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Posts Tagged ‘Budget’
Mid-Day Cyprus Bailout Update for March 26, 2013
Tuesday, March 26th, 2013Lessons from the Cyprus Bailout
Tuesday, March 26th, 2013So the Cyprus crises is “solved,” for values of “solved” that means “everyone but bankers and Eurocrats get screwed.”
The European cradle-to-grave welfare state is unsustainable. It’s only a matter of how many trillions will be destroyed before the world is willing to face that fact.
Quick Cyprus Update for March 21, 2013
Thursday, March 21st, 2013Cyprus crisis is a miniature version of the Greek crisis, and the Greek crisis is a miniature version of Europe’s crisis. The scale and details differ, but the underlying problem is mind-numbingly familiar: People spending too much of other people’s money with too little accountability. Cyprus bank bailouts are unsustainable in the same way that Greek government bailouts are unsustainable in the same way that the European cradle-to-grave welfare state is unsustainable.
How could it have been avoided? The same way any of the multitudes of financial crises that have rocked Europe in last several years could have been avoided: Don’t spend money you don’t have. That solution is both blindingly obvious and completely unacceptable to the Eurocratic elite (as well as our own liberal ruling class). After all, the bloated welfare state is where they get theirs. Nothing can be allowed to come between the permanent ruling class and their perks. Nothing.
Some current Cyprus news:
Once Greece hit the skids in 2010, it was inevitable that Cyprus would follow. Already by 2011 the government was effectively prevented from selling bonds by a junk credit rating. It resorted to a €2.5 billion ($3.2 billion) loan from the Russian government, due in 2016. The killer, though, was the pact reached in October 2011 to reduce the value of Greek government bonds by 70 percent. That produced a loss to the Cyprus banks of more than €4 billion—the same in proportion to the economy’s size as a $4 trillion loss in the U.S. President Demetris Christofias, seemingly not realizing the severity of the blow, agreed to the haircut without seeking offsetting aid for Cypriot banks. He eventually sought a bailout, but, befitting a left-wing politician who earned a doctorate in history in the Soviet Union, dragged his heels on cutting government spending while inveighing against the “troika” of the European Union, the European Central Bank, and the International Monetary Fund. Losses mounted.
Texas vs. California Update for March 20, 2013
Wednesday, March 20th, 2013Time for another Texas vs. California roundup! Just imagine how the MSM would crucify Rick Perry if the head of, say, the Texas Teacher’s Retirement System were indicted on multiple counts of felony fraud…
A grand jury in San Francisco charged Federico Buenrostro Jr. and Alfred Villalobos, and they were booked and released on bond Monday after briefly appearing in court.
Buenrostro, 64, served as CEO of the California Public Employees’ Retirement System from late 2002 until June 2008. Villalobos, 69, served on the CalPERS board and is a former vice mayor of Los Angeles.
The indictment alleges the two conspired to fabricate documents that certified to federal regulators that Villalobos’ firm had obtained required “investor disclosure letters” from CalPERS to serve as a “transfer agent.” The indictment charges that the falsified documents allowed Villalobos to reap $14 million in fees for serving as a middleman between CalPERS and a prominent investment firm handling $3 billion in CalPERS’ money.
Today’s Mid-Day Cyprus Roundup
Tuesday, March 19th, 2013Update: REJECTED!
Imagine a basketball being swatted back into Angela Merkel’s face…
A few updates on yesterday’s Cyprus bank deposit seizure story.
The EU creditor states have at a single stroke violated the principle that insured EU bank deposits of up $100,000 will be guaranteed come what may, and in doing so they have more or less thrown Portugal under a bus.
They have demonstrated that the rhetoric of EMU solidarity is just hot air, that they will not force their own taxpayers to share a single cent of clean-up costs for the great joint venture of monetary union – in which northern banks, insurers, pension funds, and indeed governments, were complicit.
Their refusal to pay is entirely understandable in one sense – and if I were a German taxpayer, I would not care to swallow these losses either – but then the leaders of these creditor countries can hardly expect the world to believe that they will in fact do whatever it takes to hold EMU together. Quite obviously, they will not.
The sooner this is made clear, the better. The sooner they take the proper course of withdrawing from EMU and organise the break-up the euro in the least disruptive way, the sooner Europe can recover.
It Begins
Monday, March 18th, 2013Chances are pretty low that you haven’t heard that the EU has decided to seize portions of people’s bank accounts in Cyprus as a condition of a bank bailout:
When Cyprus’s banks reopen on Tuesday morning, every depositor will have some of his or her money seized. Accounts under 100,000 euros will have 6.75% of the funds seized. Accounts over 100,000 euros will have 9.9% seized. And then the Eurozone’s emergency lending facility and the International Monetary Fund will inject 10 billion euros into the banks to allow them to keep operating.
It’s hard to express in words just how bad an idea this is. Europe has truly crossed the Rubicon.
“The establishment of the principle that a government can, and at times of economic strain must, help itself to your savings, and that this is a legitimate tool of statecraft, ought to provoke riots.”
I’ll go further: riots are not enough.
If I were one of the people having my wealth confiscated, the proper response to such actions would be join an angry mob hanging the still-twitching bodies of the people who proposed and passed such a measure over the nearest lightpost.
Think it can’t happen here? Remember, liberals have already floated the idea of seizing your 401K.
The Eurocrats in Brussels have already decided that they would prefer to seize people savings rather than let the Euro fail, or admit that the European cradle-to-grave welfare state is unsustainable. “The dream of political union matters more to Europe’s governing caste than the well-being of the people they represent.”
