Wednesday, December 9, 2009
I've let this sit for a while, but the more I think about it, the more ridiculous the war seems to be. And my opinion is very well-supported by recent editorial activity.
For a comparison between our present efforts and those worked by the Soviets long ago, you can check out:
Basically, what we should come to understand is that Afghanistan is not so much a country per se, but rather, various fiefdoms controlled by the local population and the applicable warlord. The Taliban is free to terrorize the enclaves, hide out among them or even, just stay quiet and out wait us...our recent troop commitments are either feeble, or else the administration is being hugely disingenuous with the American public. Either way, this war, conducted according to the published plans is a bad idea, and I suppose that we will spend years, untold resources and our credibility in achieving a result no more satisfying than what the Soviets did.
A better idea is to concentrate on building morale within the local population (which presently often sees us as unwelcome occupiers) by erecting schools, constructing infrastructure and showing them societal alternatives. The following article by Nick Kristof beautifully illustrates this point:
If we proceeded as Mr. Kristof suggests, we would save money ($30 billion per year funds plenty of schools), preserve our integrity and quite possibly, actually do some good in Afghanistan.
This war effort now belongs to Obama, and in typical "waffling" fashion, he has somehow managed to immerse us in ambiguity. Are we committing troops for the long haul or is there a disengagement planned for 2011? Does fighting the Taliban in Afghanistan make any difference, or are they simply going to maintain their positions in Pakistan? For that matter, will either the Pakistan or Afghanistan governments really lift a finger to help us? There are so many questions and so few answers emanating from our government that it is positively disgusting.
The American people do not like this war. Those families who are contributing soldiers like it even less. I believe that we deserve better than to do what we are doing which is to "back into" an ill-advised military strategy in Afghanistan.
Tuesday, November 24, 2009
For years I have half-joked that if we want to solve the governance problems in Iran, Iraq, Afghanistan or any other backwards, belligerent country all we need to do is entice and enable all those nations' women to watch Oprah Winfrey. After such exposure, I surmised that the political scenario would change for the better, pretty damn fast.
Well what do you know? In reading SuperFreakonomics (SF) by Levitt & Dubner, I discovered that a very similar phenomenon actually occurred in India, of all places. It turns out that India (and China) are relatively inhospitable or even, downright cruel to women. Female fetuses are commonly aborted, and the prospects for those that survive are often grim. The Indian culture deprives women of higher education, tacitly supports wife-beating and generally, treats women in a sub-human manner. This doesn't happen everywhere in India but it manifests itself frequently enough to be well-known.
In SF they tracked areas where the situation had improved markedly for women and SF's findings traced the changes to television. It turns out that Indian villages obtained TV coverage and TV sets at different times. Those locales where TV became available showed dramatically better results with respect to a woman's treatment and human rights. I don't know if Oprah is on the air in India, but it seems that exposing people to what exists outside their enclaves does indeed foster behavioral changes in society...you can read the statistics for yourself in SF (incidentally, I really like the book.)
So if all this about India is true, and even making allowances for the fact that it is a democratic country, I think that if we plugged women in the Middle East into conduits like TV and the Web, that good stuff (by our standards) is bound to happen.
Periodically we have gone to war with troublesome nations like Vietnam, Afghanistan and Iraq, yet we pay little attention to the underlying sentiments that pervade the local population. We lost the Vietnam war simply because we did not understand how to oppose an enemy who hit, ran and used the countryside/local population as camouflage. Similarly, we do not comprehend Iraqis or the Afghans and we largely ignore their customs and tribal nature. After more than a decade of bellicosity, the Soviets were unable to conquer Afghanistan so what gives us the notion that we can do any better?
My Oprah quip is just a trivial expression for what I believe is needed in the Middle East. You can bet that when Obama soon explains his war escalation and exit strategies, he won't mention anything like educating the locals in western ways, using TV and media propaganda. Yet if it works in places like India, then isn't it worth a try in Iraq and Afghanistan?
Monday, November 16, 2009
Sorry that I have been absent for a while. Some medical problems got in my way but things are getting better now.
In the meantime, I have noticed that world affairs continue to deteriorate, and in the United States, issues such as unemployment, the Middle East wars, state and local financial troubles and such have reached disastrous proportions. In the link below, Bob Herbert, a NY Times columnist whom I admire greatly, explains rather pointedly how the unemployment situation has hit condition RED for those who are less than privileged, and especially those who aren't fortunate enough to work on (proverbial) Wall Street.
The financial community would have us believe that the salad days are here again, but who ever heard of the Dow topping 10,000 and gold besting $1,000 per ounce at the same time? Intuitively, that spells trouble to me. Meanwhile, the ill-conceived war efforts in Iraq and Afghanistan now look like they will take decades to bear the fruit we are seeking, provided that we have the fortitude and resources (money and personnel too) to persist, and this seems highly unlikely.
Our politicians from Washington to Chicago are lost in rhetoric and in a non-winnable race to the bottom. Municipalities are looking to monetize their infrastructure by selling off things like parking rights, tax items and even bridges. I pity both the cities and the financial organization who are participating in this chicanery; the money the local establishments receive has already been spent and it is beyond me how anyone can achieve a long-term profit from 70-100 year leases on all this stuff.
