Daily Digest

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Daily Digest 11/8 - Aftermath Of A Crisis, The Drought Of 2012 In Pictures

Wednesday, November 7, 2012, 8:12 PM

Economy

Aftermath Of A Crisis (Nervous Nelly)

Right after the financial crisis happened in 2008, sociologist Manuel Castells convenes the Aftermath Network, an international group of intellectuals who will analyze the crisis as it is unfolding. They think it is not just a financial crisis, but a social crisis as well, bringing about a fundamental transformation of societies at large.

112-year-old Pennsylvania apparel maker to close (Thomas C.)

FesslerUSA had survived war and depression, free trade and foreign imports, producing millions of knitted garments from its base in eastern Pennsylvania. Five years ago, third-generation owner Walter Meck and his family were feeling so good about the company's prospects they doubled capacity, moving into a former pencil factory outside the small town of Orwigsburg.

They were still setting up shop in the new place when the Great Recession hit.

Storm Sandy: New York inquiry into overpricing (westcoastjan)

And there was some good news for the region's beleaguered public transport-users. A limited Path train service between Jersey City and Manhattan is due to resume on Tuesday morning, Port Authority officials have announced.

Mourning The Vanishing Greece Of My Childhood (westcoastjan)

Debts are rising, the economy is shrinking. There is high unemployment, an increase in drug use, depression and prostitution. People have been filmed foraging for food in bins after dark, and schoolchildren are reported to have collapsed from malnutrition. It seems a long way from the pretty pictures on dusty postcards at stalls beneath the Acropolis.

In B.C., energy companies forgot about the ‘social licence’ (westcoastjan)

Historically, an NEB approval was the biggest rubber stamp in the drawer, encircling the interests of all Canadians . At the end of the arduous process, the validation of conscientious safety practices, stringent environmental protection, enhanced economic value and overall social benefit delivered a stamp on the applicant’s licence that confidently said, “APPROVED.”

Blame and shame in Ireland over financial crisis (westcoastjan)

Former US bank regulator and criminologist Prof Bill Black, who was responsible for aiding prosecutors during America's savings and loans crisis of the 1980s, is a regular at Kilkenomics. He would like to see many more financiers in Ireland and beyond prosecuted for what went wrong in the run up to the 2008-9 financial collapse.

Greece austerity vote: Will it secure Greece's future? (westcoastjan)

With the left-wing and socialist members of the fragile coalition government wavering, Mr Samaras has insisted that these cuts will be the "very last", with the only other option a eurozone exit leading to what he has estimated would be an 80% drop in the standard of living.

Why are we bailing out the banks? – Part Four – What happens now? (Thomas C.)

I argued that one of the legion problems with this world view is the fact that whatever the ideology says should happen, the reality is that giving money to the banks for them to invest has simply not worked. It was never going to work because it is founded on a misapprehension about the nature and business of modern banks. Namely – that they invest for growth. They do not – certainly not in the broader economy during a recession. Banks used to ‘invest’. Today they much prefer to speculate. Investing is long and slow and does not make big bonuses. Speculating on food prices, currency fluctuations and sovereign debt, lending for leveraged, debt ladened buy-outs - now these things can all provide the quick returns and big bonuses which old fashioned investment does not.

The Aftermath of Hurricane Sandy, A Long Term
View
(Tall)

I want to ask a question here. We built
all this infrastructure in this country - the roads, the bridges, the dams
and so on - why can't we maintain them? It is fundamentally because our
culture does not understand what wealth is.

The Drought Of 2012 (westcoastjan)

A dead fish lays several feet from the water in Lake Corpus Christi near Mathis, Tex., as the lake continues to shrink due to this year's drought. The city of Corpus Christi is thinking of mandatory water conservation restrictions, which could be in place by mid-September unless Corpus Christi's lakes receive rain.

