President Snow

Are “The Hunger Games” realistic? Yes and there are ample historic examples. The Soviet Union operated on that basic premise for decades.  Specifically various regions (Districts) operating a very monolithic economy with all planning and distribution through a central authority or city (Moscow).  Such a system inherently breaks down if not for the sheer inefficiency of such economic models causing the collapse from the center out.  Or from the  abuse of power of the central authority causing moral decay and eventual collapse of production.

The whole colonial model of England in New England, Holland with the Dutch East and West Indies Companies and the French in Africa and South East Asia are great examples.

What about Tributes, you say?  Slaves for one and Roman Games, “For those about to die, we salute you!”.  Parallels to Communist Party membership and hence privileges the normal folks of the district would not get, that parallel is strained.   But the Victors did get to share in the wealth abet with some guilt.  As President Snow said, “offer hope, but don’t deliver it”.   “I don’t like underdogs”, said  President Snow.

Capitol City practices “extractive economies”, the outlying districts use unskilled labor for one commodity only, the technology or equipment to add value to that commodity that are not located in the districts. Emigration to other districts in search of better opportunities are banned, as are exploitation of the apparently bountiful resources of the surrounding forest.  Keep the masses down and make them dependent on the Capitol City.   All this is very much in line with the Colonial Model Exploitative economies of the 1500′s, 1600′s and 1700′s.  As well as limiting educational opportunities.

Oh, and to those who say, you’ll be confused if you don’t read the book before seeing the movies.  Not so, especially if you know history.

I enjoyed the movie.  It tells a story.  Very little special effects, the story doesn’t need it.  Worth seeing.  3 Thumbs up from the Mainstreet movie critic.

Amazing Tech Needs Amazing Taxpayer Dollars!

Ponder the concept of tech so amazing that it must get Federal loans.   Considering the track record of Federal government giving loans and the following exchange between Energy secretary Steven Chu and Sen. Al Franken (D-MN) and you just might cringe.

Sen Al Franken:

And it’s really…I’ve been there and it’s just an amazing tech. In the Spring of 2010, the DoE promised the company it would receive a $72 million loan guarantee under the 1703 Program to build a new manufacturing facility that would create 160 manufacturing jobs and 200 construction jobs in southern Minnesota. It’s now been two years since SAGE has been notified that it will receive a loan guarantee and the deal has not yet been closed. While the Department of Energy prolongs closing the deal, time and money are running out for SAGE. There are high-tech manufacturing construction jobs at stake here. It’s been going forward with the project assuming they get this loan guarantee but they’re running out of time and they may have to sell themselves to a French company. My first question is that the SAGE loan guarantee was going to be submitted to the credit committee on August 23rd, but it was stopped. Why is the Department of Energy continuing to delay closing and executing the SAGE loan guarantee?

Because maybe, and just maybe the Federal DOE thinks its a bad investment.  And they are probably right, if it was a great investment in amazing tech, there would be hundreds of lenders lining up to loan them money.

But seriously, what is this amazing tech?  Its glass as in window glass that darkens or lightens at the flip of a switch.

Maybe for Al Franken its amazing tech….or maybe it’s just amazing because it’s in his state.    But I think its amazing that Sen Franken is so shameless in shrilling for tax dollars and if they don’t get the money (our money) they just might have to ….gasp….sell themselves to a French company….the horror…. a fate worst than death.   Well I have dealt with French companies and they are really quite good business people.  Most people in business, successful businesses are.   And those in Government, typically aren’t, because its not their money.

If you go on Sage’s website you will find most of the installations are Colleges and Government buildings.  Very few privately funded installations.  And does that not tell us something?  Amazing tech so amazing and so expensive that only tax payer funded installations go past the planning stages.

This is what passes for “creating jobs” and election campaigns.    Sure, sell it to the French.

President George Washington - Resigning

Why?  Because he stepped down.  At a critical point in the new Republic, when traditions had not yet been solidified, he voluntarily gave up power and went home.

