Illinois facing "fiscal tsunami"

[Ad Orientem]

CHICAGO — Illinois is facing one of the worst fiscal crises of any state in recent decades, largely because it has mismanaged its pension system.

The shortfalls could potentially mean sharply higher taxes and cuts in spending. And even though the state’s highest court just this month threw out a landmark plan to cut worker and retiree benefits, some lawmakers say they may have to find another way to make those reductions as well.

Illinois’s problems resonate well beyond its borders. Pennsylvania, New Jersey and Kentucky are among the states confronting similar problems, and to them, Illinois is a model of what can go wrong — with political intransigence, mounting costs and a complicated legal terrain.

Read the rest here...
http://www.nytimes.com/2015/05/26/us/po ... risis.html

[Pointedstick]

It'll have to be spending cuts. They already tried raising taxes, and couldn't resist directing the extra money to their favorite projects instead of actually paying down the pension shortfall. And the IL supreme court has repeatedly ruled (correctly) that they can't cut the pensions at all.

[Stewardship]

Illinois’s problems resonate well beyond its borders. Pennsylvania, New Jersey and Kentucky are among the states confronting similar problems, and to them, Illinois is a model of what can go wrong — with political intransigence, mounting costs and a complicated legal terrain.

Didn't this just happen with Detroit?  Also my city, North Las Vegas was insolvent a year ago.  Illinois isn't the first and it certainly isn't the last.  Add Los Angeles to that list.

Are people still saying that government debt isn't a bad thing?

[bedraggled]

I heard Las Vegas may have no water within 2 years.  Is this accurate?  Is it time to leave Las Vegas?

[Xan]

Are people still saying that government debt isn't a bad thing?

States are currency users.  The federal government is a currency issuer.  Huge difference.

[Libertarian666]

Are people still saying that government debt isn't a bad thing?

States are currency users.  The federal government is a currency issuer.  Huge difference.

Yes, the difference is that a currency issuer can keep going further into debt until they make the currency worthless and wipe out everyone who has accepted it as money, whereas a currency user can only wipe out those to whom it owes money.

Wait a minute, what was that difference again? 

[Pointedstick]

Are people still saying that government debt isn't a bad thing?

States are currency users.  The federal government is a currency issuer.  Huge difference.

Yes, the difference is that a currency issuer can keep going further into debt until they make the currency worthless and wipe out everyone who has accepted it as money, whereas a currency user can only wipe out those to whom it owes money.

Wait a minute, what was that difference again? 

The relevant time scale?

[moda0306]

States are currency users.  The federal government is a currency issuer.  Huge difference.

Yes, the difference is that a currency issuer can keep going further into debt until they make the currency worthless and wipe out everyone who has accepted it as money, whereas a currency user can only wipe out those to whom it owes money.

Wait a minute, what was that difference again? 

The relevant time scale?

Well since we are perpetually on the doorstep of hyperinflation or default, I'd have to say the time scale on public debt is imminent!  Just ask Peter Schiff!

I kid.  My environmentalist leanings have always left me with cognitive dissonance towards a Keynesian mindset that I tend to think works for economics.  As I've been diving deeper into the machinations of our federal surveillance state, foreign wars, and corporatocracy, I'm starting to wonder more and more what they systemic risk is to this country of having so many Americans and corporations dependent on an ever-growing top-line (aggregate demand) to supply a sustainable bottom line (paying the bills and living a happy lifestyle).

We build so much on leverage, yet we expect defense (and other) corporations to just go quietly into the night when they've built their entire business structure on requiring ever-higher gross revenues.  I recently saw a documentary on food (Fed Up, I think).  It raised the point that even if we wanted our kids eating healthier, it's almost impossible when you've got a food industry that is built to feed them Pizza Hut more than steamed veggies and healthy meats.  They are actually quite leveraged into this position, which makes them unable to change quickly, and therefore any efforts to limit their gross revenues are going to be met with some extreme survival-instinct reactions that wouldn't be as strongly motivated if they were in a more flexible financial position.

However, I still fervently believe that business interest of various size are NOT served by an austerity mindset, as they often claim.  When I hear a business owner with inadequate sales complaining about low interest rates and/or high spending, I truly wonder if he knows how bad it would be for him to have an "Austrian" fiscal/monetary policy.  Obviously this doesn't apply to all businesses or sectors, but certainly a lot of them.

