patrick.net

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.

Good report. Seems like CA is in for a big crash, it's coming. Have to say, no shock there. I've lived in this state for too long, I'm surprised it held out this much. A lot of the programs are abused, certain unions have way too many legislative friends.

Politicians just keep on shifting the problems down the future, and here are the results. This crash is well deserved in my opinion, years of self denial and legislative lies not solving problems but simply handing tax dollars away and moving on to better opportunities.

I have every reason to believe you are capable of comprehending my numbers above, in which case you realize that this kind of pension does not cost the state that much. Literally we are talking just a couple thousand per year per employee more than what they would pay as an employer paying into social security. Oh those crazy benefits state employees get.

That's our big benefit. As state employees we get to pay in to a real pension fund instead of what social security is (basically a way of temporarily funding tax cuts for the rich ).

marcus says

I have every reason to believe you are capable of comprehending my numbers above, in which case you realize that this kind of pension does not cost the state that much.

I've been crunching some numbers since my last above.

Here's what I got. . .

My starting year is 1990 since that's when the employer contribution was raised to 8.25%. Employee contribution has been 8% since 1972. I am ignoring the juicer contribution of 2-4% since that is variable.

Since the 1980s, Calstrs has been pretty aggressive investing around 80% in equities, so I am using 80% of the S&P 500 as an annual rate of return.

Taking the newly minted teacher starting out at age 25 in 1990, I assign him a $30,000 salary from which 16.25% is deducted off the top. Of course, one of the major mistakes the union has done is not have this 8.25% "employer" contribution come from you own salaries -- makes it harder for the Gordon Geckos of the world to take it from you, eh.

Giving the teacher $2000/yr raises will max out his salary at $90,000 in 2020.

In 2010, this is what the spreadsheet is saying:

Current salary: $70,000.
Total contributions: $170,000.
Investment gains: $150,000.
Total socked away: $320,000

Assuming 8% returns here on out, in 2026 the teacher will be a very old 61 and have:

Current salary: $90,000.
Total contributions: $390,000.
Investment gains: $1.1M
Total socked away: $1.5M

At continued 8% returns, the 25-yr annuity value on that cashpile would be $123,000 per year.

Of course, only Madoff got his customers 8% returns. . .

With 3% returns (the average of 1999-2009) from here on out, the total principal will be $800,000 in 2026 and the annuity value is only $44,000/yr.

Of course, any political argument you have to argue with spreadsheets is one you're going to lose, alas.

Nomograph says

709hannah says

debating with you is like adding water to acid….

Debate? You haven’t presented any facts or figures regarding US manufacturing.
You challenged everyone to find something in their home that is US-made. I gave you a long list and you simply disregard everything as being “made by illegal Mexicans”.
What kind of debate is that?

Nomo, you haven't provided any facts or figures either except your original post and that is actually a survey not fact based. You never replied to questions about how the accounting is done for items sold that have imported contents, you never provided any types of figures of actual sales, you put up as prove of your assertions a walk through your house. I also ask what kind of debate is this?

I don't know if US manufacturing is actually the largest in the world or just a largest assemblers of parts from other places in the world, but you haven't made a case of any kind.

Yes, we also passed prop 26, which blocked the only other avenue for raising revenue w/o a 2/3 vote, which essentially means voter approved only now.

It's kind of absurd. We tell the legislature to spend as much money as they want, but if you want to actually raise revenue run it by us first.

And I have a feeling that the only reason prop 25 passed - the one that made a budget just require a majority - was because it was presented as a punish-the-goverment bill in the TV ads, even though that was a minor provision of the initiative. (first sentence of the summary is "Legislature permanently forfeits daily salary and expenses until budget bill passes.") Very clever, but also very sad.

Voter approved amendments to the constitution with a simple majority vote of the population was not one of the brightest ideas ever conceived.

In LA, teachers salaries are close to maxing out in a little over 10 years, but closer to 70,000 ( if they meet requirements for a lot of additional education or training).

