patrick.net

Troy says

The late 70s economy was pretty decent. Real wages were steady. Inflation didn’t get *that* bad, like stuff in the Sears Catalog in 1975

http://www.miseryindex.us/customindexbyyear.asp

here's just economics 101... because it is painful to watch you make a fool of yourself in public. When inflation and unemployment are both high it is the most hellacious economic scenario because there are no solutions. You are doomed. Reagan (with volker) heroically raised rates induced the '82 recession and purged inflation. You would never see a modern politician do that. They'll spit out "stimulus" ad infinitum as long as the presses can print currency.

tatupu70 says

OK–how about using some numbers this time. I know you can write a nice story, but real arguments use data and numbers to back up their points.

Ok, but I am not here to give you an education and google charts all day so you gonna have to use common sense. If you want me to teach you I demand union terms. This means I get $100/hour, can fondle your daughter, you can't fire me and if you bitch I'll get 50 of my buddies to protest in front of your house.

MarkInSF says

True. Duxbury also ignores the unionization of workers in Germany and Japan. Somehow, even though unions in those industries were on the rise there, and on

Thanks for defending me, but I really can't take away the "jackass" label yet because Japan wasn't so stupid as to keep unions. They dumped them after we tried to foist them on them. They abolished them and whattahyaknow happened?? their economy went on a ferocious tear for 30 years until the out of control growth made a bubble. Germany has unions... but for whatever reason they aren't as psycho as US unions... they aren't making idiotic work rules that hamper production and welding beer cans in chryslers for fun.

duxbury001 says

Ok, but I am not here to give you an education and google charts all day so you gonna have to use common sense. If you want me to teach you I demand union terms. This means I get $100/hour, can fondle your daughter, you can’t fire me and if you bitch I’ll get 50 of my buddies to protest in front of your house.

Typical trollish response. You won't do it because you can't. There is no data to suppport your position.

MarkInSF says

The right, including duxbury here, are trying to claim unions they are the “the primary challenge confronting the West is thugocracy”, but it’s a pretty hard case to make. The certainly had nothing with the financial bust we’re still dealing with today.

It really isn't very hard since labor costs are a huge part of the budgets and funny whereever unions are strong you see budgets careening to oblivion.... but what really makes it obvious is how criminally inflated the wages are... 450k air traffic controllers in spain, 100k teachers in madison, 200k train conductors on amtrak and in france. like the rampant corruption in greece, portugal going bankrupt, cali going bankrupt, deficits in NJ, etc... basically if every public sector employee gets a million dollar pension your budget is screwed.

In my mind it is 10 times worse than that because unions fight for the most psychotic economic policies.. like encouraging unskilled illegals (who they view as social service clients). Paying welfare to encourage poor mothers to be brood mares with giant welfare payments for large families. Fighting accounting and efficiency methods. encouraging muslim immigraton with no intention of assimilation to create a giant underclass in france (dependent on unionized social services).

But the surest was is to contrast union vs. non union states.. financial chaos in maryland vs. financial stability in virginia a few miles away. It ultimately becomes a psychological issue, not a policy issue, if you can't see the problems with public sector unionization.

MarkInSF says

I really hate to be defending duxbury, since he called me a jackass and hurt my feelings, but union membership among public employees is actually much higher than is was in the 50’s and 60’s.

unions were wimps in the 50's and 60's because they were private sector unions... which means all they can do is shoot themselves in the foot with their extortion. They blew up the US industrial base because companies were run into bankruptcy or moved to the south... so private sector unionization is finished because it is so self-destructive. How many factories left in pittsburg? detroit? unions crushed the old factory towns. New factories are in Alabama or China away from thugocracy.

Public sector unionization is infinitely more powerful because you can extort all you want until the government goes bankrupt.. with no consideration of the naive taxpayer. Unions contributed hundreds of millions to the last election cycle + time. Andy Stern practically pushed obama care (Andy was the most frequent guest of obama). So Public sector unions (along with the trial lawyers) are a defacto labor party of the democrats.

I like communists and liberals, I find them naive and idealistic (but ignorant). Democrats are not liberals, they are thugocrats serving millionaire trial lawyers, public sector employees and a few favored companies.

tatupu70 says

Typical trollish response. You won’t do it because you can’t. There is no data to suppport your position.

READ AN ECONOMICS BOOK... PLEASE.