Do I have any answers? Not really. That's why I use a hurricane as the graphic for this post; it is the most powerful force on earth and it is unstoppable. I am afraid that this is precisely what we are facing in a social context. Perhaps the United States can borrow from Germany's playbook, or even China's since in both countries, they have managed to resume (paltry) growth and preserve jobs, although they both have other problems (China=pollution, Germany=economic stagnation) with which to contend; but in the USA, we don't have the gumption to upset the political status quo. If what I am writing about here is even moderately correct, then next year's elections will devastate incumbents, and without a better Middle East war strategy (stop the fighting) and a concerted effort to resurrect jobs for the many disadvantaged, Obama and his entire Washington crew will end up confirming that they are the feckless ideologues that I believe they are. My biggest fear is that even with the best practices, wonderful innovation (currently stifled) and terrific luck, it will still take ten years or more to pull out of this mess.
Geez this really sucks?!
Here's the link to Bob Herbert's article:
Friday, September 11, 2009
Two posts ago, in one entitled "Do Economists See The Light About Their Crappy Math. I explained that Benoit Mandelbrot's (image above) work with fractals would suit them better.
Today in the WSJ there is a pretty extensive article (reprinted in its entirety below) about Harvard's loses in particular last year...nearly $10B. But Yale too lost big bucks from their endowment along with Harvard because of (1) market turmoil, (2) asset classes became (and remain) correlated with one another (3) some asset classes evaporated all together (4) both institutions (especially Harvard used too much leverage, sometimes even borrowing so as to remain 105% invested in often illiquid elements and (4)they both failed to protect against their catastrophic risks. Columbia which has a much smaller endowment (~=$5.5B) than either giants mentioned above lost about 16% which they claim was all about earlier, more active and more conservative risk management. Incredibly enough, Cooper Union, the tuition-free (if you can get in!) college down here in Greenwich Village says it actually managed to break even.
Now here comes the part that is filled with delicious irony. I believe that Benoit Manelbrot will eventually win a Nobel Prize either for Physics or for Economics and maybe for both; his work in these two fields has been more than seminal it has been a breakthrough.
Now these two schools might claim that they aren't familiar with Mandelbrot's work and advice which, if followed might have avoided $$$billions in losses. Yale shed only half as much as Harvard, but their endowment is only half the size so what's the big surprise in that?
Or they may say that they didn't read his book because it wasn't available soon enough. "The (Mis) Behavior of Markets--A Fractal View of Risk, Ruin and Reward" was published, for God's sake, in 2004. Their academics, students and administration must at least be partly interested in this stuff.
Maybe they couldn't locate him? That's hard to believe because he once taught at Harvard and until he retired in 2005, he was a tenured, endowed-chair mathematics professor at Yale.
So why did these schools put their constituents (thousands, including whole towns) at risk? Why didn't they phone up Benoit and ask him for his opinion about their portfolios? He might have taken up a deep-digging project bro bono for them and analyzed their market situations from a fractal-math perspective. Why didn't they ask Benoit? This is inexplicable to me, except for one obvious reason...hubris.
Money managers often get so confident that they don't listen to any others...not even Benoit Mandelbrot. The shame here as I see it is that innocent folks and even whole towns can get crushed by this behavior. If you don't believe me, just swim across the river from Cambridge and you won't see a pretty site at all.
Here's the article:
Harvard, Yale Are Big Losers in 'The Game' of Investing Yahoo! Buzz By JOHN HECHINGER It's a tie in the Harvard-Yale investment game. Both schools were thrown for colossal losses. The universities on Thursday said their endowments, higher education's two largest, each lost 30% of their value in the year ended June 30. Combined, the pair of investment pools shrank by a staggering $17.8 billion. Declines in the endowments have forced the two schools to cut budgets and delay plans to expand facilities and hire staff, as even the country's top colleges are being forced by the financial crisis to retrench. The pain is being felt widely across higher education. While many private colleges are getting less help from their endowments, public universities are suffering because of state budget cuts. Harvard University and Yale University, such fierce rivals that their fall football contest is known to both sides simply as "The Game," badly trailed the results of the typical college in the latest year. The dismal returns have exposed weaknesses in their exotic approach to investing, which after turning in chart-topping performance for years has proved to be highly risky. The schools were hurt by investments in assets that can't readily be sold, such as private-equity partnerships, which were pummeled in the past year after stellar results over the previous decade. In the category Harvard calls "real assets," including timber, commodities and real estate, annual losses neared 40%. Harvard was already budgeting for a 30% decline, but hadn't released a final tally. On Thursday, it said its endowment shrank to $26 billion on June 30 from $36.9 billion a year before. The decline also reflects spending from the endowment and donations. The Cambridge, Mass., university's investment loss itself was 27%, dwarfing the 18% drop in the median return for large endowments calculated by Wilshire Associates, an investment consulting firm. Yale said its endowment fell to $16 billion on June 30 from $22.9 billion a year before. The New Haven, Conn., university didn't break out its investment results. Yale had projected a drop of only 25% and Thursday warned of further budget cuts. In a letter to Yale faculty and staff, Richard Levin, the school's president, and Peter Salovey, its provost, said it now projects an annual deficit of $150 million each year from 2010-11 through 2013-14. Last winter, Yale cut staff and nonsalary expenses by 7.5% for the 2009-10 academic year and signaled it would ask for further cuts in nonsalary expenses of 5% for 2010-11. On Thursday, the university said it would ask for the 5% cut this year instead. The administrators pledged to preserve financial aid, but said otherwise "no area of expenditure will be immune from close scrutiny." Messrs. Levin