Article suggestions for the Daily Digest can be sent to dd@peakprosperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

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saxplayer00o1
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saxplayer00o1
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$5 Trillion Price Tag for Public Pensions

"As strapped state and local governments scramble for ways to balance their budgets, it's become very clear that it will be impossible for many to honor their pension promises to new employees and even current retirees. According to a recent economic study, the cost to fully fund these promises would cost taxpayers $5 trillion over a 30-year period, or nearly $1,400 a year in higher state and local taxes and fees for every household in the country.

Put another way, contributions to pay for public employees' retirement benefits now total 5.7 percent a year of all state and local taxes, fees, and other government charges. "Government contributions to state and local pension systems must rise to 14.1 percent" to produce fully funded pension systems, the study said, and it will take 30 years to get there."

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Debt Ceiling Complicates a Tax Shift

"Come January, should Congress fail to act, the United States will face more than immense tax increases and spending cuts. It will also run out of room to finance its large running deficits. The Treasury Department expects the country to hit its debt ceiling, a legal limit on the amount the government is allowed to borrow, close to the end of the year. That would give Congress only a matter of weeks to raise the ceiling, now about $16.4 trillion, before sending financial markets into a panic. "

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Wendy S. Delmater
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California's Liberal Supermajority

California's Liberal Supermajority: Taxpayers are going to get all the government they ever wanted. (WSJ)

Lawmakers have been borrowing and deferring debts for the past decade merely to close their annual deficits, and those bills will soon come due. The legislature has raided $4.3 billion from special funds and deferred $10 billion in constitutionally required payments to schools.

The state has also borrowed $10 billion from Uncle Sam to pay for jobless benefits and $313 million this year from the state disability insurance trust fund for debt service on those federal loans. Then there's the more than $200 billion in unfunded liabilities the state has accrued for worker retirement benefits, which this year cost taxpayers $6.5 billion. The California State Teachers' Retirement System says it needs an additional $3.5 billion and $10 billion annually for the next 30 years to amortize its debt. Plus

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rhare
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Stupidity in California (guess it's everywhere)

safewrite wrote:

The California State Teachers' Retirement System says it needs an additional $3.5 billion and $10 billion annually for the next 30 years to amortize its debt.

Wow - that's an amazing figure.  That's ~ $725/household/year in CA (13.7M households) just for Teachers retirement - what about all the other retirees?  (So 1% of the population (400K teachers, 37M population) expects the other 99% (everyone else) to pay 1+% ($725/57K) of their household income a year to support them.  Hmm, perhaps people are complaining about the wrong 1%! devil

There are an awful lot of really smart people in California behaving exceptionally stupid.  Too many people that know technology and finance but not basic math, perhaps the teachers planned it that way!

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saxplayer00o1
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Quercus bicolor's picture
Quercus bicolor
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rhare wrote:safewrite

rhare wrote:

safewrite wrote:

The California State Teachers' Retirement System says it needs an additional $3.5 billion and $10 billion annually for the next 30 years to amortize its debt.

Wow - that's an amazing figure.  That's ~ $725/household/year in CA (13.7M households) just for Teachers retirement - what about all the other retirees?  (So 1% of the population (400K teachers, 37M population) expects the other 99% (everyone else) to pay 1+% ($725/57K) of their household income a year to support them.  Hmm, perhaps people are complaining about the wrong 1%! devil

There are an awful lot of really smart people in California behaving exceptionally stupid.  Too many people that know technology and finance but not basic math, perhaps the teachers planned it that way!

And here's an article that gives a hint at how that would change if a more reasonable rate of return was expected (4% vs. 7.75% in this case):  Voila!  Another $94 Billion in funding required over 30 years.  At 4% interest, that would require about another $5 Billion a year for a total of $15B.  So that's about 1.9% of total household income to pay for just the retirement of just 1.1% of the population.  At that rate, the entire population needs about 180% of it's income just to pay for it's retirement.  Of course, everyone will starve to death and be in debt about 30 years worth of household income by the time they retire!

(edited to add missing link to Sacramento Bee Article)

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