N Dr Lo R says

I’ve used this particular model as an example, but the same things were true across the board for all makes and models. It’s the main reason foreign cars became more popular as they were better built, but you were still getting less car than you had in the 60’s.

Detroit also found itself having to compete with a Japan that had its yen pegged at an insanely low 300-360 to the dollar.

Used Japanese cars actually went UP in value after 1978 when the yen went from ~260 to ~180.

As for 1970s inflation, here's 3 washers from Sears catalogs:

$200 -> $220 -> $288.

(that last one was pretty well-built, it's still going at my Mom's, after 30 years).

Prices went up, but so did wages. That was the wage-price spiral. The main people who got screwed were people on fixed incomes who didn't own their own houses, but the 1972 Congress added automatic COLAs and SSI in 1972 to help address that.

The public will not stomach the tax increases and it is constitutionally difficult to pass tax increases like that in California anyway.

True enough. The voters do in fact control this process, guided by all the anti-tax crap that has been tacked onto the State Constitution via initiatives. Not going to be pretty though.

when will the Dem-controlled state government actually make the tough calls?

Brown is right with you on this, and I'm with him. If the people want cuts, they're going to get cuts.

No free lunches here any more.

Good thing I was in LA in March-April 1992. I've seen this movie before. This is why when I talk about "fortresses" here it's with meaning.

I saw how the LAPD brought in the troops to literally defend Westwood when there was a gang shooting there in 1988. Black gangster-type people were simply not allowed anywhere in 90024 after that.

http://articles.latimes.com/1988-02-02/local/me-40025_1_westwood-village

duxbury001 says

but what really makes it obvious is how criminally inflated the wages are

Kind of like CEOs making $25M/year?

People want to be told the lies they want to hear.

Film at 11.

There is no fix for this. It is all going to end very badly.

Well, that's more a Downer-Debbie thing I guess. I was wrong in 1992 and maybe my pessimism will be proved wrong this decade too.

shrekgrinch says

Only one state currently has its own bank . . .North Dakota…and North Dakota doesn’t have any financing or budget problems:

That sounds an awful lot like the socialism

North Dakota has 40 acres of productive cropland per capita, which alone would be enough to support any economy.

On top of that it is producing 200bbl of oil per capita per year, twice that of the KSA.

On top of that it receives an extra 70c for each Federal tax dollar it sends to DC.

It would take a really concerted effort to screw that economy up.

But I do like the state bank idea.

We need a return to the Fairness Doctrine, there is no other solution since clearly the main mission of Big Money is to LIE in order to further it's own growth without regard to civil consequences.

heh, I thought I was repeating myself here:

http://patrick.net/?p=28379#comment-667013

Gotta get back to work now . . . see ya guys

Vicente says

We need a return to the Fairness Doctrine,

I totally agree. How else will the ideas of the left ever survive in the free marketplace without force and government assistance? "Air America" is a prime time example. They went bankrupt not only for financial reasons, but because virtually no one with a brain could stand listening to their childish, drooling ranting on the air.

@Nomograph - 99% of all housing materials are made overseas....your cement is probably made in mexico and the siding also. bathroom fixtures and door sets...please what percentage of product sold is made in the usa.

majority of laboratory glassware is made in turkey or india....

more plywood is imported into the usa than produced here....

your windows probably are made in the usa with illegal mexicans....

your ford was made in the usa...really....what percentage of the parts were made in the usa...your ford might have been 'assembled' but probably 65% were foreign parts....

Kewaunee equipment...maybe assembled in carolina but made in singapore and bangalore....

pyrex glass tubing...all made in china...all of it....i was a glass blower and manufactured custom laboratory glassware and 30 years ago the tube/rod glass was made in america...not today

ALL OF THE FANCY MEDICAL EQUIPMENT IS ASSEMBLED IN THE USA from parts made over seas.........very few of the parts are acyually made here.

i could go on and on but....if 95% of your stuff is made in america, why do we have a trade deficit...?....get real.

tatupu70 says

709hannah says

then go long GM stock …what are you waiting for. while you are at it go long treasuries and aapl and nflx and throw in some california RE

I’m more of an index guy.
709hannah says

….good luck and remember…dont do the numbers just read the headlines….good luck

No—headlines are often misleading. I’m assuming you are being sarcastic, and if so, it’s one thing I’ll agree with you on. Unfortunately, you appear to have your mind made up before you get to the numbers..

tatupu70 - can i be clearer...do the math! if you read the headline you will be lied to and mislead. my original post states 'do the math'. these idiots go by headlines and dont have a clue how the numbers are arrived at.........