and Salovey said most major construction would be halted until donor support could be found or financial markets recovered. They said Yale would also slow the pace of faculty recruitment. Facing a cash crunch last fall, Harvard has laid off staff, suspended some faculty searches and delayed a major expansion of its campus. Other wealthy schools, including Stanford University, Princeton University and Massachusetts Institute of Technology, have predicted losses similar to Harvard and Yale's. They all follow an investment model that de-emphasizes traditional stocks and bonds and instead loads up on alternatives unavailable to the average investor. Yale and Harvard pioneered the approach, arguing they could afford to take big risks, because they were investing for decades, even centuries. Many copied the schools, saying they had found a high-return, low-risk strategy. But Eric Bailey, managing principal of CapTrust Financial Advisors LLC, a Tampa, Fla., firm that advises college endowments, says, "If it looks too good to be true, it probably is." Mr. Bailey says typical colleges outperformed Harvard last year, because they stuck to a plain-vanilla approach, typically allocating 60% of their holdings to stocks and 40% to bonds. That strategy would have generated a loss of roughly 13% in the year ended June 30. Harvard aims to have only 4% of its investments in U.S. bonds, which were one of the few safe havens over the last year. It has cut by more than half its target for investments in U.S. bonds since 2005. The University of Pennsylvania's endowment, by contrast, loaded up on Treasury securities in 2008 and reported a more moderate 15.7% decline. In New York City, Cooper Union for the Advancement of Science and Art, which charges no tuition, ratcheted down the risk of its investment portfolio three years ago and expects its endowment to hold steady for the year. Yale and Harvard say their long-term results justify the strategy. Harvard's endowment remains the largest in higher education. In fact, the $10.9 billion it lost last year is bigger than the 2008 value of the endowments of all but six colleges. In Thursday's report, Jane Mendillo, Harvard's endowment manager, noted that Harvard achieved an average annual return of 8.9% over 10 years, three times its peers' -- adding $18 billion in value over what would have been earned by a 60%-stock, 40%-bond portfolio. Ms. Mendillo said the school is better off than it would have been if it had "pursued a more conservative investment strategy over the longer term." In Thursday's report, Harvard said its private-equity funds, which generally represent about 13% of its endowment model, fell almost 32%. Its real-asset segment, representing nearly a quarter of the endowment, lost 38%. Investments in "absolute return" hedge funds, designed to generate positive results in good times and bad, instead posted a 19% loss. The report showed Harvard trimmed its endowment's risk profile by raising cash, cutting by $3 billion its future commitments to invest in private-equity and other investment funds, and reducing its real-asset category to 23% from 26% of its model portfolio. Harvard also said the school now aims to hold 2% of its assets in cash. Previously, it targeted a negative-5% cash position, reflecting its use of borrowed money to expand its investments. Ms. Mendillo said endowment managers had learned to better reflect "the risk tolerance of the university." Ms. Mendillo pledged to manage more of the school's money in-house, giving it readier access to securities to sell for cash. Currently, 70% is farmed out to outside managers. That move could focus more attention on its managers' multimillion-dollar paychecks, which have provoked controversy on campus. Ms. Mendillo said "a substantial number of portfolio managers" had portions of their bonuses, awarded for past years, "clawed back" into the endowment because of poor performance. Harvard and Yale, like other schools, also signed contracts that committed them to huge future investments in private-equity and other funds at exactly the time they could ill afford them. In Thursday's report, Ms. Mendillo said Harvard cut its "uncalled capital commitments" to $8 billion from $11 billion.
Wednesday, September 9, 2009
The following was submitted by my friend (one of the last ones) Tim W. who received it anonymously.
Some time this year, we taxpayers may again receive an Economic Stimulus payment. This is a very exciting program. I'll explain it using the Q and A format:
Q. What is an Economic Stimulus payment?
A. It is money that the federal government will send to taxpayers.
Q. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money?
A. Only a smidgen.
Q. What is the purpose of this payment?
A. The plan is for you to use the money to purchase a high-definition TV set, thus stimulating the economy.
Q. But isn't that stimulating the economy of China ?
A. Shut up.
Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely:
• If you spend the stimulus money at Wal-Mart, the money will go to China
• If you spend it on gasoline, your money will go to the Arabs.
• If you purchase a computer, it will go to India.
• If you purchase fruit and vegetables, it will go to Mexico, Honduras and Guatemala .
• If you buy a car, it will go to Japan or Korea.
• If you purchase useless stuff, it will go to Taiwan.
• If you pay your credit cards off, or buy stock, it will go to management bonuses and they will hide it offshore.
Instead, keep the money in America by:
1 spending it at yard sales, or
2 going to ball games, or
3 spending it on prostitutes, or
4 beer or
(These are the only American businesses still operating in the US .)
Go to a ball game with a tattooed prostitute that you met at a yard sale and drink beer all day.
Tuesday, September 8, 2009
I am totally sorry that the text below is unformatted, but you can thank the WSJ for that. In order for me to report the full story, you would have to pay for a subscription so I grabbed it on my Blackberry for you.
Here is the gist. On January 22,2009 in an article entitled "Who Knows What Is Going To Happen To The Economy?" I questioned the math that all the idiots have used to predict financial futures. Here's the nugget: Nobel Prize winner Markowitz thirty years ago entirely absorbed the Gaussian curve...and that's what won him the (dubious) prize. Yet as I wrote on February 25, 2009, "Why I Hate Economists," I explained that their math was horrific and I pointed you to Mr. Mandelbrot's work which I have studied extensively.
Finally, on May 4, 2009 I displayed that Buffett and Munger had disdain for all this "high-order math." In another installment I will display my utter distaste for Mr. Buffett's achievements and intellectual capacity but that will have to wait. In the meantime, please read the junk that follows, courtesy of my Blackberry.