A tradition that held till Franklin Roosevelt, who couldn’t give up power, only after he died in office did he go home.  After that we passed an amendment limiting Presidents to two terms, just like George Washington.  Good enough for George good enough for all that follow.

Giving up power voluntarily was rather unusual in that time period.

He wasn’t the deepest thinker in the bunch, but consider the crowd, Jefferson, Franklin, Madison, Adams and Hamilton.  He lead through actions, and if you could pick one of the most critical junctions in American history, and there are many, the act of resigning and going home was and is to this day game changing.

We honor General George Washington for all he did, and what he didn’t do.   Compare his actions to those in the city that bears his name and reflect.  Maybe they should be more like George.

Prime Rate - You Get Much Lower

A lot of retirement planning are based on a 7% rate of return.   Especially pension plans that are not subject to change.  With the Federal Government keeping interest rates artificially low these pension plans are having a hard time delivering.

Additionally the amount of money that people not on pensions have to save prior to retiring is going way up as they count on dividends in the 1% range and not the 7% range, causing many to delay retirement or just put it off.

Consider this, the Government debt service is $169 Billion this year.  That is interest only, and that is at artifically low rates, rates the Government is keeping low as a means to stimulate the economy.  A side effect is if the interest doubles or triples or more, which eventually it will, the Government will be looking at upwards of $600 Billion in interest payments.  Or over 1/2 Trillion dollars a year, and that is just the interest payment, never mind principle payment.

The Government has every incentive to keep interest rates low, which hurts pension plans and retirees, which causes them to delay retirement or not to retire, which exacerbates the unemployment problem.

The Federal Government has a big footprint in the economy and right now it hurts.  Government debt and the Government’s attempts to deal with it and the recession are having horrible effects and it’s going to get worse.

This will cause people to take more risk at a time they should be dialing it back.

Greek Riots

We need to follow Greece because their default and withdrawal from the eurozone would set off major consequences to the European Monetary Union, and thus the EU, that are unforeseeable. A default would impact Greek banks who are major lenders to the government, as well as major German, French, and Belgian banks. These defaults would set off a crisis because these big banks are allowed to use sovereign bonds, such as Greek bonds, as Tier 1 capital. Everyone knows that those values are a fantasy and that these European banks are seriously undercapitalized. Even without a Greek default, these banks are required to come up with an additional $150billion of capital by July 1, 2012. A default would eventually result in major bank bailouts from their host countries and would probably require the European Central Bank to intervene by buying sovereign debt, thus monetizing the debt and flooding the EU with fiat (editor: fiat = paper printed money) money. Greece would just wipe out its debt, go back to the drachma, and stay in perpetual recession/depression. My guess is that there could be a military coup somewhere along the way.

Perhaps everything will be just fine, but my smell-o-meter tells me otherwise:

Today is the first day of massive protests in Athens, Thessalonika and other cities. Five ministers resigned from the coalition cabinet of Lukas Papademos.  Germany’s Finance Minister Wolfgang Schäuble cast a shadow of doubt over the proposed implementation of austerity measures since they haven’t followed through on the conditions from the first bailout. Several members of the “nationalst” Laos party resigned and refused to back the settlement. It’s getting ugly. This, from different sources:………read more at the Daily Capitalist

Biggest question I have, will our Government feel the need to “help out” and buy European Sovereign debt, with our fiat (printed paper) money? The Germans have said no repeatedly.

Judge for yourself.  This is the actual language.
Standard And Poors Report.

Some highlights.  That I think represent the tone and bring out the points the media as usual is missing.

My take, S&P reduced the rating because:

1) Recent events in Washington have left S&P doubtful congress can act effectively to deal with the financial problems facing the country.

2) The recent agreement is not adequate.

3) The timing of the next election makes it unlikely a significant agreement will be reached, the debt issue will be worse and require tougher measures.

4) Political  leaders have shown no intention of tackling Medicare and Medicate or

other entitlements programs.

5) S&P takes no position of what mixture of revenue raising or spending cuts is appropriate.

From the report.

