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Archive for August 14th, 2010

The only way out appears to be a combination of higher taxes, fewer public services, and reduced pension benefits. Expect the hostility between the public and private sectors to intensify and to break out into open class conflict.

The pension plans sponsored by states and municipalities will place a substantial burden on state and local public finances in the near future. My recent work has estimated that the present value of already-promised state pension benefits is over $5 trillion when the benefit payments are discounted using Treasury yields, compared to a little over $2 trillion in pension fund assets. Most state constitutions offer special protections to pension benefits that state workers have already earned.

This analysis raises the question of how soon such a situation might lead to an all-out state and municipal fiscal crisis. One important day of reckoning is the day that the state pension funds run out of money. At that point, pension payments to retirees will have to come out of general revenues. This day of reckoning is in fact not as far away as some might imagine. For Illinois, it could be as soon as 2018.

Red more at the Kellogg School of Management.

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Hard work and individual initiative in the private sector no longer pay off. That’s why the smartest kids are being nudged into careers where they’ll produce the least that is useful.

“Anyone who wants to work an interesting job, earn a generous salary, enjoy unbeatable, rock-solid job security and, most importantly, advance the public good in pivotal ways would probably favor the federal sector,” said Lily Whiteman, Federal Careers Expert. This quote represents a troubling new reality in today’s American society: The public sector has become more attractive than the private sector. Today, however, government favoritism toward public workers has skewed the sense of values that are the American capitalist hallmark. Ms. Whiteman continues on to say, “. . . government employees seem to work shorter hours, have more vacation time, access unbelievable health care, never worry about job security and even make more money than people slugging it out in the private sector.” Sounds like a dream job, right? Work less, don’t worry about losing your job over poor performance, get better benefits, and get paid more for doing a job that contributes very little to the nation’s output. So what, now, are parents supposed to tell their kids, “Weasel your way into a government job and you’ll be set for life”? The reality of the situation is that the government always looks out for its own, even when the economy is spinning down the toilet.

Read more at Minyanville.

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When some of us rant about “the elites” who presume to rule us—to systematically rob us of private wealth and individual liberty—to whom, precisely, are we referring? Prof. Angelo Codevilla of Boston University has done a stunningly thorough job of identifying these elites and explaining their method of rule. His essay is rather long but is worth reading in its entirety.

Never has there been so little diversity within America’s upper crust. Always, in America as elsewhere, some people have been wealthier and more powerful than others. But until our own time America’s upper crust was a mixture of people who had gained prominence in a variety of ways, who drew their money and status from different sources and were not predictably of one mind on any given matter. The Boston Brahmins, the New York financiers, the land barons of California, Texas, and Florida, the industrialists of Pittsburgh, the Southern aristocracy, and the hardscrabble politicians who made it big in Chicago or Memphis had little contact with one another. Few had much contact with government, and “bureaucrat” was a dirty word for all. So was “social engineering.” Nor had the schools and universities that formed yesterday’s upper crust imposed a single orthodoxy about the origins of man, about American history, and about how America should be governed. All that has changed.

Today’s ruling class, from Boston to San Diego, was formed by an educational system that exposed them to the same ideas and gave them remarkably uniform guidance, as well as tastes and habits. These amount to a social canon of judgments about good and evil, complete with secular sacred history, sins (against minorities and the environment), and saints. Using the right words and avoiding the wrong ones when referring to such matters — speaking the “in” language — serves as a badge of identity. Regardless of what business or profession they are in, their road up included government channels and government money because, as government has grown, its boundary with the rest of American life has become indistinct. Many began their careers in government and leveraged their way into the private sector. Some, e.g., Secretary of the Treasury Timothy Geithner, never held a non-government job. Hence whether formally in government, out of it, or halfway, America’s ruling class speaks the language and has the tastes, habits, and tools of bureaucrats. It rules uneasily over the majority of Americans not oriented to government.

The two classes have less in common culturally, dislike each other more, and embody ways of life more different from one another than did the 19th century’s Northerners and Southerners — nearly all of whom, as Lincoln reminded them, “prayed to the same God.” By contrast, while most Americans pray to the God “who created and doth sustain us,” our ruling class prays to itself as “saviors of the planet” and improvers of humanity. Our classes’ clash is over “whose country” America is, over what way of life will prevail, over who is to defer to whom about what. The gravity of such divisions points us, as it did Lincoln, to Mark’s Gospel: “if a house be divided against itself, that house cannot stand.”

Read more at The American Spectator.

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Remember the Jobs Bill, passed by Congress last spring? It’s really about controlling what little wealth remains in private hands. The oligarchs who own and run the U.S. Federal government can and will take everything you own. Most Americans are unaware that this is happening.

Instituting capital controls seems like the next big event in the government-banking-oligarchy’s great looting of America.

First, these vampires designed “free trade” agreements to use slave labor abroad at the expense of American jobs.  Next, they moved their investment capital and assets abroad sucking the life-blood out of the U.S. economy.  Then, they covertly used America’s remaining wealth to prop up their bogus financial instruments like credit default swaps and derivatives, which came crashing down.  Finally, they got their taxpayer bailout, and now they want your pension funds and cash deposits to stay under their control.

This last stage of the mass looting requires your wealth to remain in their possession.  They seem to be setting up several ways to control the remaining capital.  One of the first tactics used by the banksters to control your money was to get the SEC to adopt a proposal to allow money market funds to suspend withdrawals during a financial crisis to prevent bank runs.

Read more at Activist Post.

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