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Thread: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

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    Default "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    Anyone see "60 Minutes" last night ? The "Day of Reckoning" arrived well over a year ago in both California and Illinois. Just to mention two of the states in the worst shape. Absolutely NOTHING new in the story at all except a bit of comic relief if you watched and listened carefully. The public employee unions in N.J. had the amazing gall to blame Christie for not funding their pensions !! Rotflmao ! The guy has only been in office less than a year. CORZINE and McGREEDY were the worst offenders in robbing the pension funds. Christie was the FIRST Governor in memory to tell them the truth that the pension funds are BROKE !

    This story has been around for YEARS ! and "60 Minutes" finally got the memo ? Meredith Whitney has been warning investors away from state and muni bonds for quite some time. Some of these state and local humps seriously expect a Federal bailout ? They only realize NOW that it's never gonna happen. Obama and Biden were telling them a year ago NOT to expect Federal bailout help.
    The BEST they can hope for is long overdue Federal legislation for a fast track "Bankruptcy in all but name" for states. Put the cotton in your ears. The caterwauling from the unions when their pension and benefit deals get ripped up will be tough to take otherwise.

    How long do you wanna bet this story was in the can before CBS decided to air it ?

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    Default Re: "60 Minutes" Finally Catches Up

    ^^^ yup a planned federal bailout of bankrupt blue states has been 'baked into' state credit ratings and muni bond ratings / interest rates for the last two years. Ironically, these states are still receiving 'stealth' federal bailout money ... by obscure mechanisms from Build America Bonds to Federally subsidized student loans for State college tuitions, to infinite 'loans' to bankrupt state unemployment insurance funds, to block grant money 'handouts'. And based on the november election results, there is no fear whatsoever that continuing the blue state policies of the last two years could ever have truly negative results ( i.e. California just passed the nation's first carbon cap and trade regulations ! ).

    Maybe this is why Webster's Word of the Year for 2011 is AUSTERITY. So far California and Illinois have stiffed 'private sector' suppliers of goods and services via issuing IOU's or simple refusal to pay in a timely manner. Those 'private sector' suppliers have been borrowing money in order to stay in business hoping that they eventually will receive payment due from the states. At some point, there won't be any 'private sector' suppliers remaining that are willing to deal with these states on anything but a cash basis. Similarly, muni bond investors are starting to get extremely nervous that an implied federal guarantee against state muni bond default won't materialize ... causing state borrowing costs to increase ( which only exacerbates state deficits ) and making it impossible for states to borrow additional money via new muni bond sales.

    Of course, in the short term, these states still have the 'union recommended' option of raising state tax rates ... which they are doing with a vengeance. However, the higher the differential rises between effective state tax rates in CA or IL versus TX or NV, the more likely it is that people and businesses that actually pay taxes will remain in the more expensive states. Of course, people who DON'T actually pay taxes WILL remain ... collecting oversized green energy subsidies, oversized unemployment checks, and oversized social welfare benefits !

    At some point state gov't employees and state social welfare recipients will have to learn how to pay their bills with IOU's instead of cash money ! Stand by for a long, hot summer !!!

    Indeed it is interesting that the matter has now progressed to the point were even CBS and the NY Times would devote significant air time / above the fold print space to this subject. However, as I have already posted in other threads, many of the 'gold foil hat' crowd consider blue state bankruptcies to be the #1 'trouble' issue of 2011 !
    ~
    Last edited by Melonie; 12-20-2010 at 04:05 PM.

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    Default Re: "60 Minutes" Finally Catches Up

    Government austerity in our current situation is the exact opposite of the correct action to take. Of course those economists whose ideas caused the Great Depression II will disagree.

    60 Minutes typically works on a story at least 3-6 months before it airs, unlike what the less expensive news magazines do.

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    Default Re: "60 Minutes" Finally Catches Up

    Government austerity in our current situation is the exact opposite of the correct action to take.
    That's exactly what the governors of already broke blue states are saying !!! They are hoping to receive federal bailout funds to help balance their budgets ... thus allowing them to continue paying exorbitant salaries and benefits to state gov't employees, and to continue handing out generous social welfare benefits ... that will eventually be paid for by the children of red state citizens as well as the children of blue state citizens !

    Unfortunately for those broke blue state residents, just like Greece and Ireland versus France and Germany, broke blue states like California and Illinois face a steep uphill battle trying to convince citizens of Texas and Mississippi that they should be forced to 'give away' a significant portion of the fruits of their productive labors to assist blue state residents - without also expecting that Californians and Illini citizens endure some serious AUSTERITY measures where their own economies / gov't paychecks / gov't benefit checks are concerned.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by lesbianbob View Post
    Government austerity in our current situation is the exact opposite of the correct action to take. Of course those economists whose ideas caused the Great Depression II will disagree.