SEPTEMBER 8, 2009 Some Funds Stop Grading on the Curve Yahoo! Buzz By ELEANOR LAISE Last year, a typical investment portfolio of 60% stocks and 40% bonds lost roughly a fifth of its value. Standard portfolio-construction tools assume that will happen only once every 111 years. With once-in-a-century floods seemingly occurring every few years, financial-services firms ranging from J.P. Morgan Chase & Co. to MSCI Inc.'s MSCI Barra are concocting new ways to protect investors from such steep losses. The shift comes from increasing recognition that conventional assumptions about market behavior are off the mark, substantially underestimating risk. Mark Brewer Though mathematicians and many investors have long known market behavior isn't a pretty picture, standard portfolio construction assumes returns fall along a tidy, bell-curve-shaped distribution. With that approach, a 5% or 6% stock-market return would fall toward the fat middle of the curve, indicating it happens fairly often, while a 2008-type decline would fall near the skinny left tail, indicating its rarity. Recent history would suggest such meltdowns aren't so rare. In a little more than two decades, investors have been buffeted by the 1987 market crash, the implosion of hedge fund Long-Term Capital Management, the bursting of the tech-stock bubble and other crises. Investors using standard asset-allocation approaches have been hammered. Last year, all their supposedly diversified investments plummeted in unison. In short, the underlying assumptions failed. "We got blindsided by some developments that weren't accounted for by the models we were using," says Clark McKinley, a spokesman for the giant pension fund California Public Employees' Retirement System, or Calpers. As a result, the fund is looking at incorporating an extreme-events model into its risk-management approach. Many of Wall Street's new tools assume market returns fall along a "fat-tailed" distribution, where, say, last year's nearly 40% stock-market decline would be more common than previously thought. Fat-tailed distributions are nothing new. Mathematician Benoit Mandelbrot recognized their relevance to finance in the 1960s. But they were never widely used in portfolio-building tools, partly because the math was so unwieldy. Morningstar's Ibbotson Associates unit in recent months built fat-tailed assumptions into its Monte Carlo simulations, which estimate the odds of reaching retirement financial goals. More than nine million individual retirement-plan participants have access to Ibbotson's Monte Carlo tool. The new assumptions present a far different picture of risk. Consider the 60% stock, 40% bond portfolio that fell about 20% last year. Under the fat-tailed distribution now used in Ibbotson's tool, that should occur once every 40 years, not once every 111 years as assumed under a bell-curve-type distribution. (The last year as bad as 2008 was 1931.) Insulation from extreme market events doesn't come cheap. Allianz SE's Pacific Investment Management Co., or Pimco, which systematically hedges against extreme market events in several mutual funds launched last year, says the hedges may cost investors 0.5% to 1% of fund assets a year. Pimco uses a variety of derivatives and other strategies to hedge the funds. "You're spending some of your upside to buy the insurance" against catastrophic losses, says Vineer Bhansali, a Pimco managing director. Among the Pimco products applying the hedges are target-date funds, aimed at retirement savers. The firm plans to launch more funds that employ the approach in the next few years, Mr. Bhansali says. Another potential pitfall: Number-crunchers have a smaller supply of historical observations to construct models focused on rare events. "Data are intrinsically sparse," says Lisa Goldberg, executive director of analytic initiatives at MSCI Barra. Even so, the firm this year offered pension plans and other large clients a beta, or prerelease, version of its new risk-management model, which seeks to account for more extreme market events. The company plans to include the model in risk-management products to be released next year. As Wall Street relies on ever-more-complex mathematical models to manage money, a new breed of uber-wonks is gaining influence. Pimco's Mr. Bhansali, for example, holds a doctorate in theoretical particle physics from Harvard University and runs 50-mile to 100-mile super-marathons. And MSCI's Ms. Goldberg, an inventor of the firm's credit-risk and extreme-risk models, is also a professor at the University of California, Berkeley and has a penchant for the "beautiful mathematical subject" of extreme value statistics. The fat-tailed assumptions sometimes lead to quite conservative portfolios that cushion investors on the downside but also sharply curtail the upside. Smart Portfolios LLC last year launched the Aston Dynamic Allocation Fund, which uses fat-tailed distributions and other complex formulas to assume more-frequent occurrence of market shocks. In the 12 months ending Sept. 4, the fund is down 0.5%, compared with a 16% decline for the Standard & Poor's 500-stock index, thanks to hefty allocations to Treasurys and cash. But as markets have rallied in the past three months, it has risen only 4%, compared with 8% for the S&P. In times of upheaval, "we don't sit there and take it like a man. We run for the hills," says Bryce James, the firm's president. Many of the new tools also limit the role of conventional risk measures. Standard deviation, proposed as a risk measure by Nobel Prize-winning economist Harry Markowitz in the 1950s, can be used to gauge how much an investment's returns vary over time. But it is equally affected by upside and downside moves, whereas many investors fear losses much more than they value gains. And it doesn't fully gauge risk in a fat-tailed world. A newer measure that gained prominence in recent decades ignores potential gains and looks at downside risk. That measure, called "value at risk," might tell you that you have a 5% chance of losing 3% or more in a single day, but doesn't home in on the worst downside scenarios. To focus on extreme risk, many firms have begun using a measure called "conditional value at risk," which is the expected portfolio loss when value at risk has been breached. In other words, if value at risk says you have a 5% chance of losing 3% or more in a single day, but you have lost 4% before lunch, conditional value at risk helps estimate your expected loss on this very bad day. Firms such as J.P. Morgan and MSCI Barra are employing the measure. Pimco's Mr. Bhansali is unimpressed. Since it is so difficult to forecast extreme events, investors should focus on their potential consequences rather than the probability they will occur, Mr. Bhansali says. As for comprehensive measures of risk, he says, "they fail you in many cases when you need them the most." Write to Eleanor Laise at firstname.lastname@example.org
I think that I have finally found an honest politician (man.) David Walker is profiled in a WSJ interview with John Fund, entitled "The Deficits Are Coming." Previously Mr. Walker was a top executive at Arthur Anderson and most recently, he spent 10 years running the General Accounting Office (GAO) which is widely considered to be exempt from the oxymoron phrase, "competent government agency."
