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Daily Digest 12/22 - Deadbeat Governments, Is Debt The New Addiction?

Sunday, December 22, 2013, 11:00 AM
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Is Debt the New Addiction? (westcoastjan)

Here's an example: a homeowner has a $250,000 mortgage that is amortized over 40 years with an interest rate of 5 per cent, with monthly payments of $1,197.01. Now, if the mortgage had been amortized over 25 years instead of 40, the payments would have been $1,454.01. If you were able to pay the 25 year rate of $1,454.01, you would have had no problem purchasing a more expensive house amortized over a longer period. A $300,000 mortgage at a 5 per cent interest rate and amortized over 40 years gives you payments of $1,436.41, which stacks up awfully close to the $250,000 mortgage over 25 years.

Budgeting By Stealth (westcoastjan)

Surplus budgeting is a worthy goal; however, the means by which the Government gets there has to be transparent. Increasing El premiums beyond sustainment and reducing eligibility is not transparent. Sale of undisclosed assets is not transparent. Lapsing budgets by stealth is not transparent.

Deadbeat Governments (westcoastjan)

Governments also got in the habit of promising workers higher pensions in the future so that they would accept lower wages in the present. To make matters worse, whenever pension funds looked especially robust public employees lobbied for higher pensions, and politicians were all too willing to grant them. In 1999, at the height of the tech bubble, California retroactively increased benefits for every government employee by twenty-five to fifty per cent. This was terrible policy. As Munnell says, “You have to put aside the excess return you earn in good times to cover your costs when the bad times hit.” But lots of states did similar things. Even more egregious, Detroit’s pension fund routinely sent bonus payments to retirees whenever it had a good year. This weakened the fund and increased the burden on taxpayers, but, since pension accounting is eye-glazingly dull, few complained.

Retirement myths that just won’t die (westcoastjan)

Endless free time, holidays that don’t lead to overflowing email boxes and years and years of time to do whatever you’d like—and yes, maybe some concerns about staying healthy and having enough money to live on?

But when it comes to actually living in retirement, some of what we believe to be true can turn out to be more fiction than reality.

NSA Data Mining: Do Americans Care About The Privacy Of Our Metadata? (jdargis)

In modern society, individuals, for practical reasons, have to use banks, credit cards, e-mail, telephones, the Internet, medical services, and the like. Their decision to reveal otherwise private information to such third parties does not reflect a lack of concern for the privacy of the information, but a necessary accommodation to the realities of modern life. What they want — and reasonably expect — is both the ability to use such services and the right to maintain their privacy when they do so. As a matter of sound public policy in a free society, there is no reason why that should not be possible.

Data brokers won’t even tell the government how it uses, sells your data (jdargis)

The report harkens back repeatedly to the good old days of data collection, when many of the same companies queried used demographic information like zip codes to help marketers figure out where to send catalogs or area codes to figure out which towns to telemarket to. These days, our many interactions with the Internet—particularly financial ones—have resulted in an onslaught of data for these data brokers to not only collect, but to resell to interested parties.

Subtract Teachers, Add Pupils: Math of Today’s Jammed Schools (jdargis)

Across the country, public schools employ about 250,000 fewer people than before the recession, according to figures from the Labor Department. Enrollment in public schools, meanwhile, has increased by more than 800,000 students. To maintain prerecession staffing ratios, public school employment should have actually grown by about 132,000 jobs in the past four years, in addition to replacing those that were lost, said Heidi Shierholz, an economist at the Economic Policy Institute in Washington.

Algae go in, biocrude oil comes out (jdargis)

The process started with a near-solid slurry of single-celled algae that grow rapidly in tanks. This raw material was sent through a number of tanks where it was pressurized and warmed using waste heat from the main reaction tank. Solids (mostly calcium phosphate) and sulfur were removed before the material entered the reaction chamber, where it met the hydrogen and a catalyst (ruthenium). The ensuing reactions used the hydrogen to remove oxygen from sugars, break down double bonds, and convert any nitrogen into ammonia.

Gold & Silver

Click to read the PM Daily Market Commentary: 12/22/13

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