    60 Minutes typically works on a story at least 3-6 months before it airs, unlike what the less expensive news magazines do.
    Ahhh. A Paul Krugman clone. His stuff is always good for a laugh.

    Just who are the economists who caused the Great RECESSION ? Keynes ? Greenspan ? Samuelson ? Galbraith ? Please don't say the Free Marketers because that school has no room for Fannie, Freddie, fiat currency and the Fed. i.e. the REAL causes of our current mess. Like the Great Depression, this current mess was caused more by government than the private sector.

    "60 Minutes" is able to spit out a story as fast as they like. Either they sat on this one until after the most recent elections or they were way behind the curve. The N.Y. Times has actually done an excellent job on this issue. They've been reporting on broke and deadbeat states and cities for years. With a leftward slant to be sure, but their factual reporting has actually been rather good.

    In Illinois most vendors are only accepting cash. The state troopers can't even get gas stations to take state credit cards. That has been happening more and more across the country. As far as California is concerned, I haven't heard a single serious word out of Jerry Brown about the state's finances. Expect more tax increases and thus more businesses and wealthy individuals to leave. Would the last shopper on Rodeo Drive please turn out the lights ?

    For now, there is still some stealth Federal aid. That will quickly dry up and disappear altogether as the Feds start serious budget cutting. Already there are plans afoot to cash in unused TARP and unspent stimulus money. With a Republican controlled House and enough Senate votes to block anything, there is NO CHANCE of Federal aid for spendthrift states like California and Illinois. There are plans to effectively add a Chapter to the Bankruptcy Code so states can go broke and restructure in an orderly manner. One potential booby trap is Federal "DIP" financing for states. If Congress is smart they won't do it. The last thing these states need is MORE DEBT.
    Last edited by Eric Stoner; 12-21-2010 at 12:51 PM.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by lesbianbob View Post
    Government austerity in our current situation is the exact opposite of the correct action to take .
    Maybe.

    But if we do use a Keynesian method to dig ourselves out of this morass, it has to be spent the right way, in an investment fashion. Doling out masses of welfare and unemployment is not the way.

    Build infrastructrure. Fund education (and I don't mean propping up teacher pensions). Buy the future, not subsidize the past.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Mr Hyde View Post
    Maybe.

    But if we do use a Keynesian method to dig ourselves out of this morass, it has to be spent the right way, in an investment fashion. Doling out masses of welfare and unemployment is not the way.

    Build infrastructrure. Fund education (and I don't mean propping up teacher pensions). Buy the future, not subsidize the past.
    That is always the aspiration; the intention ; the advertised and stated goal but NEVER the reality. Better to just starve the beast.

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    Default Re: "60 Minutes" Finally Catches Up

    ^^^ not wanting to drift off the economic aspect, but doling out welfare checks and unemployment checks buys votes fairly cheaply and fairly quickly on a per-capita basis. Underwriting the construction of new nuclear power plants, revamping the education system to actually educate, etc. are far less 'cost-effective' in terms of per-capita cost of votes, as well as involving a much longer 'lead time'.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Melonie View Post

    Unfortunately for those broke blue state residents, just like Greece and Ireland versus France and Germany, broke blue states like California and Illinois face a steep uphill battle trying to convince citizens of Texas and Mississippi that they should be forced to 'give away' a significant portion of the fruits of their productive labors to assist blue state residents - without also expecting that Californians and Illini citizens endure some serious AUSTERITY measures where their own economies / gov't paychecks / gov't benefit checks are concerned.
    You're completely distorting the facts. California and Illinois pay far more federal taxes per person than Texas and Mississippi and get back much less in return. Mississippi gets back twice as much revenue from the federal government as it pays in taxes. It's California and Illinois that are giving away the fruits of their labor to Mississippi.

    http://www.visualizingeconomics.com/...or-each-state/

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    Default Re: "60 Minutes" Finally Catches Up

    ^^^ while technically accurate, there are so many distortions, exclusions, and mistaken assumptions embedded in that link site's analysis that its overall 'accuracy' is about that of the official unemployment rate and/or official GDP number. Huge and obvious omissions are the 'stealth subsidies' the federal gov't ( taxpayer ) is providing to certain states via Build America bonds, by green energy grants and subsidies, by 'repayment optional' federal loans to broke state unemployment funds, by federal emergency unemployment checks, and a host of others which do not fall under direct line item accounting in the federal budget ( upon which the link site's analysis is based ).