The fact is that it isn't as golden as you think. But you're right, I'm not going to convince you. I've argued with you before about education, to the point that I put you on ignore because you got too "know it all" about my area of expertise. I got over it. Truth is I learn a lot from you. But it's also true that you don't know how to be lose.

By the way, It's 8% plus 8.25% from the district and an additional 2 - 4% from the state.

Madoff, I think got his people 12% returns (supposedly).

MarkInSF says

Voter approved amendments to the constitution with a simple majority vote of the population was not one of the brightest ideas ever conceived.

you can blame us progressives, for that, alas.

http://bluebook.state.or.us/notable/noturen.htm

marcus says

But you’re right, I’m not going to convince you.

marcus, I think you're mostly right on this. I'm just arguing from the objective perspective, ie what's actually going to go down this year.

Pension stuff is extremely technical and variable on assumptions, contribution levels, and actual market performance and my estimates are mostly GIGO (but meant to give a rough estimate, hopefully the errors I made cancelled themselves out).

Overall the CALSTRS fund is basically set up the same as the SSTF, both are scheduled to turn into pay-as-you-go in the 2040 timeframe. Neither are in major crisis, but the optics of a schoolteacher couple retiring with $100,000+/yr in pensions for life after already earning millions of dollars from the system is pretty easy to demagogue.

This probably doesn’t apply to frisbees
How wrong you are Nomo. Didn't you get the memo? Wham-O is moving some manufacturing back the the US. And they're headquartered in the Bay Area. Use your noodle next time; we're movin' on up the value chain.

SF ace says

it is based on highest salary. So even though average is 90K, the salary range over a 35 year period is 30K-150K

Calstrs has a nice brochure out:

http://www.calstrs.com/eNewsletters/RE/Winter11/REwinter11.pdf

saying the average is now $64,156 at age 45 with 11 years of service.

EBGuy says

Wham-O is moving some manufacturing back the the US. And they’re headquartered in the Bay Area. Use your noodle next time; we’re movin’ on up the value chain.

This is good news. Dont care if its frisbees or wafers very job counts.

RayAmerica says

I totally agree. How else will the ideas of the left ever survive

...and if the 'ideas of the right' need to rely on lying in order to gain traction... well, I'm surprised even you and Syndrome don't see the problems in that one, Giggles.

IN related news Canada recently denied Fox a license to broadcast. Canada regulators announced they would reject efforts by Canada's right wing Prime Minister, Stephen Harper, to repeal a law that forbids lying on broadcast news. Canada's Radio Act requires that "a licenser may not broadcast....any false or misleading news."

So.. no lying in news broadcasts, no Fox News in Canada. In the US, no problem at all. Aren't you always complaining about the dumbing down of the US, Ray? Gosh, I wonder where the push for that is coming from?... I love this finale to a recent article on Fox vs. Canada:

"Harper's attempts to make lying legal on Canadian television is a stark admission that right wing political ideology can only dominate national debate through dishonest propaganda. Since corporate profit-taking is not an attractive vessel for populism, a political party or broadcast network that makes itself the tool of corporate and financial elites must lie to make its agenda popular with the public. In the Unites States, Fox News and talk radio, the sock puppets of billionaires and corporate robber barons have become the masters of propaganda and distortion on the public airwaves. Fox News's notoriously biased and dishonest coverage of the Wisconsin's protests is a prime example of the brand of news coverage Canada has smartly avoided."

shrekgrinch says

The main half trillion dollar gap

That actually is just right-wing spin. Look at the summary yourself on page 3:

http://siepr.stanford.edu/system/files/shared/GoingforBroke_pb.pdf

They use a statistical model to project the underfunding, and the $500B+ figure is just the highest one they projected for on the graph, giving it 12% odds. They give the probably of over a $250B shortfall at less than 50%.

And note that the probably of the funds actually showing a surplus are 30ish percent, nearly triple the odds of the $500B shortfall.

Still if it turns out to be $250B, that's would take a nice little bite out of the general budget.