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective,
and less predictable than what we previously believed.

The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently.

Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures.

It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal  sustainability. Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a ‘AAA’ rating and with ‘AAA’ rated sovereign peers.

In our view, the difficulty in framing a consensus on fiscal policy weakens the government’s ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population’s demographics and other age-related spending drivers closer at hand (see “Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now,” June 21, 2011).

Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing.  The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

Change in Unemployment Rate By Country

By any measure this has been a hard and long recession, and many of us are not convinced it is over.  Particularly worrisome is the millions of men who have dropped off the face of employment statistics.  Men who have just disappeared.  No statistic the Federal Government keeps tracks them.  If they are working its in the cash underground or by barter or combination of or just wearing out the couch.  These men having exhausted their unemployment don’t even show in the state numbers.

Giving voice to this statistic is the Structural Unemployment number traditionally around 2%, representing the people who don’t work and aren’t looking for work, the long term unemployed.  The chart (Reuters) suggests this rate maybe more like 4.5% now twice the rate of any European country.

The share of American men aged 16 to 64 who are employed has fallen from nearly 85 percent in the early 1950s to less than 65 percent now.  This is a really big deal, millions of men have dropped out and are not participating in the American economy.  We have no experience with what the social ramifications will be, a huge rise in crime comes to mind.

Some estimates put every 1 in 5 young men out of work, and this does not include those in school, or who have part time jobs.  This is a critical time for those men, work habits are established and a career basis is formed.  The start of their life wealth is being seriously delayed, if it ever starts at all.

Chairman of the Texas Workforce Commission Tom Pauken writes:

One reason that men’s employment rate lags behind is that there has been negative growth in the types of jobs men historically have occupied. In the last 10 years, 5.5 million manufacturing jobs were lost. That’s one-third of our manufacturing base in an industry where men make up 70 percent of the workforce. In construction, where 87 percent of positions are filled by men, more than 1.4 million jobs went away during that time frame. Approximately 4.4 million jobs have been added in the education and health care sectors, but women dominate this growing field as they make up 77 percent of the work force.

Bringing manufacturing jobs home is more critical than ever, it’s a National Security issue.

Job Growth By State Since The "End" of the Reession

Regional and State Employment and Unemployment Summary (BLS.gov)

If you click on the graph to the right and expand or zoom in on Connecticut you can barely see a tiny bit of blue.  That blue represents job growth since the MAX jobs lost point during the 2007 Recession as of this past May 2011.  Note it’s the 2007 Recession and we are now obviously in 2011.  The top of the blue is the worst unemployment rate and the top of the red is where we are as of May this year.  Keep zooming in, I assure you there is SOME blue in the Connecticut bar, (yes a pun).

Also note only one state is worse in job growth.  Louisiana.

If you google.com “companies leaving Connecticut” it returns: 59,100,000 results in (0.10 seconds) including a link for this resource guide on everything you need to know, leavingconnecticut.com

To this I add, how could the housing market in Connecticut ever recover if we don’t improve our job growth?

Counting Ballots

The number of minivans in the school parking lot was a giveaway.  The budget passed 181 Yea, to 50 Nay (or something close to that).

No drama, no questions.  Just the check in and voting.

This was the third budget vote and essentially the same budget tax increase and spending wise.  The bottom line was the same for all three votes.

The 1st and 2nd differed by a line item providing legal fee relief to residents in the Sewer District.  And I’ll not explain that, it would take a book to fully explain the ins and outs.  The 2nd and 3rd budget “essentially” in Bill Black’s words, were the same.

A exit survey was prepared in the event the budget failed.

Your July 1st tax bill will show a 2.35% tax increase over last year.

$80 Billion in 8 Days.

Treasury’s release this afternoon of its Monthly Statement of Public Debt provides more insight into how much of those options Treasury has tapped so far. The following chart shows non-marketable securities held by the CSRDF each month since April of last year.

The G-fund was $73.3 billion as of May 31, down $56.0 billion from the end of April. As our next chart shows.

Zerohedge.com