    The basic point of the 60 Minutes story and thus this thread is that STATES are on the verge of bankruptcy. Last year, in the presence of 'stealth' federal subsidies, most states still went further into debt. This coming year, as the 'change' in the US Congress makes renewal of those 'stealth' federal subsidies difficult to impossible, many states will approach the edge of a financial cliff.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by eagle2 View Post
    You're completely distorting the facts. California and Illinois pay far more federal taxes per person than Texas and Mississippi and get back much less in return. Mississippi gets back twice as much revenue from the federal government as it pays in taxes. It's California and Illinois that are giving away the fruits of their labor to Mississippi.

    http://www.visualizingeconomics.com/...or-each-state/
    You are partly correct and yet ignore one of the bases of the problem : The necessity that state taxpayers in places like California and Illinois send their money to Washington for a "night on the town" and then get pennies back. When we had something resembling Constitutional government, those funds STAYED in those states. Decisions on where to spend how much for what were made in Sacramento and Springfield and not Washington.

    The REAL part of the problem, which both you and your link completely ignore, is that it is effectively irrelevant. That's right. Even if California got back 100 cents on the dollar it would still have a HUGE structural deficit. The problem is NOT on the revenue side. It is the SPENDING that is out of control and unaffordable. Despite Christie's good work, N.J. is still looking at a $4 billion deficit for 2011 and that does not include pension funds that are anywhere from $40 to $140 BILLION under or UNfunded. Other states have similar type problems including N.Y. , Florida and of course, Califonia and Illinois. Ironically, many low tax states do NOT have these structural deficits. With far less per capita revenue they have been able to keep SPENDING under control. A big part of that is weak public employee unions. In many Southern and Western states, public employees do NOT get traditional pensions or if they do, they are modest and supplemented by 401K's.
    Last edited by Eric Stoner; 12-23-2010 at 09:00 AM.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Melonie View Post
    ^^^ while technically accurate, there are so many distortions, exclusions, and mistaken assumptions embedded in that link site's analysis that its overall 'accuracy' is about that of the official unemployment rate and/or official GDP number. Huge and obvious omissions are the 'stealth subsidies' the federal gov't ( taxpayer ) is providing to certain states via Build America bonds, by green energy grants and subsidies, by 'repayment optional' federal loans to broke state unemployment funds, by federal emergency unemployment checks, and a host of others which do not fall under direct line item accounting in the federal budget ( upon which the link site's analysis is based ).

    The basic point of the 60 Minutes story and thus this thread is that STATES are on the verge of bankruptcy. Last year, in the presence of 'stealth' federal subsidies, most states still went further into debt. This coming year, as the 'change' in the US Congress makes renewal of those 'stealth' federal subsidies difficult to impossible, many states will approach the edge of a financial cliff.
    States like Illinois and California are already bankrupt in all but name. Both have handed IOU's to vendors instead of paying them. What an OUTRAGE ! The state's agreement or promise to pay in the first place WAS an IOU. The real tremors will be felt when both default on state debt like NYC did in 1975.
    Last edited by Eric Stoner; 12-23-2010 at 09:01 AM.

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    Default Re: "60 Minutes" Finally Catches Up

    The reall tremors will be felt when both default on state debt like NYC did in 1975
    ... and ultimately, THIS point will be the basis for a new federal bailout effort, i.e. the US Treasury officially guaranteeing state bond debt in a similar manner that the US Treasury officially guaranteed Freddie / Fannie bond debt. If this were to come to pass, then the bankrupt states can simply default on their muni bond payments, with taxpayers nationwide then being forced to 'take over' the payments.

    As the 'gold foil hat' crowd has already pointed out, the resulting situation of a bankrupt California being bailed out by taxpayers in Texas, North Dakota, South Carolina etc. would be analogous to the existing situation of a bankrupt Ireland being bailed out by taxpayers in Germany, France and Holland. To cover their butts, financially 'responsible' states are already making efforts to reserve their ( states ) rights via 'nullification' ... which in this context could include all sorts of 'surprises' ...

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    Default Re: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    I'll add this tidbit from the NY Times ....

    (snip)"PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.

    Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full. (snip)

    (snip)The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.

    It is not just the pensioners who suffer when a pension fund runs dry. If a city tried to follow the law and pay its pensioners with money from its annual operating budget, it would probably have to adopt large tax increases, or make huge service cuts, to come up with the money.

    Current city workers could find themselves paying into a pension plan that will not be there for their own retirements. In Prichard, some older workers have delayed retiring, since they cannot afford to give up their paychecks if no pension checks will follow.

    So the declining, little-known city of Prichard is now attracting the attention of bankruptcy lawyers, labor leaders, municipal credit analysts and local officials from across the country. They want to see if the situation in Prichard, like the continuing bankruptcy of Vallejo, Calif., ultimately creates a legal precedent on whether distressed cities can legally cut or reduce their pensions, and if so, how.

    “Prichard is the future,” said Michael Aguirre, the former San Diego city attorney, who has called for San Diego to declare bankruptcy and restructure its own outsize pension obligations. “We’re all on the same conveyor belt. Prichard is just a little further down the road.”

