Greece is that they are part of the same story: The failure of American liberalism is a microcosm of the bankruptcy of the welfare state, and the bankruptcy of the welfare state is a subset of the failure of socialism.

    The quandaries begin with Chicago’s dramatic social divide. To an even greater extent than is the case in, say, New York or Philadelphia, Chicago has become two entirely separate cities. One is a bustling metropolis that includes the Loop, Michigan Avenue’s Magnificent Mile, and the Gold Coast, as well as the city’s well-to-do, working-class, and upwardly mobile immigrant neighborhoods. The other Chicago consists of impoverished neighborhoods on the far South and West Sides, primarily populated by African-Americans. These places have remained beyond the reach of the city’s recovery from the Great Recession.

    As we have known since Charles Murray’s Losing Ground in 1984, welfare programs don’t lift the poor out of poverty, but keep them ensnared in it. Indeed, a cynic might observe that welfare programs are designed to create a voting clientele for the welfare state and the liberal party that runs it.

    The problem, as Mark Steyn put it, is that “the 20th century Bismarckian welfare state has run out of people to stick it to. In America, the feckless insatiable boobs in Washington, Sacramento, Albany and elsewhere are screwing over our kids and grandkids. In Europe, they’ve reached the next stage in social democratic evolution: There are no kids or grandkids to screw over.”

    As Steyn further noted:

    A government big enough to give you everything you want isn’t big enough to get you to give any of it back. That’s the point Greece is at. Its socialist government has been forced into supporting a package of austerity measures. The Greek people’s response is: Nuts to that. Public sector workers have succeeded in redefining time itself: Every year, they receive 14 monthly payments. You do the math. And for about seven months’ work – for many of them the workday ends at 2:30 p.m. When they retire, they get 14 monthly pension payments. In other words: Economic reality is not my problem. I want my benefits. And, if it bankrupts the entire state a generation from now, who cares as long as they keep the checks coming until I croak?

    The story of Detroit’s current bankruptcy is the story of Chicago’s coming bankruptcy, and the similar problems of California. All are dealing with bloated public sector pensions that are making their cities insolvent. All promised and spent money they didn’t have against their decedents, not realizing (or not caring) that the debt burden will ruin the worlds of those decedents before they could ever pay it off.

    The theme with all is that deficit spending destroys, and the only cure is to force governments to pare back the welfare state and stop spending money they don’t have. As the example of Greece shows, there reaches a point in welfare state dependency at which actually curtailing welfare state spending, even at the point of financial ruin, is politically impossible. The looting of the public treasury cannot be stopped because that looting is the only thing that holds left-wing coalitions in power anymore.

    One of the many reasons the Tea Party exists is to hold American politician’s collective feet to the fire to make sure the terminal phase of the welfare state Greece is now enjoying never gets that bad in America. (To this end, they’ve had the tiniest little glimmer of success.)

    Chicago is Detroit is California is Greece is, eventually, America. It’s all part of the same story, and one any voting public ignores at its peril.

    (Hat tip: Instapundit.)

    Texas vs. California Update for April 2, 2105

    Thursday, April 2nd, 2015

    Time for another Texas vs. California roundup. The Texas House passed a budget, but I haven’t had a chance to look at it in any detail yet…

  • Unemployment rates in February: National average is 5.5%, Texas at 4.3%, California at 6.7%.
  • Even though hiring slowed to 7,100 new jobs in Texas in February, it was still the 53rd straight month of positive job creation, and Texas added 357,300 new jobs over the preceding 12 months.
  • A report from the Dallas Fed goes into more details.
  • California institutes mandatory water restrictions due to drought. California is indeed suffering a horrific drought, but it’s imposition of or acquiescence to idiotic environmental restrictions (see also: Delta Smelt) have made things much worse.
  • Some have proposed free market solutions to California’s water problems.
  • Workers comp abuse at LAPD/LAFD. (Hat tip: Pension Tsunami.)
  • Add Richmond, California to the list of cities that have radically underfunded their public employee retirement plans. “The shortfall of $446 million works out to about $4,150 for every city resident.” (Ditto.)
  • San Bernardino reveals its bankruptcy deal with CalPERS. (Hat tip: Pension Tsunami.)
  • Volokh the Younger examines the legal framework around the California rule (“not only that public employees are entitled to the pension they’ve accrued by their work so far, but also that they’re entitled to keep earning a pension (as long they continue in their job) according to rules that are at least as generous”), as well as its practical effects:

    The California rule distorts what the salary/pension mix would otherwise be, given employer and employee preferences, and given the tax code as it is. Because underfunded pensions are a popular form of deficit spending, public employee compensation may already be too pension-heavy, and the rule makes it more so by freezing pensions in times of retrenchment. The incentive effects of the rule, given the political economy of government employment, may well exacerbate this tendency. And the possible theoretical reasons for preferring a pension-heavy mix don’t go very far in justifying this particular distortion.