Mr. Walker performed wonderfully at GAO but he left his term five years years early, because I suspect that he was fed up with all the nonsense.
The interview is too articulate and profound for me to adequately paraphrase it so if you are at all interested in a very well-reasoned, plausible view for our financial future, I strongly recommend that you devour it.
Thursday, September 3, 2009
I have never before seen something like this. Okay, you can accost me for living in fancy neighborhoods and under relatively privileged circumstances, but remember, I have been in and around Manhattan (arguably the richest large city on Earth) since I was 18, and that was a LONG time ago.
The other morning, on my way to Penn Station, in a hurry to catch the 7:14 train to Princeton Junction to (I hoped) finalize the major oral surgery that has plagued me for more than a decade, I saw a huge phalanx gathered outside Saint Francis of Assisi Church on 31st Street just east of 7th Avenue. I ordinarily take the subway but early in the morning and/or when running late I optimize my cab ride by having the driver drop me off at "31 and 7." This usually takes less than 10 minutes from my place at Broadway and 11th Street and I have taken this route at least 100 times throughout the years.
So back to the long line waiting at the church. My first presumption was that all these, relatively well-dressed people were waiting to attend early-morning Mass. But this seemed strange since I had never witnessed it before. And the crowd was definitely not your usual street mongers, who often look like rejects from a leper colony. My curiosity was intense, so risking missing my train, I asked a well-dressed gentleman why such a large group (hundreds) was congregating this particular morning. I was expecting any answer other than the one I heard from him. "Sandwiches" he said. "Sandwiches." For Christ's sake, this was a genuine food line with more than a hundred patrons, right in Manhattan's mid-section. Let me remind you that a giant bagel with butter costs a whopping $1.17 at Zaro's in Penn Station across the street. I went and boarded my train, but I promised myself that on my return trip, I would investigate further, which I did.
I returned to the church at about 2PM, with my left cheek swollen like a pumpkin from the implant surgery, which incidentally, probably cost more than it takes to feed these people for a month (no insurance applies on this.) I spoke with the bookstore manager who explained that St. Francis operates chronologically the longest-running breadline...since 1928...in the city. He admitted that many patrons are mental patients, but they sure didn't look that way to me...I didn't see a single shopping cart loaded with myriad belongings and I did indeed espy some very well-dressed people. The manager confessed that "yes, there are some people with $400 Brooks Brothers suits" and that the line has grown four-fold during the past year. Apparently, St. Francis now serves 300-500 people per day. And there is another place, further uptown that provides lunch. Yet another, even further uptown that handles supper.
To conclude this chapter, I am seriously considering not only donating my money to this endeavor but also my time. Candidly, I was absolutely shocked by my observations.
No great lesson can exist without extrapolation. If our government, our President, our economists want to proclaim wonderful economic victories, we can let them try to convince us, but not without having them stand and beg for food in New York; and yes, despite my previous naivete, I now realize that there are profoundly large (and growing?) food lines in New York, and if so, most likely everywhere else. The people standing in these queues are not indigent slackers; they are just hungry. To put this into perspective, New York can be the most expensive place on Earth to eat (Le Cirque) or it can be extremely cheap. This morning, I just bought a bialy with a fried egg on it for less than $2. I can get a totally loaded falafel pita for less than $4 and I won't suffer a nutritional breakdown on that...besides, I don't require many calories. If you think that I have gone totally nuts, please read the recent pieces about people waiting in places all over the country for food handouts...I don't even need to provide links...these stories are all over the place.
But our country is suffering economic meltdown and nutritional stress. Let the obstreperous BS politicians from Washington step aside and join me at 31st and 7th, with very decent people, and then we can calibrate how well this country is doing. Pretty crappy is my assessment...wait in line for an hour for what Zaro's will give you for $1.17...that's a pretty low minimum wage.
Boy am I hot about this one.
Thursday, August 27, 2009
Hey, I am never eager to trample on graves. But my readers know that I am willing to express what others only want to keep to themselves. But all this poppycock about Ted Kennedy being a wonderful senator, and all the revisionism that revitalized his questionable political career sickens me greatly.
It was 1969 and I was 14 years old, when I heard that Mr. Kennedy drove his car off a bridge, killing a beautiful 28 year old woman. Then I found out that he didn't report this accident for nearly one day. Now I'm sure we have all done some terrible things in our lives but some events are so horrific that they end up defining our entire existence. Well, not so for Mr. Kennedy. For normal people, a tragedy like this might have ruined them...I can certainly say that I would never have been the same thereafter.
The police treated the episode like a fender-bender. Kennedy was let off the hook despite the assertion that rapid response (under two hours) might have saved the woman's life (see the link below.)