I personally think statistical models for projecting investment growth are mostly bullshit, but that's a whole other topic.

SF ace says

pension is not based on average

But average can be used to understand exactly what a person pays in, and what the state and school district pays in pays in, versus what they take out (which yes, is based on highest salary). That is, if people are interested in actually understanding the approximate value/cost of the pension plan per person.

Troy says

Somebody set us up the bomb.

All your base are belong to us. You are on the way to destruction. Make your time.

Love it.

With 4.10 a gallon today for 87 I think any company that will offer an electric car and an easy way to charge it will own the markets.

So if you completely ROBBED all public employee pensions, and used it to fill your budget hole.... then what? How big of a hole in the dike do you need to fill and does that fill it?

Is that it.. Just Beanie Babies.

So whats Pratt and Witney doing China ? MFG and Design ...

http://www.pw.utc.com/About+Us/Worldwide+Locations

(Chris--maybe TSLA or GM---the Volt is sweet...Nissan Leaf is good too)

Nomograph says

bob2356 says

Nomo, you haven’t provided any facts or figures either except your original post and that is actually a survey not fact based. You never replied to questions about how the accounting is done for items sold that have imported contents, you never provided any types of figures of actual sales

I posted a news article, which does not in any way mandate that I do your intellectual work for you. If you want manufacturing accounting figures, YOU get them, YOU post them, and then YOU construct an argument based on them. Nomograph is nobody’s errand boy.

So you are stating the the manufacturing sector is "on a tear" based on a newspaper article based on a survey of opinions. Perfect. That means you don't have a clue any more than I do, I'm just willing to admit it. Of all the posters here who seem to know so much about the subject, feel free to jump in at any time and explain the methodology of how "manufacturing" is calculated.

nomograph and tatupupu70 - i am not going to waste my time arguing with you any longer. the topic was 'Manufacturing growing at fastest rate in seven years…' and my comment was..'do not go by headline news', you need to dig into the numbers and see what is truly going on…..

firstly, i assume you have a mathematics background if you are required to work in a lab. when you see a wild number that is out of line with past performance or recording..YOU QUESTION THE VALIDITY OF THAT NUMBER. corporate profits up 67%, employment rose by 80% etc etc etc…all these headlines are bullshit. nature doesn't go up and down in massive spikes……

as someone that works in a lab….when you are running a process, any process, you should already know with a fair degree of certainty what the resulting number will be BECAUSE YOU DID THE CALCULATIONS BEFORE YOU RUN THE PROCESS AND YOU KNOW THE OUTCOME. that is science…… when you are looking for a number of '25' and you get '55,000'…then you did something wrong.

right now our government is doing everything it can to publish 'happy numbers' and push them out to the main stream media (which it controls). as an investor (and a scientist) it is your job to look beyond the headlines and find out what the real numbers are and what they represent.

i don't know if you are a troll or slow or whatever but this isn't about you….this is my comment to everyone on this forum ….do the research, dig into the numbers and don't take all the hype at face value…..to do so will be at your peril.

so anyway…a few interesting numbers….

2007 report to congress on china trade deficit…..
( http://www.fas.org/sgp/crs/row/RL31403.pdf )

just an excerpt(page23)…'The value of U.S.-imports of PRC office and data processing machines
alone ($42.2 billion) exceeded total U.S. exports to China in 2005 ($41.8 billion).'

total..? total….!

'U.S. Imports from China
As shown in Figure 7 and Table 3, among the top twenty U.S. imports from
China in 2005 by dollar amount, the top six were office machines and automatic data
processing machines, telecommunications and sound equipment, miscellaneous
manufactured articles, apparel and accessories, electrical machinery, and furniture
and bedding. The value of U.S.-imports of PRC office and data processing machines
alone ($42.2 billion) exceeded total U.S. exports to China in 2005 ($41.8 billion).
While U.S. imports in all these categories have increased, the most dramatic
percentage changes have been not in traditional labor-intensive industries but in
sectors that encompass advanced technology, such as office and data processing
machines (up 284% between 2000 and 2005), telecommunications and sound
equipment (245%), and general industrial machinery (234%).'