709hannah says

i could go on and on but….if 95% of your stuff is made in america, why do we have a trade deficit…?….get real.

Ever heard of oil?

709hannah says

tatupu70 - can i be clearer…do the math! if you read the headline you will be lied to and lislead. my original post states ‘do the math’. these idiots go by headlines and dont have a clue how the numbers are arrived at………

I did the math. The math told a different story than you did...

what did it tell you...?

It told me that GM had a good year.

so without the oil component. we wouldnt have a deficit...BULLSH&T....!

numbers...dont give me a 'headline'....what was good? did they pay back the gov loans....buy back all the gm stock owned by the tax payers...?

709hannah says

numbers…dont give me a ‘headline’….what was good? did they pay back the gov loans….buy back all the gm stock owned by the tax payers…?

Which numbers would you like? Total sales? Net income? Retail sales? Cash flow? ROA? ROI?

how about sales of GM cars in china....up or down? thats their big new market isnt it...?

are GM production numbers/sales up or down....?

....so are inventories up or down...?

how much money has the gov pushed to GM....?

would GM make a profit if it had to pay taxes....?...$45bil gift from uncle sam

..and why has the stock price fallen to below the IPO price if it is doing so well...?

709hannah says

so without the oil component. we wouldnt have a deficit…BULLSH&T….!

No we still would. But petroleum based products are 50%+ of our current deficit.

I say invest in Southeast Asia, particularly the Phillipines. Can't own 100 per cent of land there but you can go into partnerships.

CAT, X, AAPL, have been good for me. UPS or FDX, or some leading indicators seem smart if there is a ramp up on the consumer side.

Why would homebuilders be good? Don't we have surplus houses that lie vacant?

Maybe CAT will do even better when they need those big D9s to bulldoze Vegas and the Inland Empire?

http://en.wikipedia.org/wiki/IDF_Caterpillar_D9

I agree that it is a problem that needs to be addressed, and some of their suggestions make sense. Others are vague and also questionable ethically.

Here are two excerpts from the Hoover document that I find at odds:

The system lacks discipline. The purpose of the public pension system has shifted away from providing retirement security to public employees. Today, the pension system is regarded as deferred compensation – the perceived tradeoff of earning a lower salary in the public sector in exchange for a good retirement
package.

and this

Recommendation 1: To reduce growing pension liabilities of current public workers, state and local governments must pursue aggressive strategies on multiple fronts.

The Legislature should give state and local governments the authority to alter the future, unaccrued retirement benefits for current public employees.

They acknowledge that this was understood as deferred compensation. And then later they say the state needs to take that compensation back (essentially raiding our pensions). They don't say that this would be a last resort after trying all other recommendations. And they are very vague about what this would even mean.

So I guess they are saying that after the state lured quality people into these jobs with a promise of compensation x, that now, when these employees have committed themselves and invested themselves, and now have less employment alternatives, they will decrease their compensation from what was promised ?

Other measures such as having caps, and preventing pension spiking I agree with.

why do we have a 'dumping' case against cemex if we dont import mexican cement. i said 'your' as i dont know where your cement came from. i didnt say we probably import....we do import mexican cement....a lot of it.

cemex cement at home depot.
http://www.homedepot.com/h_d1/N-5yc1vZ1xgl/R-100321932/h_d2/ProductDisplay?langId=-1&storeId=10051&catalogId=10053

one of my oldest clients is americas largest manufacturer of residential windows and the entire floor work force is mexican.....

america cars dont have any foreign parts....maybe you need to check out the 'domestic parts content' area on the price stickers at the car dealerships...

the glass companies you listed are suppliers NOT manufacturers. they list their sources as foreign companies...

...again...why do we have such a large trade deficit if we make everything here....?

Other parts of their suggestions are somewhat transparent. They suggest future employees have a limited defined benefit pension combined with a employer matched 401k. Suggesting that the 401k be conservatively invested.

What I find fascinating about this part of their suggestion is that by reducing the amount that future employees pay in to the defined benefit pensions, they would further adversely impact the ability of the pension funds to make it through the old age of baby bloomers.

If you think about it, their plan is a transparent all out attack on California pensions. As long as they get some competent non biased actuaries looking at this, I'm not too worried. Figuring out what they are thinking here is not exactly rocket science.