[Pointedstick]

We build so much on leverage, yet we expect defense (and other) corporations to just go quietly into the night when they've built their entire business structure on requiring ever-higher gross revenues.  I recently saw a documentary on food (Fed Up, I think).  It raised the point that even if we wanted our kids eating healthier, it's almost impossible when you've got a food industry that is built to feed them Pizza Hut more than steamed veggies and healthy meats.

Bullshit. We have no difficulty whatsoever feeling our son healthy food irrespective of how many pizza joints may be around. He pretty much loves all vegetables at this point. Pizza too, but we choose how much of that he eats. The food industry doesn't feed kids anything; parents decide what to feed their kids. To the extent that a a lot of parents feed their kids junk, that's simply the effect of them going with bad default choices rather than thinking and choosing for themselves. This effect is real, and better defaults are important, but ultimately the real solution is to teach people to make their own decisions.

[moda0306]

PS,

Parents don't really "feed kids" at school lunches.  Sure, they don't seem overly motivated to make them healthier, but far, far more of the school lunches today are being provided by food companies that prepare things like frozen pizza than mixed vegetables.  This, of-course, is a chicken/egg thing that is just as much (initially) about parents/admin priorities as it is about the industry.  However, they are now naturally leveraged and motivated into 1) serving kids foods that their productive capacity is designed to prepare in mass quantities, and 2) it really helps if the food is addictive (which un-healthy options have often shown to be when studying the brain) for future consumption.  I've never had a binge broccoli eating session, but I've loaded my face with 1,000 calories of pizza on several occasions and wanted more with a full stomach.

I'm not trying to take away the ultimate responsibility of the parents and perhaps somewhat the school district administrators, but the motivations of the food industry are real, and work their way into the political and administrative process.  And when they leverage themselves into a certain productive framework, there are undeniable macro-economic rigidities that are going to work their way into public policy via political contributions.

I'm not advocating a statist solution... simply trying to determine facts and cause/effect relationships.

[Pointedstick]

Oh, school lunches… so you're complaining about the government, then?

[moda0306]

I'd like to add that parents feeding kids junk is by far the biggest root of the problem.  Without complacency in that arena, we would have no problem with Pizza Hut being served at school lunches.

But we're talking about the negatives of building a highly-leveraged economy... and in that case I think it builds rigidities in production that leave corporations VERY motivated to keep the status quo alive against the greater good of the people, and oftentimes against the free market.  Take the over-head around debt out of the equation, and corporations would have a lot more flexibility to reduce their expenses when aggregate demand for their product takes a hit and remain profitable.  Debt pushes them tighter into the corner due to the larger nut they have to hit just to break even.  And we all know how motivated people are when they're backed into a corner.

[moda0306]

Oh, school lunches… so you're complaining about the government, then?

I'm not complaining.  I'm describing one risk of debt.  And this is probably far-more a risk in our military industrial complex where things are done in secret (and spying is used as a tool).

So in that sense, yes, I AM concerned about that aspect of the government's pro-growth, pro-debt model.  And its affect on motivations of how the private sector (if you can call it that, if it contracts with government so much and is built on a publicly traded business chassis) interacts with that government.

[Libertarian666]

Oh, school lunches… so you're complaining about the government, then?

I'm not complaining.  I'm describing one risk of debt.  And this is probably far-more a risk in our military industrial complex where things are done in secret (and spying is used as a tool).

So in that sense, yes, I AM concerned about that aspect of the government's pro-growth, pro-debt model.  And its affect on motivations of how the private sector (if you can call it that, if it contracts with government so much and is built on a publicly traded business chassis) interacts with that government.

The defense industry is in (almost) no sense the private sector. Yes, it has shareholders, but it is entirely dependent on and financed by taxation and borrowing.

The way to tell what is the private sector and what is the public sector is actually pretty simple: if the government disappeared tomorrow, who would be financially better off and who would be financially worse off? The former is the private sector, and the latter is the public sector.

[moda0306]

Oh, school lunches… so you're complaining about the government, then?

I'm not complaining.  I'm describing one risk of debt.  And this is probably far-more a risk in our military industrial complex where things are done in secret (and spying is used as a tool).

So in that sense, yes, I AM concerned about that aspect of the government's pro-growth, pro-debt model.  And its affect on motivations of how the private sector (if you can call it that, if it contracts with government so much and is built on a publicly traded business chassis) interacts with that government.