And what was Kennedy (a notorious drunk and womanizer) whose then-current wife was pregnant, doing in a car that late with a lady nearly 10 years younger? Forget about getting any answers anymore...everyone has tried to investigate this thing and only the Lord will ever know what really happened; but I have my strong suspicions. Here's a very interesting link:
So what about the great liberal senator from Massachusetts? Other than introducing the verb "Borked" into the nation's vocabulary, what the hell did this guy ever do for the USA? He served his country without distinction in the military (unlike his two older brothers) and was discharged as a private. He was caught cheating on a Spanish exam at Harvard and was accordingly suspended. He grew up as the privileged son of a famous American bootlegger, so I suppose that you can claim that his prolific and well-detailed drinking habits were genetic. He and his staff introduced more than 300 bills in the Senate but I challenge you to name a single one that has had any lasting consequence (except COBRA.) He was a proponent for the Vietnam War and for universal health care...both turned out to be fiascoes. In 1980, he tried to run for President against his own (admittedly feckless) incumbent, Jimmy Carter.
Ted Kennedy always tried to be the consummate power-broker, but he did so by utter compromise and promise breaking. His pernicious personal habits constantly hindered his efficacy.
After all this, and you can read it for yourself:
what we get from oratorical Obama et al is a hagiography that ignores what could have been a prodigious life, and instead turned out to be a profligate one.
I'm not the first one to imply this, but Ted Kennedy isn't just any departed American hero; he was an American disgrace.
Tuesday, August 18, 2009
Well, that's Diogenes, and I have to confess that I am feeling more like him every day. Are we so corrupt that this is the only way to get along in life? I understand that more than 50 thousand US citizens acquired Swiss bank accounts so as to evade income taxes. Bernie Madoff is a new legend. The financial institutions have ripped us off and are now using their new found prowess to rip us off further. The President is a (well-intentioned) liar. The congress consists of not so well intentioned liars. Any baseball player who has avoided steroids (think Derek Jeter and not much further) won't make it into the Hall of Fame.
My home state, New Jersey boasts not only the most corrupt politicians in history (read the papers) but also, Rabbis who sold body parts. I wish this was confined to New Jersey but I fear that these guys were just stupid enough to get caught.
The Wall Street guys have it right...they get caught over and over again, pocket the dough and continue. They have ample help from Greenspan, Bernanke, Buffet and all their other stooges.
Have fun folks...the next 10 years will shake everyone loose.
Monday, August 17, 2009
I sure hope so, and my favorite friends the "economists" are suggesting it. Let's just be sure that it's not a bottom that is fifty feet below the water's surface; if it is, then we won't have a sufficient air supply to allow us to rise up to see the sun and breathe freely again.
I do not believe that we have even come close to bottoming out. A series of links below tell the story about the real economic news. We are still losing jobs at an alarming pace and these jobs will not be replaced very soon, if ever.
Smaller banks are getting blown out faster than bald tires on a heavy truck. Commercial real estate is not in the tank, it's in an acid bath.
Retail sales, including those for the vaunted back-to-school season, the home improvement industry and virtually anything else you care to think about, are anemic. Even "cash-for-clunkers" has an inherent problem. The automakers can't manufacture qualifying cars fast enough, they still have mountains in inventory that does not qualify for the program and with all that, the best selling vehicles are all made by foreign car makers (admittedly in their US plants.)
California is literally on the rocks, and the vacancy rate in Southern Cal is moribund. Airlines too are complaining that their business models are not sustainable.
This is a worldwide problem despite a few bright spots coming from Asia and Europe. The linkages between these economies ensures that if one nation does poorly, the rest will also suffer. The same economists who predict bottoms also regurgitate their optimistic auguries on very scant data, collected during an extremely short time period. I did not trust these folks a year ago and I am even more mistrustful today. In my opinion, only the politicians stand lower in the intellectual pecking order.
Have We Hit Bottom?
Jobs A Scary Reality
Commercial Loan Defaults
Southern California Vacancies
Sunday, August 9, 2009
For those that believe that the Wall Street banks that borrowed billions from the government have been chastened enough to abandon their reckless behavior AND forfeit their outlandish pay packages, you should read the NY Times article linked to below.
"Rewarding Bad Actors" by Paul Krugman explains that not only are firms like Goldman Sachs preparing to pay out billions in bonuses for 2009, but also, that the profits may be coming from marginally legal activities such as high-frequency trading. With this maneuver, Wall Street banks employ powerful computers to execute trades exponentially faster than any human could possibly manage to, thereby capturing tiny spreads on millions of trades. This technique is certainly responsible, in large part, for the profits that Goldman will post.
Over at Citigroup, a small commodities trading team led by Andrew Hall has been speculating successfully enough that Mr. Hall may earn more that $100 million for 2009.
Now I'm not a communist, and I think that people who do well should be rewarded well, but what is it that these organizations are doing so well?
On the high-frequency trading side, Goldman is making an artificial market that crowds out other trades and distorts the real market dynamics. The Citigroup traders are creating similar effects in oil markets and the like, driving up prices because the oil they are trading is being warehoused in tankers, and is not getting to market until prices improve. Of course, Citigroup's machinations are directly aimed at creating that improvement.
Mr. Krugman makes a very strong argument that these activities harm America because they are pointless beyond the fact that they make money for their respective firms. Each tactic corrupts the markets' fundamental purpose. For example, the stock exchanges are intended to allocate capital to companies so that the firms can function effectively. On the commodities side, what was supposed to be a hedging vehicle for things like corn, oil and such, with the intention being to stabilize prices, Mr. Hall and others are grotesquely manipulating things so as to produce a precisely converse result.
I suppose both Goldman and Citigroup are proud that they have such smart people who can devise clever strategies to steal money. After all, I've often opined that America has become a kleptocracy, and if so, the top kleptocrats are those whom we should admire the most. Right?