    Many cities and states are struggling to keep their pension plans adequately funded, with varying success. New York City plans to put $8.3 billion into its pension fund next year, twice what it paid five years ago. Maryland is considering a proposal to raise the retirement age to 62 for all public workers with fewer than five years of service.

    Illinois keeps borrowing money to invest in its pension funds, gambling that the funds’ investments will earn enough to pay back the debt with interest. New Jersey simply decided not to pay the $3.1 billion that was due its pension plan this year.

    Colorado, Minnesota and South Dakota have all taken the unusual step of reducing the benefits they pay their current retirees by cutting cost-of-living increases; retirees in all three states are suing.snip)

    The non-obvious but extremely important point of this article, and the reason that the 'legal eagles' are studying it so closely, is this. Under state laws, states and municipalities are often LEGALLY REQUIRED to make pension payments to gov't workers, potentially placing gov't workers in a position of being the 'first to be paid' in situations where states and municipalities go broke. Similarly, under state laws, states and municipalities are often LEGALLY REQUIRED to make bond interest and principal payments to muni bond owners, potentially placing those bond owners in a position of being the 'first to be paid' in situations where states and municipalities go broke. So what you ask ?

    Well in situations like this Alabama city where local tax revenues are very insufficient to cover day to day costs of providing police protection, fire protection, school operation etc. as well as pension payments and bond payments, the 'city fathers' have chosen to stop pension payments altogether in order to continue paying for police, fire, school etc. If legally challenged, it may be decided by the courts that the 'city fathers' are legally obligated to pay pensioners and bond owners first ... and then if there is any money left over it can be used for police, fire, school etc. As this is unworkable, such a court decision may instead force the 'city fathers' to increase local sales tax rates / property tax rates / income tax rates, fees, municipal employee pension contributions etc. to the point where the retired gov't workers, the muni bond owners, and the police, fire, school all have enough money for continuation.

    The impact of such a possible court decision, and such a possible tax rate hike, is monumental !!!

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    Default Re: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    ^^^ Your point is well taken and quite germane. The ONLY solution is for radical reform of public pensions. So long as states and cities have to pay healthy people in their late 40's and 50's pensions for life, often inflated by ridiculous amounts of overtime in their last year or two, the problem will only get worse. One proposal is to limit the payout based on age i.e. retirees at age 50 or younger would get only 50% of their pensions and would not collect full pensions until age 65. Most analysts say it is little more than a stopgap and that defined benefit programs have to go the way of the dodo bird and be converted to 401K's.

    Another part of the problem is how politicians and the labor unions flipped the entire pay and benefit paradigm for public employees. It used to be that in exchange for job security and good benefits, public sector workers were paid less than their private sector counterparts. Today, they are paid MORE. Another part of the problem is the "stacking" of pensions. One retiree in N.J. collects THREE pensions : One for being a retired cop ; one for being retired from the State Assembly and another as a retiree from a Public Board. Another collects one from the State Police and one from the a town as a retired police chief while his wife gets one as a reired teacher and another as a retired State Education official.

    As for a Federal bailout , forget it ! Ain't gonna happen and that's all to the good.

    Another part of the solution, particularly in states like N.J. is consolidation. A lot of little towns and villages are going to have to combine with others or at least share services. The days of school district superintendents being paid $200,000 a year when their school district does not have any students are numbered.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Eric Stoner View Post
    Ahhh. A Paul Krugman clone. His stuff is always good for a laugh.

    Just who are the economists who caused the Great RECESSION ? Keynes ? Greenspan ? Samuelson ? Galbraith ? Please don't say the Free Marketers because that school has no room for Fannie, Freddie, fiat currency and the Fed. i.e. the REAL causes of our current mess. Like the Great Depression, this current mess was caused more by government than the private sector.
    No, it was the private sector. Fannie/Freddie had nothing to do with the collapse of Lehman Brothers. If Fannie/Freddie didn't exist, it would not have prevented the financial crisis. It was lenders in the private sector making risky loans and then selling the risky mortgages to private institutions, such as Lehman Brothers.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Eric Stoner View Post
    Ironically, many low tax states do NOT have these structural deficits.
    Texas is facing a projected deficit of $25 billion. Washington state is facing a $3 billion deficit. (Washington's population is about 1/7 of Texas)

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Eric Stoner View Post
    The REAL part of the problem, which both you and your link completely ignore, is that it is effectively irrelevant. That's right. Even if California got back 100 cents on the dollar it would still have a HUGE structural deficit. The problem is NOT on the revenue side. It is the SPENDING that is out of control and unaffordable.
    The biggest cause of the state deficits is the major financial crisis we're going through, which was caused by the policies of the federal government.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Eric Stoner View Post
    You are partly correct and yet ignore one of the bases of the problem : The necessity that state taxpayers in places like California and Illinois send their money to Washington for a "night on the town" and then get pennies back. When we had something resembling Constitutional government, those funds STAYED in those states. Decisions on where to spend how much for what were made in Sacramento and Springfield and not Washington.
    Contrary to conservative beliefs, money sent to Washington isn't just used for a night on the town, but is put to many good uses. Money sent to Washington pays for our military, our national highway system, scientific research, education and many other important purposes. It's true that some of it does get wasted, and we should be doing all we can to eliminate waste, but to say it's useless, or for a "night on the town", is just not true.