…total u.s. exports…!…unbelievable….! i don't believe it so i look a little further and at the u.s.census website they have the export trade deficits by year…….( http://www.census.gov/foreign-trade/balance/c5700.html#2005 )…the numbers match.

what is more frightening….look at 1985…look at the ratio of import/export from 1985 to 2010. 3,855mil export to 3,861mil import…compared to 91,878mil to 364,943mil in 2010….!….and you feel we are a manufacturing powerhouse….?

DO YOU SEE ANY MENTION OF PETROLEUM IMPORTS FROM CHINA IN THIS REPORT…? using oil to justify(cloud) our trade deficit problem is just a straw man……

from the original article about the rise in manufacturing…we have the statement..'A measure of export orders rose to its highest level in more than 22 years.'….IF THIS DOESNT SET OFF A RED FLAG YOU ARE BLIND(stupid?)…. ….first off, what are they even talking about because the statement isn't even realistic when we look at the china trade deficit going back to 1985……maybe if the 'rate' was at zero and went to '50' it was the greatest rate of change as a normal rate of change would be from '3' to '5'……bullsh*t….all happy numbers…..

using general motors as an example….

1st qtr gm produces 25 cars + 5 extra…25 are sold by the dealer and the dealer inventories the extra 5.
2nd qtr gm produces 25 cars + 10 extra…25 are sold by the dealer and the dealer inventories the extra 10.
3rd qtr gm produces 25 cars + 15 extra…25 are sold by the dealer and the dealer inventories the extra 15.

GM production is going up month-over-month and at record levels…30 cars then 35 cars then 40 cars but the dealer inventory is also going up because they are only selling 25 cars a month…..so are sales up, down, or flat…..the reality is GM is channel stuffing production and the headline states..'GM production up 3rd straight month…'

is RIM channel stuffing...aapl..? they still have first gen iPads for sale..? i thought they sold all they could produce...? CSCO stuffing maybe...?

go to the links i posted and look at the numbers…..GM sales up 70%….RED FLAG AGAIN….as someone that depends on mathematics to do your job, you don't see an issue with a number like 70%….2% maybe that is realistic but 50% 70% 80%…when in your life have you had a change in any number of 70%….IT ISNT REALISTIC.

now look at those sales of 25 cars a month……subprime buyers…?…have we seen that story before…?
also look at the floor financing….how can a dealer finance that growing inventory?…go bailout…?
etc etc etc…..are we growing this economy or is it all happy numbers and bullsh*t….?

again DO THE NUMBERS, LOOK BEYOND THE HEADLINES….the headlines are for the sheeple……...

shrekgrinch says

Canada has SHITTY freedom of speech protections compared to the US, Kentm. To quote you back: “I’m surprised even you don’t see the problems in that one…”

Canada has s system where people are held accountable for defamation or for 'inciting hatred' when there is no provable truth to the viewpoint, its similar to slander laws only applied to groups. Any person making a statement who can prove its truth has nothing to worry about. The law in question here basically says that any statement made over the airwaves must be provable as a fact when its presented as such. So, um, no, I don't have a problem with that one, particularly in comparison of how Fox News is demonstrably allowed to twist and invert facts & truths.

I probably wouldn't actually have so much of a problem with Fox if they were required to state right up front what they were and that the information they're presenting is straight out opinion with a VERY political slant of a very particular orientation, but instead they're stealing the format of news shows and presenting provable lies to people as if it were fact. This is problematic.

Canada vs. US freedom of speech laws... Well, I don't see people being thrown in jail in Canada for having simply criticized a Senator... Besides, with the Patriot Act, does the US actually HAVE any actual freedom of speech laws in place anymore? Its humorous, trying to paint Canada as an oppressive society in comparison to that one item.