I suspect that neither organization is particularly proud. Consider that Lloyd Blankfein, Goldman's CEO, sent out a company wide voicemail (who has ever heard of such a thing these days) admonishing employees to avoid spending their bonus money extravagantly (Ferraris I suppose) lest Goldman incur federal government wrath (and maybe Andrew Cuomo's too) and general public vilification. Come to think of it, why did Blankfein use archaic voicemail rather than email? It couldn't possibly be that he wanted to avoid having the press scrutinize his message, could it? Well Lloyd, they got it anyway.
The notoriously press-averse Mr. Hall is working a different plan. Apparently, he wants to get out from under Citigroup's very visible umbrella, and create a separate firm that simply pays Citigroup a hefty (49%) tithe in the future. Undoubtedly under this arrangement, Mr. Hall will make even more money with even less transparency. Nice work if you can get it!
Are these the actions exhibited by people who are proud of what they are doing? As the old gangster adage explains, "if you are going to make money, it's best if you make it in the dark."
Here's the link and I recommend that you read Mr. Krugman's analysis and draw your own conclusions.
Credit Suisse is trying (at least temporarily) a different approach. They too expect to earn sizable profits this year, but they're not paying their traders and bankers bonuses entirely in cash and/or company stock. Rather, they have established a $5B fund that holds toxic mortgages and bonds that those traders and bankers managed to accumulate.
The Credit Suisse folks eligible for bonuses, for the most part, don't like this one bit. That alone convinces me that this is the right way to go and if the responsible individuals manage to profit from the toxicity they created, more power to them. I certainly hope this sets an example for other Wall Street banks; if you create a problem then that problem is yours to fix.
Will Credit Suisse continue to use creative compensation plans in the future? I hope so, but I wouldn't bet on it. Here's the link that caught my eye:
Saturday, August 8, 2009
Do you know what that lovely image above is? No, it's not some abstract art. It's a picture, taken from space, of the thick smog that blankets China, and eventually travels elsewhere around the world.
Several posts ago (July 23rd to be exact) I stated that until and unless the Chinese and the Indians agree to clean up their acts, that all attempts by other nations to improve the environment will prove to be futile. Well the link below explains that these two prime offenders have basically told the world to "kiss off," and that they're not going to jeopardize their economies by enacting, implementing and enforcing clean air policies. Here's the link:
But with all this clean tech propaganda being foisted on us by our slippery administration, all they are going to accomplish is to spend vast (tax supported) amounts on measures that will be meaningless in a world-context, unless China and India get religion here, so to speak.
And it seems that both countries have spoken and what they have told us is to "go get lost." So we push on by building so-called clean cars that most people don't want, and on inflicting emissions standards that are exorbitantly expensive, and on attempting to legislate silly cap-and-trade regulations that will simply allow our own worst offenders to continue being just that.
If someone in Washington would take off their dunce hat and replace it with a thinking cap, they would encourage the world to offer whatever economic concessions/punishments it takes to get China and India to play pollution-free baseball with us.
Finally, I have no idea if there really is a legitimate global warming problem, I have so stated in the past, and my opinion is backed by at least a thousand credible scientists. But the smog, carcinogenic rivers, deadly water supplies and the like that exist in China and India can't be good for the world, and so global warming or not, they need, commencing yesterday, to seriously address their environmental problems. Or else.
Of course, I am not alone in believing this, but I think it is a very positive development. The French who have long touted their universal health care system are retrenching and Mon Dieu, even considering lifting some elements from America's present system. Here's a link that explains this:
In a separate article, The Wall Street Journal reports that 68% of Americans are satisfied with their health coverage, and that they oppose the taxes that would be required to pay for what is being proposed by pending legislation:
Many posts ago I started blathering about social unrest, but I had no inkling that it would be this health care mess that might precipitate that unease. Yet in state after state, district after district, plain ole folk are storming their congressional representatives at town meetings being held to discuss health care reform. Some would have it that the demonstrations, shouting matches and such are fomented by right-wingers and Republicans, and while I know that those factions have been very vocal, I'm simply not buying the argument that all the protesters are stooges. The congress people are running home scared, faster than a 3-minute miler. According to some congressmen, "the situation is becoming dangerous." I've got news for you, you haven't seen anything yet...it will get worse, much worse.
From my perspective, health-care reform is an utterly legitimate discussion, and there are certainly micro-economic elements that can be addressed, as my good friend Bob H. has pointed out. But here's a fact for you to chew on. The American public is deeply distrustful whenever the government starts poking its nose into programs that directly affect them, and this oratorical administration is jamming its whole body into this deal.
Washington is very quick and highly disingenuous in declaring victories with respect to the economy...we are still in horrible shape. I don't think that they are going to be able to declare anything about health care reform because these idiot politicians (sorry, that's redundant) have simply bitten off way more than they should have, unfortunately, as is typical.
Mrs. Pelosi et al, I have bad news for you. Your days, politically, are numbered.
Friday, July 31, 2009
By some indications, the recession may be starting to ease a little. GDP (for various reasons) is down only 1% for the 2nd quarter, manufacturers are starting to add inventory and the government's "cash for clunkers" program has been a huge success. Employment is still anemic and will remain so for a long time to come, so we can't really crow about a jobless recovery, can we? Corporate profits are getting obliterated, but at least there are some profits to be had. The stock market obviously believes we've hit bottom as is reflected in a stellar performance in July. Even housing (although not commercial real estate) looks like it is picking up. So cross your fingers, hold your breath, throw salt over your shoulder in the hope that the favorable data isn't a false positive.