    We do have Constitutional government. The 16th Amendment allows the government to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

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    Default Re: "60 Minutes" Finally Catches Up

    Quote Originally Posted by Eric Stoner View Post
    That is always the aspiration; the intention ; the advertised and stated goal but NEVER the reality. Better to just starve the beast.
    We've been "starving the beast" for 30 years and our country is going through a deep decline. Meanwhile, the government of China is spending hundreds of billions of dollars on a first rate infrastructure, education, and research, and they have the fastest growing economy of any major country. China is spending 10% of their GDP on infrastructure, while the US is spending 2%. Whose economy do you think will be in a better position in the future, if current trends continue?
    Last edited by eagle2; 12-24-2010 at 02:14 AM.

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    Default Re: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    Whose economy do you think will be in a better position in the future, if current trends continue?

    ^^^ the one that doesn't burden it's businesses and industries with high taxes to fund generous social welfare programs for its 20+% of non-working citizens, the one that doesn't artificially increase the energy prices its businesses, industries, and resident consumers must pay via carbon taxes / high environmental compliance costs, the one that doesn't allow frivolous lawsuits to saddle its businesses and industries with billions of dollars worth of legal fees and judgements / awards, the one that doesn't force its businesses and industries to pay artificially high legal minimum wage rates for unskilled labor ... in other words, China ! The quality of available infrastructure in China versus the USA is relatively insignificant in comparison to THESE cost factors !


    We do have Constitutional government.
    Yes, but, that same constitutional government also allows US states to 'nullify' federal laws that will be highly detrimental to the state's citizens and economy. For example ...

    (snip) The EPA will decide directly on greenhouse-gas permits for companies seeking to build or upgrade power plants and oil refineries in Texas, the agency said today in a statement. The EPA’s nationwide carbon rules, imposed under the Clean Air Act, take effect Jan. 2.

    Texas is the only state that has refused to implement the new rules. President Barack Obama is pressing ahead with the regulations after Congress failed to pass legislation capping carbon emissions. Perry, a Republican, calls the rules overreaching by the federal government that will cripple his state’s economy.

    “The EPA’s misguided plan paints a huge target on the backs of Texas agriculture and energy producers by implementing unnecessary, burdensome mandates on our state’s energy sector, threatening hundreds of thousands of Texas jobs and imposing increased living costs on Texas families,” Katherine Cesinger, a Perry spokeswoman, said in an e-mailed statement.

    The American Petroleum Institute in Washington, the largest U.S. lobbying group for the oil and gas industry, called the EPA’s plan improper.

    ‘Coercing’ States

    “In unprecedented fashion, EPA is now coercing some states to relinquish their authority and is directly usurping state regulatory authority in Texas,” Howard Feldman, API’s director of regulatory and scientific affairs, said in a statement.

    The EPA’s rules are set to start 13 months after the agency declared carbon-dioxide emissions a danger to public health and welfare. The EPA’s “endangerment finding” followed a Supreme Court ruling in 2007 that the agency has the authority to regulate carbon emissions under the Clean Air Act. (snip)


    ^^^ This is one reason that states like Texas will maintain their competitive economic advantage over states like California !

    ~
    Last edited by Melonie; 12-24-2010 at 04:00 AM.

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    Default Re: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    Quote Originally Posted by Melonie View Post
    ^^^ the one that doesn't burden it's businesses and industries with high taxes to fund generous social welfare programs for its 20+% of non-working citizens, the one that doesn't artificially increase the energy prices its businesses, industries, and resident consumers must pay via carbon taxes / high environmental compliance costs, the one that doesn't allow frivolous lawsuits to saddle its businesses and industries with billions of dollars worth of legal fees and judgements / awards, the one that doesn't force its businesses and industries to pay artificially high legal minimum wage rates for unskilled labor ... in other words, China ! The quality of available infrastructure in China versus the USA is relatively insignificant in comparison to THESE cost factors !
    As always, you're making stuff up based on your ideology, and the stuff you make up is completely wrong. China invested almost twice as much as the US in clean energy during 2009.

    http://www.guardian.co.uk/news/datab...y-pew-research

    China is planning to spend $123 billion on universal health care by 2011.

    http://www.nytimes.com/2009/01/22/wo....19590543.html

    As discussed before, China's workers are now demanding higher wages.

