City Bankruptcy Tsunami... as goes Rhode Island...?

Central Falls, Rhode Island.  The city's website proudly proclaims itself a "city with a bright future".

Maybe after they go thru bankruptcy (see WSJ  http://blogs.wsj.com/marketbeat/2011/08/01/central-falls-becomes-second-muni-casualty-of-2011/).  The city has entered receivership and "THE FAN" of SHTF fame will be working overtime.  This could be a blueprint for the inevitable wave of municipal bankruptcies being readied now.

Across the country, get ready for "realignment" and "restructuring" more corporate-style than what local governments feel they are permanently insulated from.  City by city, it will be reported that city budgets have been increasing (despite howls of budget cuts, etc.), year after year, while services have been decreasing, year after year, because... the workforce is retiring in increasing numbers into collectively-bargained, sweetheart pension plans that are.... uh oh, not funded.   I've witnessed this phenomenon up-close in California in sleepy li'l San Luis Obispo and now San Francisco.   When will these failing machines break down and get fixed?

Let's be real.  Cities have to do what they can to maintain as strong a credit rating as possible, because they WILL have to borrow more money even if their house is in order - receipts don't always match up in time with necessary expenditures.  So they will pay back interest and principal on their existing bonds and other debt come hell or high water.  What they will sacrifice are their biggest cost items - labor contracts and unsustainable pension provisions.  What mayors and councils haven't been able to do, court-appointed receivers will.

Look for some previously unthinkable solutions to surface... receivers are business accounting and legal folks who don't owe anything to government management traditions.  Could neighboring cities merge like corporations to reduce costs?  Hmmm.  More cities are outsourcing their services to their host counties... but that's just a partial step.  Surely there will be more outsourcing to hungry private-sector operators.  Services might even get a favorite private sector tactic - value pricing - good, better, best service standards with corresponding fees.

You may feel that you are not receiving much in the way of "city services" these days.  You need to get ready for less service and/or higher fees.   Not much can be taken for granted when your city bites the bullet and really tackles its fiscal problems.  That time is here...  so all the cities that say they have a bright future can at least have A future.

Slow Motion Replay - How China Won the Upper Hand in Global Economics

... and got American and Europe on the ropes of debt.

The couple-page analysis  HERE  is about as good a summary of China's successful economic strategy as I've ever seen.  Well worth your time to read and digest. The conclusions about what we must do to avoid the dustbin of history are right the to the point.

The Debt Ceiling is a total red herring.  So are the "plans" by the political parties to deal with our debt.  The story is the debt itself, how we got to where we are, and what we must do, if bitterly, to correct it.  Few will be spared - my parents grew up in the Depression and remembered it vividly.  Most sacrificed to one degree or another.

Oh, I and I wouldn't be looking for a replay of WWII to 'save' us.  The war is already well advanced, and it is  ECONOMIC, not military.   China used asymmetry to its great advantage in gaining the economic upper hand.  Time for us to wake up, generate a viable strategy and action plan, and work like hell to execute it.

 

Yep. It's all the Baby Boomers' Fault.

Eisenhower called out the biggest power & corruption game going when he left office.  FWIW, E's advisors strongly advised him to redact the "congressional" part of his cautionary parting speech about the military-industrial-congressional complex.  Make no mistake about the wacko, debt-debauched, over-militaried, over-entitled world we find ourselves in - it was already GAME ON in a big way, long before the boomers were created as post-war celebrations.  Could it be that even the Greatest Generation had a hand in it?  No, it was all the Boomers.  It was us dastardly 5 year-olds Ike was warning about in his parting address.  The same boomers who protested Vietnam and were called unpatriotic for it.  We dared flout the M-I-C complex because probably, we just didn't know what we were up against.

Yep, it's all the boomers' fault.   At the least, I hope that makes everyone else feel comfortable about their role in our current "interesting times".  Hah.  Does anyone really believe all the world's problems will be solved just because the Boomers pass away???   Dream on.  Better yet, start fighting for common cause with like-minded members of all generations.

The End of Magic as We Know It?

The Harry Potter decade comes to a close July 15, 2011.  We will have to look elsewhere for our magical fantasies as the epic good v. evil saga draws to it's cinematographic conclusion.

I wonder sometimes about synchronicities and the closing of the book on 'arr-ee 'awht-ah makes me think about all the financial shenanigans that have been accelerating during the time of Potter.  They, too, appear to be reaching a sort of unsustainable climax.  European debt debacles are going to continue and worsen.  China has horrendous problems with both inflation and bad debt, not covered by what passes for media these days.  Here in the good ol' USA, the Fed is in hyperdrive monetizing debt and effecting the greatest transfer of "risk" aka bad debt from the private sector - your friends at Goldman Sachs, JP Morgan, BofA, et al to US taxpayers.  And our government is cooking the books on the ultra-convection setting - spitting out spurious jobs data and inflation measures, downplaying the seriousness of our structural deficit and, let's call it what it is (thank you Ron Paul for saying it as an elected official) insolvency.

I see evidence that more and more people are not buying the stories they're being fed.  More are finding alternative sources of information and analysis, like www.zerohedge.com.  When the audience stops buying the story, guess what happens to the "magic"?  Uh-huh, show's over, folks.  The magic is exposed for the fraud it is and stops working.  Then there's just the aftermath.  Until the next era of magic is invented.

I'll miss the distraction that was Harry Potter... but look forward to a return to basic values and common sense on the political - economic front.

Stop Blaming John Maynard Keynes

It took years for mainstream media to catch on that deficit spending in a deflationary bust isn't a panacea.  Oops... is there a problem in our r-e-c-o-v-e-r-y???  The only context of recovery I might go along with is that of an addict taking a break from the original addiction.   But let's be fair.  Let's not blame John Maynard Keynes.  Yes, QE1, QE2 and QE to the X were and will be unproductive at best and accelerate our Depression at worst.  But it's not JMK's fault. Really.

If you have ever worked in the software business you'll see a strong parallel to the old curse of RTFM.  Most user calls for technical support arise because the user won't invest any time in learning about how the application works.  So, when it doesn't work, they blame the application and make an irate call to technical support.  After the polite technical support staff have answered the question and pointed said user in the right direction, they hang up and curse at each other, RTFM! (Read the F****** Manual!).

Our economic leaders and soothsayers are just like those misguided software users.  RTFM, boyz and girlz!   It's time to stop blaming Keynes for your own incompetence and chicanery.  One of the core precepts from Keynes (it was right there in his "Getting Started" section) was the assumption that deficit spending to accelerate prosperity would be undertaken by a CREDITOR nation.   All our fool leaders who are jacking up the deficit spend may not have noticed that we aren't exactly a creditor nation... more like a deadbeat-to-be.

So stop blaming Keynes.  Everyone back to your favorite survival strategies.  Leadership elites, back to your plundering and burning of civilization.

Max Keiser in Ireland, Part Two

It can't happen here.

Never.

That settles it.

Sleep well.

What Can Ireland Tell Us?

Plenty.  Check out the Max Keiser video.

Anything in this piece sound familiar?  Change the names of the government entities and "bailout" actions that have systematically socialized bad debts incurred by speculators (just give it to the middle class, they won't mind) and banks while privatizing profits.  In Ireland the evildoers get enriched further for "managing" the growing national debt burden.  In the US, the banksters get free money from the Bernank to keep on gamblin' and fleecin'.

Shucks.  I was looking for something fun to post on.   As they say in baseball, there's always next year.