The defense industry is in (almost) no sense the private sector. Yes, it has shareholders, but it is entirely dependent on and financed by taxation and borrowing.

The way to tell what is the private sector and what is the public sector is actually pretty simple: if the government disappeared tomorrow, who would be financially better off and who would be financially worse off? The former is the private sector, and the latter is the public sector.

To paraphrase Milton Friedman, I suppose "we are all members of the public sector, now."



JK.

[MachineGhost]

Bullshit. We have no difficulty whatsoever feeling our son healthy food irrespective of how many pizza joints may be around. He pretty much loves all vegetables at this point. Pizza too, but we choose how much of that he eats. The food industry doesn't feed kids anything; parents decide what to feed their kids. To the extent that a a lot of parents feed their kids junk, that's simply the effect of them going with bad default choices rather than thinking and choosing for themselves. This effect is real, and better defaults are important, but ultimately the real solution is to teach people to make their own decisions.

The federal budget for public awareness campaigns is laughably miniscule compared to Big Food's advertising.  Not holding my breath.  At all.

Have I mentioned before that I believe we should require licensing exams to be able to breed?

[MachineGhost]

Parents don't really "feed kids" at school lunches.  Sure, they don't seem overly motivated to make them healthier, but far, far more of the school lunches today are being provided by food companies that prepare things like frozen pizza than mixed vegetables.  This, of-course, is a chicken/egg thing that is just as much (initially) about parents/admin priorities as it is about the industry.  However, they are now naturally leveraged and motivated into 1) serving kids foods that their productive capacity is designed to prepare in mass quantities, and 2) it really helps if the food is addictive (which un-healthy options have often shown to be when studying the brain) for future consumption.  I've never had a binge broccoli eating session, but I've loaded my face with 1,000 calories of pizza on several occasions and wanted more with a full stomach.

Isn't this a terribly dated viewpoint what with Michelle Obama's healthy changes to the school lunch program?  It is having a positive effect.

[Pointedstick]

ned before that I believe we should require licensing exams to be able to breed?

I uh, don't think you've fully thought through the implications of this position. At least I hope not; if you have, well... 

[MachineGhost]

ned before that I believe we should require licensing exams to be able to breed?

I uh, don't think you've fully thought through the implications of this position. At least I hope not; if you have, well... 

I'm aware of the implications, but the implications of ignorant parents raising diabese kids is far, far worse.  Just look around.  Of course, this won't work unless pregnancy is opt in.  But you know what they say...  shoot for the moon and if you fall short, you've reached the sky.

[Pointedstick]

I uh, think you're entering the realm of pure fantasy here.

[MachineGhost]

I uh, think you're entering the realm of pure fantasy here.

Everything starts out a dream at first, right?

[Stewardship]

I heard Las Vegas may have no water within 2 years.  Is this accurate?  Is it time to leave Las Vegas?

Nah, water is an abundant resource.  The government here just wants to be exactly like California's, fining people for watering their lawns and then fining people for having dead lawns.

It may be time to leave Las Vegas depending on what your goals are.

[moda0306]

I heard Las Vegas may have no water within 2 years.  Is this accurate?  Is it time to leave Las Vegas?

Nah, water is an abundant resource.  The government here just wants to be exactly like California's, fining people for watering their lawns and then fining people for having dead lawns.

It may be time to leave Las Vegas depending on what your goals are.

You really think water scarcity (alleged, I suppose) is just a double-sides lawn fine money-grab from government?

[flyingpylon]

Bullshit. We have no difficulty whatsoever feeling our son healthy food irrespective of how many pizza joints may be around. He pretty much loves all vegetables at this point. Pizza too, but we choose how much of that he eats. The food industry doesn't feed kids anything; parents decide what to feed their kids. To the extent that a a lot of parents feed their kids junk, that's simply the effect of them going with bad default choices rather than thinking and choosing for themselves. This effect is real, and better defaults are important, but ultimately the real solution is to teach people to make their own decisions.

IIRC, your son is still quite young.  Start planning your strategy now for when he gets a little older and is more heavily influenced by friends and mass marketing, not to mention when he becomes a teenager.  Don't stop at food either... have a strategy for video games, TV, mobile devices, and whatever else comes along.  And then decide where household peace and harmony fit on the priority list in relation to those other items.

[Stewardship]

You really think water scarcity (alleged, I suppose) is just a double-sides lawn fine money-grab from government?

No, its much more than that.