    The government of Brazil pays poor families to send their children to school instead of working in factories, yet this hasn't stopped Brazil from having one of the fastest growing economies in the world.

    http://www.laborrights.org/stop-child-labor/news/10928

    Melonie,

    Please read this carefully. The extreme ideology you espouse has already failed. There's a reason why the US moved away from this extreme ideology decades ago. Developing countries like China and Brazil are moving away from your ideology, not towards it. People don't want to work in sweatshops for a few dollars a day. People don't want to breathe dirty air and drink dirty water.


    Quote Originally Posted by Melonie View Post

    Yes, but, that same constitutional government also allows US states to 'nullify' federal laws that will be highly detrimental to the state's citizens and economy. For example ...http://www.bloomberg.com/news/2010-1...escalates.html

    (snip) The EPA will decide directly on greenhouse-gas permits for companies seeking to build or upgrade power plants and oil refineries in Texas, the agency said today in a statement. The EPA’s nationwide carbon rules, imposed under the Clean Air Act, take effect Jan. 2.

    Texas is the only state that has refused to implement the new rules. President Barack Obama is pressing ahead with the regulations after Congress failed to pass legislation capping carbon emissions. Perry, a Republican, calls the rules overreaching by the federal government that will cripple his state’s economy.

    “The EPA’s misguided plan paints a huge target on the backs of Texas agriculture and energy producers by implementing unnecessary, burdensome mandates on our state’s energy sector, threatening hundreds of thousands of Texas jobs and imposing increased living costs on Texas families,” Katherine Cesinger, a Perry spokeswoman, said in an e-mailed statement.

    The American Petroleum Institute in Washington, the largest U.S. lobbying group for the oil and gas industry, called the EPA’s plan improper.

    ‘Coercing’ States

    “In unprecedented fashion, EPA is now coercing some states to relinquish their authority and is directly usurping state regulatory authority in Texas,” Howard Feldman, API’s director of regulatory and scientific affairs, said in a statement.

    The EPA’s rules are set to start 13 months after the agency declared carbon-dioxide emissions a danger to public health and welfare. The EPA’s “endangerment finding” followed a Supreme Court ruling in 2007 that the agency has the authority to regulate carbon emissions under the Clean Air Act. (snip)


    ^^^ This is one reason that states like Texas will maintain their competitive economic advantage over states like California !

    ~
    Just because a law doesn't follow your ideology, doesn't mean it is detrimental. In most cases, it's usually the opposite.

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    Default Re: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    People don't want to work in sweatshops for a few dollars a day. People don't want to breathe dirty air and drink dirty water.
    Since you raised this to a personal level, all I will say is that when it comes right down to it, it really doesn't matter much what the 'people' in China or other developing countries want.

    What matters is that the 'people' in America and other 'developed' countries with money to spend want to purchase manufactured products as cheaply as possible, that the 'people' in America are seemingly perfectly content ignoring the fact that their cheap imported manufactured products exist because China allows the manufacturers to pollute the air and the water, and also allows the manufacturers to pay unskilled workers 'sweatshop' wages plus zero benefits ( which admittedly have risen from $1 to $2 an hour recently ! ) while the Chinese gov't, rich Chinese elite, rich foreign investors, and US companies outsourcing subassembly manufacture to China, all profit handsomely. If and when the Chinese 'people' complain too loudly, they either see a replay of Tiannamin Square or they see their $2 an hour jobs terminated as their former Chinese manufacturing employer relocates to Vietnam where they can pay $1 an hour to Vietnamese 'people' who aren't complaining because it provides a higher standard of living than working in a rice paddy.

    Putting aside all of the social commentary, and all of the Chinese gov't's 'window dressing', from a purely economic standpoint THIS is the reality of the situation !!!

    In the absence of a full blown effort by America to lock down its borders against imports ( via tariffs and quotas ), this will continue to be a purely economic question that has little to do with ideology !!! It's also a point that has little to do with this thread's topic ... other than actually CONFIRMING the economic fact that the greater the overall cost differential between operating a business in California versus operating the same business in Texas becomes, the more California businesses will be incentivized to relocate to Texas ! Check the recently released 2010 US state by state census figures and state by state unemployment figures !!! And with every California state tax paying business ( and some of it's state tax paying skilled employees ) that relocates out of the state, California edges one step closer to bankruptcy ! California edges an additional step closer to bankruptcy when the state tax paying skilled employees who are leaving the state are replaced by unskilled immigrants ( both legal and illegal ) who contribute little or nothing in state tax payments but consume significant amounts of state taxpayer funded social welfare benefits and social services. Again check the newly released 2010 US state by state census figures and state by state unemployment figures.

