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Economics

July 27, 2015

"Pension Funds Burn Cities as $1 Trillion Shortfall Set to Grow"

To quote what the psychiatrist, Dr. Krakower, chillingly tells Carmela Soprano: "One thing you can never say: You haven't been told."

(Transcript of part of the scene here; video clip here. One of the absolutely best scenes of the show.)

Related: You might think they'd know better by now. But noooooooo! "The Dangers of Pension Obligation Bonds". (With extra nice touch: this unanticipated problem is due to a fix to an earlier problem.)

Also related: "Chicago's Financial Fire: The city faces trouble from every direction."

Also related: the private sector, no surprise, is smarter.

The stunning improvement in business and family balance sheets is arguably the most impressive and under-reported characteristics of this U.S. recovery (see chart). The latest government statistics indicate that the private sector has massively deleveraged following the debt binge from 2000 to 2008.

"Pension doomsday: How will Illinois pols cope with this crisis?"

Editorial, July 24, Chicago Tribune:

More bad news for Chicago (and Illinois) taxpayers arrived Friday morning in a 35-page, double-sided packet. On one of the last pages: "The entire Act is void."

. . .

The state is in a grotesque stalemate over its finances. Gov. Bruce Rauner, Senate President John Cullerton and House Speaker Michael Madigan can't agree on much of anything, let alone a pension strategy. Even a compromise offered by Cullerton and supported by Rauner that would give pensioned employees a choice on how to reduce their benefits doesn't appear likely to pass constitutional muster, given the courts' rulings. In this state, under these unambiguous decisions, you can't willingly negotiate away a constitutional right.

"Hillary Clinton's economics: Suddenly it's 1947"

It is rather amazing how much affection today's Liberals have for the U.S. of 50 to 60+ years ago.

You can understand why that confidence was strong in Clinton's early years. The United States had just won a world war and was facing not the widely predicted resumption of the Depression of the 1930s but the surging postwar prosperity that is still fondly remembered by many.

"We must drive steady income growth," Clinton said, as if that were as simple as popping those new automatic transmission shift levers into "D." "Let's build those faster broadband networks." Which private firms were doing until a Federal Communications Commission network neutrality ruling demanded by Barack Obama. We must provide "quality, affordable child care," as if government were good at this.

"Other trends need to change," Clinton said, including "quarterly capitalism," stock buybacks and "cut-and-run shareholders who act more like old-time corporate raiders." This sounds like a call to return to the behavior of dominant big businesses in the early postwar years, when they worked in tandem with big government and big labor — and faced little foreign competition or market discipline.

July 21, 2015

"The US capital has a short buildings problem"

Absolutely lovely case study of how the dead hand of dopey, ancient laws screws life up.

This situation, so anomalous among major American cities, came to pass because of a backlash against the construction of the 164-foot Cairo Hotel (now an apartment building) way back in 1894. 

"Potential Uber cap has all the makings of a major scam"

Government in the Big Apple at work.

"Hayek for Everybody"

AEI's Alex J. Pollock reviews Donald Boudreaux's new book, Hayek for Everybody The Essential Hayek. (As I write, it's available free on Amazon.)

Boudreaux’s appeal is to the power of ideas in the long run. He believes that “No economist in the twentieth century has done as much to get the ideas right as did F. A. Hayek.” Those of us who admire these profound and complex ideas are glad to have them published in popularized, compact, introductory form. May they flourish.

UPDATE: link now included.

UPDATE 2: title of the book corrected and link to the book provided. Thanks, John.

"The Costs of Smart Growth Revisited: A 40 Year Perspective"

From four years ago. Wendell Cox argues smart growth hasn't been so smart: "Planning needs to facilitate people's preferences, not get in their way."

Related: "The Only Hope for Reducing Traffic".

July 20, 2015

"Don’t Wait Until 70 To Retire. Here’s Why."

Interesting piece that originally appeared on the Forbes site but was yanked. Unlike dozens of experts who advise waiting until 70 to collect Social Security--free money!--this piece suggests there's a good reason not to wait

And here's another piece that makes a similar point: "Would You Take 77 Cents For Every Dollar Social Security Owes You?"

Related: that nifty "spousal benefit"? That might not last, either:

"Our impression is that it was not specifically intended that this opportunity would be provided," Stephen Goss, the Chief Actuary for the Social Security Administration, told Kestenbaum. . . . 

President Obama's current budget proposal calls for eliminating aggressive Social Security strategies that benefit the wealthy, such as this one. Ultimately, "It will take an act of Congress to close the hole that it has created," says Kestenbaum.

"2016 Election: Americans Vote With Their Feet Daily, And The Winner? Texas"

Texas is clobbering California. Of course, Professor Krugman believes it's the weather:

His response to the far superior economic performance of Texas and Florida over California and New York, for example, was to argue that the migration is due to air conditioning. Most of the audience howled at that one, but he wasn't joking. Apparently people are moving from San Diego to Houston for the weather.

Related: "Oil Shock May Slow Texas, But Its Miracle Is Beyond Crude".

"Interest rate forecasters are shockingly wrong almost all of the time"

I can't say I'm "shocked": macroeconomics is hard.

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