I didn’t post anything yesterday because I was trying to figure out how much money I should put into gold and silver to get ahead of the European bank runs I half anticipated. Indeed, in this case such bank runs would etirely rational But they haven’t started outside Cyprus itself.
Yet.
Quick Impressions from the TPPF Conference Call for 3/11/13
Monday, March 11th, 2013Some very quick and exceedingly brief impression of today’s TPPF conference call with Mario Loyola and Arlene Wohlgemuth:
I said brief…
LinkSwarm for March 5, 2013
Tuesday, March 5th, 2013Had a busy weekend, so here’s a late LinkSwarm:
California: More Boning
Friday, March 1st, 2013Naturally the day after I post my usual Texas vs. California update, I see this five part California in Crisis series by Conn Carroll in The Examiner.
The first part is a general overview.
In his state of the state speech, Brown claimed, “California lost 1.3 million jobs in the Great Recession, but we are coming back at a faster pace than the national average.” The first half of Brown’s statement is true, but the second half is not. California has only gained back 556,000 jobs since the recession ended, or 42 percent of those lost — well below the national average of 60 percent regained. As a result, California’s unemployment rate is still near double-digits at 9.8 percent. By comparison, Texas, which lost 427,000 jobs during the recession, has gained them all back and created an additional 265,000.
California is no longer a model that other states want to or should emulate. It currently has the nation’s third highest unemployment rate, its highest poverty rate and more than one-third of the nation’s welfare recipients.
What happened?
To make a long story short, the same political constituencies that have made Brown’s Democratic Party invincible at the ballot box have also made the state unable to compete economically. California public employees, who are represented by the nation’s most politically powerful government unions, benefit from some of the nation’s most generous compensation packages. These unions have made it nearly impossible to keep spending down, thus making debt and higher taxes inevitable.
These unions also make it impossible to improve how government services are delivered to taxpayers. As a result, while California once had the most admired education system in the nation, it now ranks near the bottom in almost every measured educational category.
The state’s powerful environmental lobby has secured a slew of green energy regulations, including strict clean air rules, the nation’s first carbon cap-and-trade program and an ambitious renewable energy mandate. As a result, energy prices have shot up, consumers now have less to spend on everything else they need to survive, and many manufacturers can’t stay profitable in the state.
Finally, wealthy urban environmentalists have completely inverted the infrastructure spending priorities that once made California an engine of economic and population growth. Endangered species of wildlife are now favored over farmers and food. Highways and suburbs are losing out to mass transit and urban centers. The emerging result is a disappearing middle class, and what’s left of the state is split between a highly educated, landed, wealthy and elderly elite, and a poor, government-dependent, uneducated lower class.
The second part goes into how Jerry Brown’s budget surplus is illusory: “Since the recession began, governors’ budget projections have overestimated revenue by an average of 5.5 percent. Apply that average to Brown’s 2013 projections, and California’s budget would suddenly go from $1 billion in the black to $3.9 billion in the red.”
Also:
California is controlled by the Democratic Party, and the California Democratic Party is controlled by the state’s government employee unions. You can’t win a statewide election there without at least the tacit approval of those unions. And for decades, the cost of their friendship has been protection from spending cuts in lean times and generous retirement package increases in good times.
Further:
Throughout the 1990s and 2000s, government unions at the state level won huge increases in retirement benefits, including a lowered retirement age and more favorable benefit formulas. As a result, the state’s two biggest retirement funds, the California State Teachers’ Retirement System, or CalSTRS, and the California Public Employees’ Retirement System, or CalPERS, are both underfunded by $64 billion and $52 billion respectively. According to a recent report, Brown would need to spend an additional $4.5 billion per year just to make CalSTRS solvent.
The third part focuses on California’s expensive-yet-failing education system, while the fourth and fifth parts deal with green delusions. Including this gem: “fewer than 2,500 green jobs have been created in California since 2010.”
There’s not a whole lot that will be unfamiliar if you’ve been following my Texas vs. California updates, but it’s a very solid overview series. And yes, Texas gets a mention.
Read the whole thing.
Instapundit’s Favorite Word
Tuesday, February 19th, 2013See if you can fill in the blank for the following headline:
“Homebuilder Confidence in U.S. BLANK Fell in February”
Having trouble? Try again with the first sentence
“Confidence among U.S. homebuilders BLANK dropped in February from a more than six-year high, a sign the real-estate market will take time to accelerate.”
If you’ve been reading Instapundit for any length of time, you know exactly what the word replaced with BLANK is. And that word is “unexpectedly.”
Gee, how could anyone possibly have seen that continued high unemployment and an economy that is shrinking might negatively impact the housing market? (And of course, when the economy shrank, the shrinkage happened “unexpectedly.”)
Obama and friends keep trying and trying neo-Keynesian pump-priming and keep getting the same results: economic stagnation. While trying the same thing over and over again and expecting different results is the definition of madness, that doesn’t matter to them, since it allows them to continue the payoffs to cronies and interest groups that keep the Big Government Class in power (and rolling in taxpayer dough). Germany and Estonia performed no or minimal “stimulus” deficit spending and their economies are growing again. Obama and congressional Democrats have taken the opposite tack: Keep pouring money down the big government rathole and hope that results this year won’t be identical to the last four. My prediction: higher deficits, continued high unemployment and continued economic stagnation.
And each and every negative economic indicator the media will report as arriving “unexpectedly.”
Expect it.