    From a purely economic standpoint, the only things that are 'growing' in California these days are the amount of debt the state gov't owes, and the state budget shortfall between the amount of state tax revenues being received and the total cost of municipal bond principal and interest, social welfare benefits, social services, gov't employee paychecks and pension checks, etc. that the state must pay out. As virtually every author in this thread has pointed out, California has been (temporarily) covering this shortfall by borrowing more and more money via increased issuance of muni bonds ... by the issuance of IOU's to state businesses to the point where convenience stores now demand cash payments for gasoline from state policemen ... and by playing accounting games ( or committing outright fiduciary breach ) with state pension fund assets. However, with its major muni bond insurer already having been forced into bankruptcy, with its state credit rating in the toilet, with its actual state tax revenues received continuing to shrink as tax paying businesses close down or leave the state, California is rapidly running out of 'other people's money' ( quotation is from Margaret Thatcher ). Absent a federal bailout, the next step is some form of bankruptcy.

    ~
    Last edited by Melonie; 12-24-2010 at 01:27 PM.

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    Default Re: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    Quote Originally Posted by Melonie View Post
    Since you raised this to a personal level, all I will say is that when it comes right down to it, it really doesn't matter much what the 'people' in China or other developing countries want.
    It does matter, because they're the ones who have to do the labor.

    Quote Originally Posted by Melonie View Post
    What matters is that the 'people' in America and other 'developed' countries with money to spend want to purchase manufactured products as cheaply as possible, that the 'people' in America are seemingly perfectly content ignoring the fact that their cheap imported manufactured products exist because China allows the manufacturers to pollute the air and the water, and also allows the manufacturers to pay unskilled workers 'sweatshop' wages plus zero benefits ( which admittedly have risen from $1 to $2 an hour recently ! ) while the Chinese gov't, rich Chinese elite, rich foreign investors, and US companies outsourcing subassembly manufacture to China, all profit handsomely. If and when the Chinese 'people' complain too loudly, they either see a replay of Tiannamin Square or they see their $2 an hour jobs terminated as their former Chinese manufacturing employer relocates to Vietnam where they can pay $1 an hour to Vietnamese 'people' who aren't complaining because it provides a higher standard of living than working in a rice paddy.
    Again you're making stuff up without having any idea of how true it is. Wages are already increasing in China, as you said, and are expect to continue to increase even faster.

    http://www.channelnewsasia.com/stori...082542/1/.html

    --snip--
    Salaries in China are expected to rise more sharply this year - by as much as 20 per cent, compared to the average 13 per cent increase seen in the last three years.
    --snip--


    Quote Originally Posted by Melonie View Post
    Putting aside all of the social commentary, and all of the Chinese gov't's 'window dressing', from a purely economic standpoint THIS is the reality of the situation !!!

    In the absence of a full blown effort by America to lock down its borders against imports ( via tariffs and quotas ), this will continue to be a purely economic question that has little to do with ideology !!! It's also a point that has little to do with this thread's topic ... other than actually CONFIRMING the economic fact that the greater the overall cost differential between operating a business in California versus operating the same business in Texas becomes, the more California businesses will be incentivized to relocate to Texas ! Check the recently released 2010 US state by state census figures and state by state unemployment figures !!!
    High tax New York has an unemployment rate of 8.3% compared to low tax Texas' rate of 8.2%, the same as high tax Massachusetts. High tax Vermont's unemployment rate is 5.7%, and low tax Nevada has an unemployment rate of more than 14%.

    http://en.wikipedia.org/wiki/List_of...mployment_rate

    How do you explain this discrepancy between your ideology and what happens in the real world? How is it possible for high tax/high wage Vermont, with it's top tax rate of 9.5%, to have a lower unemployment rate than low tax Texas?

    Quote Originally Posted by Melonie View Post
    And with every California state tax paying business ( and some of it's state tax paying skilled employees ) that relocates out of the state, California edges one step closer to bankruptcy ! California edges an additional step closer to bankruptcy when the state tax paying skilled employees who are leaving the state are replaced by unskilled immigrants ( both legal and illegal ) who contribute little or nothing in state tax payments but consume significant amounts of state taxpayer funded social welfare benefits and social services. Again check the newly released 2010 US state by state census figures and state by state unemployment figures.

    From a purely economic standpoint, the only things that are 'growing' in California these days are the amount of debt the state gov't owes, and the state budget shortfall between the amount of state tax revenues being received and the total cost of municipal bond principal and interest, social welfare benefits, social services, gov't employee paychecks and pension checks, etc. that the state must pay out. As virtually every author in this thread has pointed out, California has been (temporarily) covering this shortfall by borrowing more and more money via increased issuance of muni bonds ... by the issuance of IOU's to state businesses to the point where convenience stores now demand cash payments for gasoline from state policemen ... and by playing accounting games ( or committing outright fiduciary breach ) with state pension fund assets. However, with its major muni bond insurer already having been forced into bankruptcy, with its state credit rating in the toilet, with its actual state tax revenues received continuing to shrink as tax paying businesses close down or leave the state, California is rapidly running out of 'other people's money' ( quotation is from Margaret Thatcher ). Absent a federal bailout, the next step is some form of bankruptcy.