I can see where I think you're coming from on this one though, though its your usual presentation of half truths & semantic twists... Canada has laws that support the peace and strength of the GROUP over the individual, while screeds like Fox News exploit loopholes that support PERSONAL expression over all else, even if its a bunch of hateful lies and half truths.

The trouble with personal expression is that its such a floating target if its not backed by some kind of understood structure and philosophy and adherence to truth & honesty. I mean, I think you're dead set against the ACLU but they strongly support personal expression cases. Its just that they don't support the things you like them to, so your philosophy for supporting freedom of personal speech basically comes down to supporting what you personally like to hear.

In the face of that floating target yes indeed I support a legally agreed upon structure for enforcing honesty in public discourse...

shrekgrinch says

Who is the government to decide

Gov, gov, gov... you guys are like a GD broken record, and you say that word until you don't even know what it means anymore, like a child talking about the troll under the bed. In the case of Truth In Broadcasting Laws in Canada, its not the mythical "Gov" you've been trained & & preened & felated to hate by outlets like Fox News thats deciding anything, its a legal system that has been refined & developed over hundreds of years, with individual access to recourse, and with tradition built on education and historical precedence that debates and decides. You know, the kind of thing that exists less & less in the US.

Anne Coulter... she doesn't even believe her own BS, has often admitted as much, yet she spouts the most cynically racist & hatefully inflammatory crap simply to make money. Is that the best example you have? It sure was fun to see her demolished by Franken in that debate a year or two ago...

The US has a system that punishes lying in advertising, but not in the NEWS. Amazing. Its a recognition of and support for the results of propaganda, nothing more.

shrekgrinch says

But I guess you don’t have any problem with that, eh kentm? The old ‘ends justifying the means’ and all?

Its such a bummer that these things can be turned on their heads semantically so easily. If the ends are honest, and all things are equal, I suppose the means will create itself.... so lets keep 'em honest.

Off topic, whats your fear of something being challenged by the justice system? That would be a good thing, right? The legal system is in place to protect and equalize and discover the truth, right?...

709hannah says

IF THIS DOESNT SET OFF A RED FLAG YOU ARE BLIND(stupid?)….

Blind and Stupid is about all you can say regarding the vested RE interest.

And 'they' dont give a rats ass about anything else...

kentm says

Anne Coulter… she doesn’t even believe her own BS, has often admitted as much, yet she spouts the most cynically racist & hatefully inflammatory crap simply to make money. Is that the best example you have? It sure was fun to see her demolished by Franken in that debate a year or two ago…

... And therefore, you believe that she should have been criminally prosecuted in Canada, despite not really knowing what she believes or doesn't, nor what she writes?

This thread isn't about my feelings on Anne Coulter or Canada even. The Canadian issue was a fair comparison to the US system in regards to support for honest and open discourse and the lack of with Fox, and I tried to keep the above post to that line of thinking. I think its best to keep the discussion on that tack and not get side tracked by the Anne Coulter freakshow.

So why hasn't the reporter who lied apologized on air? If they refuse to why haven't they been fired?

One can only assume it's because lying is encouraged and supported there.

duxbury001 says

The market chooses the rates

Wrong. The market doesn't get to choose the CEO rates... It's actaully no different than the teachers' union or firefighters' union. They get their buddies on the board to go along with whatever pay and benefits that they want.

Do you honestlly think that if a CEO job were made available that you'd need to offer a $25M salary to attract worthy candidates?

duxbury001 says

really am not your econ professor

Thank goodness. I don't think you are nearly qualified to be anyone's Econ professor.

shrekgrinch says

Super Vallejo here we come.

I think you misunderstood my question. How much of current deficit is due to pensions? Not Vallejo, the state of California.

duxbury001 says

Housing mortgage /interest costs shot through the roof in the late 70’s because of inflation.

Yes, it was the inflation that was causing lenders to insist on higher rates.

And speaking of economics degrees, if I were pursuing one now I'd love to write my thesis on the 1960s-1980s inflation event. I think I've got a pretty good handle on it -- the baby boom entering adulthood -- that I haven't seen much other analyses go into.