  • California runs out of room on death row. Maybe they could subcontract to Texas…
  • Fresno’s deputy police chief busted on drug charges.
  • Texas vs. California Update for March 26, 2015

    Thursday, March 26th, 2015

    Time for another Texas vs. California roundup:

  • Forget all those snide liberal cracks about Texas’ public education system, since we have some of the highest graduation rates in the country.

  • “San Bernardino has defaulted on nearly $10 million in payments on its privately placed pension bond debt since it declared bankruptcy in 2012.”

    The missed payments illustrate the trend among cities in bankruptcy to favor payments to pension funds over bondholder obligations, which has increased the hostility between creditors and municipalities.

    San Bernardino declared last year that it intends under its bankruptcy exit plan to fully pay Calpers, its biggest creditor and America’s largest public pension fund with assets of $300 billion.

    The city continues to pay its monthly dues to Calpers in full, but has paid nothing to its bondholders for nearly three years, according to the interest payment schedule on roughly $50 million of pension obligation bonds issued by San Bernardino in 2005.

    If you’re a bank, a retirement fund, or a hedge fund, why on earth would you buy California municipal debt when there are safer alternatives? (Hat tip: Ace of Spades HQ Doom roundup.)

  • So how’s that San Francisco minimum wage law working out? Exactly like everyone who understands economics expected. “Some restaurants and grocery stores in Oakland’s Chinatown have closed after the city’s minimum wage was raised. Other small businesses there are not sure they are going to survive, since many depend on a thin profit margin and a high volume of sales.” Plus this: “Low-income minorities are often hardest hit by the unemployment that follows in the wake of minimum wage laws. The last year when the black unemployment rate was lower than the white unemployment rate was 1930, the last year before there was a federal minimum wage law.”
  • California’s Legislative Analyst’s Office suggests phasing out state health care for workers entirely.
  • California is dead last in spending transparency among the 50 states, with an F rating and a piddling score of 34. Texas ranks 13th with an A- and a score of 91. (Hat tip: Cal Watchdog.)
  • “North Texas gained an average of 360 net people per day from July 2013 to July 2014, a testament to the job-creating machine in the Lone Star state, according to the U.S. Census Bureau…North Texas and Houston were the only metropolitan areas to add more than 100,000 people during that one-year period.”
  • Just because California has some of the highest taxes in the nation doesn’t mean that the state’s Democratic legislature doesn’t want to add still more.
  • Meanwhile, the Texas Senate just passed a $4.6 billion tax cut.
  • California is rolling out more subsidies for Hollywood.
  • The Los Angeles Department of Water and Power not only has the highest employe costs in the country, it also ranks last in customer satisfaction. (Hat tip: Pension Tsunami.)
  • While Texas is certainly in much better shape than California on public employee pensions, things here are not entirely cloudless either. “The Texas Employee Retirement System is reporting unfunded liability of $14.5 billion in 2014, compared with liability of just $6.3 billion in 2013. By comparison, all of the state government’s general obligation debt as of 2013 was $15.3 billion. The Texas Law Enforcement and Custodial Officer Supplemental Retirement Plan is reporting unfunded liability of $673.1 million in 2014, compared with $306.7 million in 2013.”
  • Unlike California, Texas looks to get ahead of the curve on pension concerns with House Bill 2608, which restores control of pension funds to the local level by eliminating legislative approval for pension changes. I”nstead of locking up significant benefits in state statute, HB 2608 would allow city pension systems, like the Houston Firefighters’ Relief & Retirement Fund, to solve pension problems at the local level by changing benefit structures, if they so chose.”
  • “Support for the “bullet train” is ebbing across California, except, perhaps, in the Governor’s mansion.”
  • California raisin packer West Coast Growers files for Chapter 11.
  • American Spectrum Realty, a real estate investment management company that operates self-storage facilities under the 1st American Storage brand, has somehow managed to file for bankruptcy in both California and Texas. I think it’s safe to say that financial shenanigans are involved…
  • Lawsuit over misappropriated funds in a Napa Valley winery leads to a murder/suicide. It’s one of those stories that sounds too strange not to link to…
  • Eurocrat Summarizes Greek Problem

    Monday, March 23rd, 2015

    Sure, Jose Manuel Barroso, the former president of the European Commission, is a self-interested Eurocrat, but here he provides a nicely concise statement of the obvious concerning Greece’s problems

    Greece’s problems can be laid at its own door and the country needs to provide a clear commitment to reform to reach an agreement with its creditors, Jose Manuel Barroso, the former president of the European Commission, told investors in Hong Kong.