    ~
    So why does Texas have a bigger projected budget deficit than California? ($25 billion compared to $20 billion)
    Last edited by eagle2; 12-24-2010 at 08:44 PM.

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    Default Re: "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)

    High tax New York has an unemployment rate of 8.3% compared to low tax Texas' rate of 8.2%, the same as high tax Massachusetts. High tax Vermont's unemployment rate is 5.7%, and low tax Nevada has an unemployment rate of more than 14%.




    How do you explain this discrepancy between your ideology and what happens in the real world?
    This is very easy to explain. To begin with, your official unemployment statistics only count people who are looking for work ! New York has an insanely high level of 'permanent social welfare benefit recipients' who are unemployed but not COUNTED as unemployed !

    As to Vermont, that's also very easy to explain. Vermont's #1 occupation is 'government employee', and Vermont's #2 occupation is 'trade, transportation and utilities'. In both cases, gov't officials and not the free market get to decide whether gov't employees, power and phone company workers, bus drivers etc. will be laid off or whether taxes / utility rates / transportation fares will be increased to continue funding their paychecks !

    Nevada is of course in an opposite situation where the #1 industry is 'entertainment' services. As opposed to gov't workers or regulated utility workers whose paychecks are more or less 'guaranteed' by gov't fiat, Nevada's private sector 'entertainment' workers are almost totally dependent on the 'discretionary spending' levels of the US middle class to voluntarily fund their paychecks ... with the remaining level of 'discretionary spending' dollars being severely beaten down by rising state and local taxes, rising food and energy prices etc. thus leaving 'entertainment' service workers in an economic lurch.


    So why does Texas have a bigger projected budget deficit than California? ($25 billion compared to $20 billion)
    This is the easiest one of all. The reason is that Texas accurately accounts for its gov't payment obligations, while California plays accounting games or outright lies about theirs ! This is particularly the case in regard to California underfunding state pensions - see . And there is also the 'small' matter of the state of California receiving proportionately massively more aid from US federal taxpayers than Texas does ... from subsidized Build America Bonds to green energy subsidies to block grants.

    It's very easy to try and 'paint a particular picture' using cherry picked statistics ... and particularly statistics like the U1 unemployment rate which excludes more unemployed Americans than it counts !!! Granted that mainstream media has been comparatively successful in 'painting pictures' - and also granted that many Americans accept the painted picture as fact. However, for those that make the effort to 'look under the hood' at the real numbers, the difference between a (rosy) painted picture and a (stark) photograph of reality becomes fairly obvious !


    Again you're making stuff up without having any idea of how true it is. Wages are already increasing in China, as you said, and are expect to continue to increase even faster.
    You're correct that I have no idea how true it is ... since my source is the NY Times !!!



    (snip)Multinational corporations are “thinking about all the world and keeping a balance” between China and other countries, said Edward Kang, the chief executive of Ever-Glory International, a sportswear manufacturer in Nanjing, China. Ever-Glory, which sells to Wal-Mart and Kohl’s, is building a factory in Vietnam.

    Companies remaining in China are desperately seeking to control costs.

    “We will maintain our capacity in China, but we will make it more automatic and reduce the number of employees,” said Laurence Shu, the chief financial officer of Shanghai-based Texhong, one of the world’s largest makers of cotton and spandex fabric.

    To limit labor costs, Hanesbrands is building a largely automated factory in Nanjing. But the company is also building a factory in Vietnam, in addition to a factory it bought here, and two more in Thailand.

    Gerald Evans, the president for global supply chain at Hanesbrands, said that compared with China, “we found more ready availability of both land and labor in both Vietnam and Thailand.” Hanesbrands will be shifting some manufacturing from Mexico and Central America to Asia.

    In China, where rural villages are running low on able-bodied young workers to send to factories, wages are rising more than 10 percent a year for many assembly-line workers. And pay is rising even faster for skilled workers, like machinery repair technicians.

    In coastal provinces with ready access to ports, even unskilled workers now earn $120 a month for a 40-hour workweek, and often considerably more; wages in inland provinces, where transport is costlier, are somewhat lower but also rising fast. While Chinese wages are still less than $1 an hour, factory workers in Vietnam earn as little as $50 a month for a 48-hour workweek, including Saturdays. (snip)

    Since the NY Times story was written 18 months ago, the wage figures are undoubtedly stale. However, the new factories in Vietnam, Thailand etc that were under construction when the story was written are now in full operation !

    ~
    Last edited by Melonie; 12-25-2010 at 05:38 AM.

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