Entries by Mike Shedlock

Explaining Dysfunctional Illinois in One Word, One Idea, One Person

Editor’s Note: Why is commentary about Illinois relevant to California? Because if you read this, written by economics blogger Mike Shedlock, all you have to do is substitute “California” into every sentence where “Illinois” appears, and it would still be accurate. The only thing missing from California is an entrenched speaker of the state legislature – […]

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Illinois Financial Apocalypse – $163 Billion Accumulated Liabilities

Editor’s Note:  If you think what’s happening in Illinois can’t happen here, think again. For starters, read these two studies by the California Policy Center, (1) “Calculating California’s Total State and Local Government Debt,” and (2) “Comprehensive Review of California School Bonds.” While experts disagree over what is a reasonable rate-of-return projection for […] The […]

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What Happens When Public Unions Control Everything for Decades?

Editor’s Note:  California and Illinois have a lot in common. Both have diverse, resilient economies, both are large states with most of the population concentrated in urban areas, and both have been controlled for decades by public sector unions. The crucial difference, of course, is that at least in Illinois, there is a reform minded […]

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Volcker Sounds Alarm Over States’ Budget Gimmicks and Pension Assumptions

The Volcker Alliance, founded by former Fed chairman Paul Volcker has sounded an alarm over budget gimmicks. The alliance seeks Truth and Integrity in State Budgeting. In the report, the Volcker Alliance examines in detail the budgeting practices of California, New Jersey and Virginia, assessing the effectiveness of each state’s practices. The report […] Continue […]

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CalPERS and Unions Win Again – Taxpayers and Bondholders Lose

In bankruptcy, the federal courts have ruled that cities can reduce pension obligations. They can, but they don’t have to. In Detroit, bondholders were sacrificed to maintain police and fire pensions with minimal haircuts. On Monday, U.S. Bankruptcy Judge Meredith Jury ruled against bondholders in favor of Calpers in the San Bernardino bankruptcy. She acknowledged […]

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To Save Defined Benefit, Unions Need to Accept Investment Realities

Editor’s Note: The president of the California Professional Firefighters union, Lou Paulson, has criticized Mayor Chuck Reed’s pension reform, stating “His idea of pension reform is, you sign up for one pension system, we’re going to change it now in mid career, and now you’re going to get something different.” But Continue reading at UnionWatch.org

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Michigan Court: Reduce Pensions or Reduce Retirement Health Benefits

Editor’s Note: Notwithstanding recent court challenges that could go either way, one way to negotiate meaningful steps towards financially sustainable defined benefit pensions, i.e., reductions or suspensions of COLAs, prospective reductions in the multiplier, increased employee contributions towards the unfunded liability and not just towards the normal contribution, etc., is Continue reading at UnionWatch.org

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The Partisan War on “Income Inequality”; Law of Bad Ideas

Debate rages over “income inequality”. CEOs makes hundreds or thousands of times more than workers. That is one aspect of income inequality. And it’s easily explained: The Fed’s inflation policies, bank bailouts, Fractional Reserve Lending, and crony capitalism are to blame. That blame is nonpartisan. Rather than attack the problem, “progressive” partisans howl over minimum wages. […]

Drone Transport Ships, Automation, and the Bubble Economy

Editor’s Note:  This article by Mike Shedlock leads off with a report on “drone transport ships,” but moves on to explore a provocative and very pertinent question:  Are policies that create the “bubble economy,” i.e., artificially inflated asset values, partly motivated by a desire to counter the deflationary pressures caused by automation? We have explored […]