    “The Greek people went through extremely difficult moments, hardship. But these difficulties of Greece were not provoked by Europe,” Barroso said in an address at the Credit Suisse Asian Investment Conference in Hong Kong.

    “It was provoked by the irresponsible behavior of the Greek government.”

    “The situation of Greece is the result of unsustainable debt that was created by the Greek government, mismanagement of their public finances, huge problems with tax evasion and tax fraud [and] problems of the administration,” he said, noting that the country had also misled the European Union by filing false figures on its economy.

    A nice statement of the problem. To which I can only add: And Greece continues to compound the problem, because it refuses to reduce government spending to match receipts. And it refuses to do because it’s welfare state is unsustainable.

    All this talk of bailouts, relief, reparations, agreements and grexits is just filigree on the essential problem: Greece’s government spends more money than it takes in and refuses to change its ways.

    Texas vs. California Update for March 12, 2015

    Thursday, March 12th, 2015

    Time for another Texas vs. California update:

  • In a worst-case scenario, CalSTARS and CalPERS might need an additional $50 billion a year between them to stay solvent.
  • If you haven’t taken a look at my piece on Stockton’s latest boondoggle, you probably should.
  • A new ballot initiative to cut California public employee pensions is due out in May, lead by former San Jose Mayor Chuck Reed, a Democrat.
  • Even Jerry Brown’s timid pension reforms are evidently too much for the Obama Administration, which is holding up funds over them.
  • A rare bit of good municipal news out of California, as Rancho Mirage declares that they’re debt free. (Hat tip: Pension Tunami.)
  • Prime Health Care pulls out of Daughters of Charity hospital acquisition. California Attorney general Kamala Harris may have just insured those hospitals will close instead.
  • Texas population to explode. (Hat tip: Push Junction.)
  • Land acquisition for California’s high speed rail boondoggle isn’t going swimmingly.
  • Malibu Golf Club files for Chapter 11. “An attorney for Malibu Associates said the company closed the golf club after defaulting on a $47-million loan from U.S. Bank, which has begun foreclosure proceedings.”
  • “In February, the Berkeley Health Center, a clinic that provided medical services to low-income patients, closed down in the wake of serious financial troubles, including allegations that it had mismanaged public funds.” They also left behind sensitive patient records…
  • Calfornia hikes water rates. Millions for the delta smelt, not one blue drop for you to drink…
  • Monolith Semiconductor relocates from Ithaca, New York to Round Rock.
  • Previously Bankrupt Stockton Suddenly Has Enough Money for an Affordable Housing Development

    Tuesday, March 10th, 2015

    As part of my regular Texas vs. California updates, I’ve been keeping close tabs on the city of Stockton, which just emerged from bankruptcy proceedings last month.

    So what’s one of the first thing Stockton does after exiting bankruptcy? Would you believe spending $14 million for 40 units of affordable housing? For a city that owes $1.6 billion in pension debt to CalPERs, that’s like someone who can barely afford food deciding to buy spinning rims for his 19-year-old Civic.

    To my mind, this has all the hallmarks of a politic payoffs.

    The project would evidently entail “renovation of the 123-year-old Cal Weber Building and the 88-year-old McKeegan Building.”

    Who controls the Cal-Weber building? Dan Cort.

    Who controls the McKeegan building? Dan Cort.

    Who’s Don Cort? A Stockton commercial real estate developer and “urban renewal expert.” He was also Mayor of Pacific Grove (which is a good two and a half hours away from Stockton) until he resigned in advanced of a recall election in 2009. Pacific Grove, like many California cities, got in financial trouble due to outrageous public employee pension costs, and bond debt to cover same.

    Is Cort tied-in to Stockton’s City Council? Given that six of the seven members, including the Mayor and Vice Mayor, are among Cort’s Facebook friends, I’m going to answer “Yes.” (The seventh, Dan Wright, has only been in office since January.)

    None of this is conclusive proof that underhanded financial shenanigans and/or kickback are going on. But it is an indication that reporters, bloggers and Stockton taxpayers should be taking a good, hard look at this project.

    Also, I can’t imagine that Franklin Templeton, the mutual fund company and Stockton bondholder which was forced to take a haircut in bankruptcy hearings can be too happy about it either…

    LinkSwarm for February 27, 2015

    Friday, February 27th, 2015

    Welcome to the Friday LinkSwarm, where two themes are jihadis enjoying the benefits of the welfare state, and Hillary Clinton enjoying treating campaign finance laws as “optional suggestions.”