The front rank of the baby boom turned 20 in 1966. At the same time we were drafting and sending 400,000+ men to SE Asia every year. Inflation started heating up in the late 1960s:

YOY Inflation

and I think Vietnam pulling a LOT of people out of the workforce -- there were only 1.8 million men turning 18 in 1968, so a draft of 500,000 from that is just an immense drawdown of the labor pool -- had a lot to do with it.

The late 1960s inflation was only killed by both the end of the US commitment to the war (which came mid-1970) and the general draw-down from our military and space spending in general in the 1970s (I was in the Bay Area as a kid in 1974 and while I don't remember anything I do think Silicon Valley aerospace and military contracts got slaughtered that year) were deflationary.

All the while 4 million baby boomers were turning 18 every year. The boomer bumrush peaked ca. 1975 when 4.3M people turned 18.

This demographic rush put immense pressure on housing stocks. Rents went up in response. Wages went up in response to rents going up. People getting credit for the first time as adults spurred consumption, which pulled in jobs, which grew the economy.

Apparently the US had the economic potential to absorb the baby boom, like I said we saw 20 million jobs being created that decade . . . comparing that to the two million jobs the economy LOST 2000-2010 should be instructive.

As graphed above, real wages kept up with inflation, which shouldn't be surprising since real GDP was growing at 5% for much of the decade. The 1970s recessions were clearly caused by credit contractions:

this chart

shows that remarkably clearly -- credit tightening (red line) prompted each ensuing recession (shaded area).

Limited wage flexibility during recessions makes matters worse..

The recessions of the 1970s were very short and sharp. This is because they were CREATED by the PTB to slow down inflation, to keep the system from inflating out of control.

The 1969 and 1974 recessions were piddly things compared to now:

three years into the current recession, things are still TWICE as bad as the worst of the 1974 recession.

And things are going to get a lot worse here, since everything is MUCH more out of control now than in the 1970s.

I'd take living in the 1970s to the 2010s anyday. Vida Blue, Kenny Stabler, Bubble Yum costing 25c a pack, the baby boom turning 20 and not 60 -- great times.

shrekgrinch says

marcus says

That is, if people are interested in actually understanding the approximate value/cost of the pension plan per person.

Who says that is what people are interested in? Most taxpayers don’t care. They only care about what services they get for their taxpayer buck, like most consumers do for anything.

It would seem understanding one leads to understanding the other.

shrekgrinch says

The actuarial facts are what you are having problems with, I think. There is no ‘ulterior agenda’.

Actually I am hoping that the actuarial facts, and the impact of California's finances are what rules the day.

I liked many of their suggestions and "ulterior motive" was an over reaction to two of their recommendations But here were my issues.

1) Their suggestions down play the idea of increasing contributions of members and the state

2) This wording is troubling - "The Legislature should give state and local governments the authority to alter the future, unaccrued retirement benefits for current public employees."

and most troubling

3)Their suggestion of a hybrid plan that decreases the defined benefit part. This is really where I question motive. If they do this, then money payed into pension funds drops dramatically, destroying the chance of the funds and the states making good on these obligations.

Sure that saves money, but there is a reason why the word obligation is used.

Think about it. On the one hand, tweaking contributions, adding caps, and following many of their suggestions, along with (eventual) inflation and economic growth could make it possible for these commitments to be honored.

If on the other hand, some time soon, payments in to the funds are greatly reduced, because of many new workers (or all) going with hybrids with 401ks. Then the unfunded liability situation changes. Then it does indeed become impossible to honor the commitments.

I don't really expect you to understand what I'm saying here, but some might. Still my language was maybe a little over the top, and maybe this aspect of it didn't even occur to them.

shrekgrinch says

And as for bias, well…you are definitely more biased than the rest of us non-state employees on here — not that anyone can blame you. Please consider that.

I am biased. But also my self interest might motivate me to analyze more deeply than you would. I don't think I "want to believe" one way or the other as much as you do.