Too bad they couldn't just try to make recommendations to solve the problem without the ulterior agenda.

marcus says

and now have less employment alternatives, they will decrease their compensation from what was promised

Thing is, I don't think the public is going to vote to pay for stuff like this:

"CalSTRS' formula, which is based largely on employee salary, age and longevity, tends to reward retirement at age 61½. For example, a teacher who has worked for 35 years, making $90,000 in her final year, could retire at age 62 and reap a $75,600 annual pension."

http://calpensions.com/2011/03/07/budget-busting-pensions-spark-ballot-measures/

Now that's a gold-bricked pension plan. Not going to survive in this environment, not at all.

marcus says

So I guess they are saying that after the state lured quality people into these jobs with a promise of compensation x

If you were already employed in 1999, you were not in anyway lured by the large benefit increase from SB-400. It was just a straight up giveaway.

marcus says

their plan is a transparent all out attack on California pensions.

yup. Willy Horton time. I think there is an object lesson to be learned here and that's that collective bargaining units really have to police their own ranks.

Pension spiking is impossible for teachers but the whole system is suffering from how the rules can be gamed.

Back in 1999 we got stupid. Somebody set us up the bomb.

Politically I think the anti-labor Republicans have the unions by the short hairs here. If they continue to play hardball with Brown by refusing to OK his initiatives, they can win the debate by just forcing the cuts they want.

The Republican's job now is to just watch the muther burn to the ground. Democrats haven't been able to mount a defense of the system yet.

nomo - you should go long the stock market....maybe buy some GM/NFLX/AAPL. also buy yourself some treasuries...30yr. ....... maybe also buy some R.E. in phoenix or miami........and lets look at this topic again on 03.07.2012.......and see how you've done.

remember, american manufacturing is growing at the fastest rate in 7 years.

Troy says

The Republican’s job now is to just watch the muther burn to the ground. Democrats haven’t been able to mount a defense of the system yet.

The ball is very much in the Democrats court. They hold both houses, and the Governors seat. And now that we passed prop 25 which makes a budget a simple majority, the Republicans can't block the budget like in years past.

Or course another way of thinking about is that the Dems won't be able to blame the Republicans any more. Any failure they will have to totally own.

Check out the numbers before jumping to conclusions.

Troy says

CalSTRS’ formula, which is based largely on employee salary, age and longevity, tends to reward retirement at age 61½. For example, a teacher who has worked for 35 years, making $90,000 in her final year, could retire at age 62 and reap a $75,600 annual pension.”

http://calpensions.com/2011/03/07/budget-busting-pensions-spark-ballot-measures/

Now that’s a gold-bricked pension plan. Not going to survive in this environment, not at all.

STRS formula applies to salary only, not including summer school or extra work. You would be hard pressed to find many district in California where top top pay is much over 75K. ALso it seems the multiplier used in this case would be for someone 64 years old not 61.

Usually you are a pretty thoughtful guy Troy, but you aren't basing this on the numbers.

You have heard me explain it before. But here it is using your numbers with conservative estimates.

This person with the 90K ending salary would have paid an average of somewhere around 550 per month into the pension (YES STRAIGHT OUT OF THEIR SALARY IN PLACE OF SOCIAL SECURITY)

Say the district and state paid another 650/month into the fund. Yes I know this 7800 per year, in pension benefit is SO SO MUCH. How can they afford such an extravagant benefit.

Anyway, I'm putting the numbers in to my financial calculator here and see that 1200/month invested for 35 years at a conservative 5% it would grow to $1, 363, 310.

Now let me annuitize that and pay it back out in an annuity for 24 years (again assuming 5% interest). Ahh, it would be $95, 600/ year that he would be paid from age 62 to age 86.

If I used a higher rate, say 7% it would be MUCH MUCH higher.

MAybe my numbers average contribution numbers are a little high, and the average of what he and the state paid in are a little high. At 90K he would be paying 600/ month and the district and state would be paying 750.
So the average would probably be somewhat less than what I said. But then again I used 5% (way less than how STRS has done on avg) and I had him living 24 more years, which is probably kind of high.

You look at the numbers and it's not that golden. It's 35 years of paying in.

nomo - i call that put up or shut up...; )

buy buy buy if everything is so great...debate..?...debating with you is like adding water to acid....

MarkInSF says

the Republicans can’t block the budget like in years past.

I think the situation in California is exactly like the current budget impasse in Japan. The "Democrats" there can pass the budget, but need the conservatives to agree to raise taxes to fund it.