  • 96% of Australian jihadis who joined the Islamic State were on welfare.
  • Sweden’s national job agency fires its entire network of “immigrant resettlement assistants” because they were finding them jobs with the Islamic State.
  • And the hits keep coming: Swedish expert on “Islamophobia” now fighting for the Islamic State.
  • Another day, another 24 people murdered by jihad in Nigeria. (Hat tip: Jihad Watch.)
  • “If it bleeds, it leads”? Not when it comes to gang rapes in Muslim countries.
  • What the hell? Terrorism trials come to a halt after the Obama Administration orders military judges to move to Guantanamo Bay until the trail is finished.
  • How one Nebraska woman lost her health care three times thanks to ObamaCare.
  • Dana Milbank is very, very upset that Scott Walker isn’t biting on liberal gotcha questions. Oddly enough, I don’t think this concern extends to Hillary Clinton ducking Benghazi questions…
  • Speaking of Hillary, blind Chinese activist Chen Guangcheng says that, despite her boasts to the contrary, Hillary didn’t do squat to help him. (Hat tip: Moe Lane.)
  • The Clinton Foundation took millions of dollars in donations from foreign donors while Hillary was Secretary of State. Maybe Hillary thinks every 3 AM call is a chance to ask for more money… (Hat tip: Instapundit.)
  • Related tweet:

  • Hillary-linked firm: Campaign finance laws are for the little people.
  • “Barack Obama has a great, big, heaping dose of Holden Caulfield in him.” So he’s an annoying, whiny loser…
  • “Every Obama speech has a villain, and that villain is often other Americans who disagree with the president.”
  • So Turkey isn’t willing to lift a finger to save Kurds or Yazidis, but they’re willing to invade Syria to protect an Ottoman tomb.
  • Mike Rowe defends minimum wage jobs and says why there’s no such thing as a “bad job.” “Work is never the enemy, regardless of the wage. Because somewhere between the job and the paycheck, there’s still a thing called opportunity, and that’s what people need to pursue.”
  • The PLO and the Palestinian Authority have been found liable in terrorism jury trial. Does this mean funds can be garnished directly at the UN? (Hat tip: Legal Insurection.)
  • Did you know that there was a prison riot at a Texas illegal alien holding facility?
  • Allah: The worst communicator ever:

  • Liberals are shocked that college “study centers” designed to attack Republicans are being closed by Republican legislators. “Mr. Nichol said the center’s only agenda was to raise the profile of poverty in the state through research, teaching and advocacy.” One of these things is not like the others. Research and teaching are fine. Do your “advocacy” on your own time and dime, not the taxpayers.
  • Given the (obvious) news that the Justice Department wouldn’t be indicting George Zimmerman, Legal Insurrection took it upon themselves to review all the myths around the George Zimmerman/Trayvon Martin trial.
  • Chicago has it’s own secret black site prison. It’s almost like it’s a corrupt one-party police state…
  • Wikipedia: “Alexis Tsipras is a Greek politician who is the 186th Prime Minister of Greece since 26 January 2015.” By my calculations, that works out to about 5 Prime ministers a day…
  • UCLA strives to make its council Juden Frei.
  • Anti-antisemitism amidst the yobs:

  • Got to admit: That’s one hell of an effective personals photo:

  • Texas vs. California Update for February 26, 2015

    Thursday, February 26th, 2015

    Time for another Texas vs. California roundup:

  • CalPERS believes that it has police powers to seize property to sell to support public employee pensions. “It is hard to imagine a bigger or more blatant example of collusion between business interests and government employees at the expense of ordinary private citizens.” Plus the impossibility of maintaining the 7.5% returns necessary for the pension fund to remain solvent. (Hat tip: Pension Tsunami.)
  • CalPERS and CalSTARS want direct proxy access for candidates for corporate boards.
  • Speaking of CalSTARS, the cost of funding it going forward looms large on California’s horizon.
  • Stockton exits bankruptcy.
  • Daughters of Charity Health Systems sues the SEIU over interference in a merger deal.
  • Part of the demands from California’s liberal Democratic Attorney General Kamala Harris to approve the merger include forcing currently Catholic hospitals to perform abortions.
  • It’s all but impossible for the Middle Class to live in Silicon Valley.
  • West coast port strike ends. Yet another reason to ship through Houston instead…
  • Texas Lt. Governor Dan Patrick files a bill for $4.6 billion in tax relief.
  • Texas Right to Work laws help keep the state prosperous, but more can be done.