Better yet, Congress is finally getting serious about all this egregious pay being handed out on Wall Street. Last year, firms that didn't even earn a profit handed out $billion$, and even those that did make some money, paid more in bonuses than what they took to the bottom line. Congress, the American Public and even foreign officials are sickened by all this. Well, let's hope that the government really comes down hard on these financial parasites.
Scary Scenario #1
China decides to stop buying US Treasuries. They appear to be already balking at the recent auctions (see WSJ link below) and the Chinese have so much leverage on our economy right now that there is little we can do to mitigate their actions. Some argue that there the US and China have a symbiotic relationship and that if they hurt us, they will hurt themselves. But if we inflate things and devalue our currency, the Chinese will already be damaged. Here's the link:
Scary Scenario #2
AIG appears to be in as much trouble now as it was before. Because this is a giant company with thousands of subsidiaries, they apparently have been playing the intra-company asset/liability transfer game. The original problem with AIG, which necessitated giving them $10s of billions in bailout money, wasn't that it is too big to fail, but rather, it is too complex to unwind. I fear that this is still the issue and you can read the full story by following the NY Times link below.
Scary Scenario #3
While we may have somehow managed to muddle our way through the deep crisis we faced just months ago, there are repercussions and consequences that follow from all the actions the government took. Being at heart, a skeptic, I am fearing that the backlash will be more joblessness, rampant inflation, and all sorts of nasty things that I don't even want to think about. For now we can take the good with the bad, and hope that the worst scenarios are merely science fiction.
Thursday, July 23, 2009
I have been noodling the consequences that attend a self-destructed California, and that led me to do some numerical analysis. Much has been made about the fact that California is the eighth largest economy on the planet. My partner asked me about other states; I became intrigued, so I did the research. Here is a table that lays out the Gross State Product for all 50, plus the District of Columbia (these are 2008 figures (in millions) according to Wikipedia):
1 California 1,846,757
2 Texas 1,223,511
3 New York 1,144,481
4 Florida 744,120
5 Illinois 633,697
6 Pennsylvania 553,301
7 New Jersey 474,936
8 Ohio 471,508
9 NC 400,192
10 Georgia 397,756
11 Virginia 382,964
12 Michigan 381,963
13 Mass 351,514
14 Washington 311,270
15 Maryland 268,685
16 Minnesota 254,970
17 Arizona 247,028
18 Indiana 246,439
19 Tennessee 243,869
20 Colorado 236,324
21 Wisconsin 232,293
22 Missouri 229,470
23 Connecticut 216,266
24 Louisiana 216,146
25 Alabama 165,796
26 Oregon 158,223
27 Kentucky 154,184
28 South Car 152,830
29 Oklahoma 139,323
30 Iowa 129,026
31 Nevada 127,213
32 Kansas 117,305
33 Utah 105,658
34 Arkansas 95,371
35 Mississippi 88,546
36 Nebraska 80,093
37 New Mexico 76,178
38 Hawaii 61,532
39 Delaware 60,118
40 West V 57,711
41 New Hamp 57,341
42 Idaho 51,149
43 Maine 48,108
44 Rhode Island 46,900
45 Alaska 44,517
46 Montana 34,253
47 South Dakota 33,934
48 Wyoming 31,514
49 North Dakota 27,725
50 Vermont 24,543
Thanks to Wiki, I can also detail the international GDP by country:
1 United States 14,264,600
2 Japan 4,923,761
3 PR China 4,401,614
4 Germany 3,667,513
5 France 2,865,737
6 United Kingdom 2,674,085
7 Italy 2,313,893
8 Russia 1,676,586
9 Spain 1,611,767
10 Brazil 1,572,839
11 Canada 1,510,957
12 India 1,209,686
13 Mexico 1,088,128
14 Australia 1,010,699
15 South Korea 947,010
16 Netherlands 868,940
Playing around, here are some fun facts that one can deduce from the above data.
California has 13.22% of GDP in the United States, and its output is larger than all states and every country starting with Russia and below. It is 37% of Japan's economy, 42% of China's, 50% of Germany's, 64% of France's, 69% of Britain's, 80% of Italy's and 110% of Russia's.
California, Texas and (an increasingly diminished) New York account for 30% of the US economy. The bottom 23 states (plus DC) nearly equal California's output. In other words, California, Texas and New York combined are slightly below China in world economic rankings. Just for laughs, let's throw in New Jersey and Pennsylvania and you now have the world's second largest economy. But California is certainly the linchpin here; without it I would have to add several more states to reach second place in the world.
So here's a frightening thought. What would happen to the world's economy if China collapsed? Or for that matter, if Japan went under? Of course, neither situation is presently plausible. Yet, the world's eighth largest economy is already reeling, with no permanent solution in sight. Every politician and commentator around thinks that the recent (almost passed) budget legislation is merely a band-aid for a wound that will fester long into the future. So I think it is safe to say that California (and maybe soon Texas, New York et al will follow in her footsteps) is toast. Jobs there are evaporating faster than a puddle on a hot summer day. People are exiting the state in alarming and increasing numbers. A public primary school system that was already bad is about to get worse. Higher education, once considered the best in the nation is taking it in the chops. Real estate is depressed and foreclosures are continuing on a torrid pace. As I have said in the past, you can bail out Citigroup once, and hope for the best...but what can you do about a state that has ongoing systemic problems? Is California too big to fail?
I think the answer to the last question is yes. As much as I hate to say it, if the government really wants to stimulate a national economic recovery, they had better move "saving California" to the top of the list. Instead of building "bridges to nowhere" and their ilk in areas like Alaska, Montana and Wyoming, why not devote ALL the stimulus money to states like California, that, from an economic standpoint, really matter.
Of course, politics being what it is, my suggestion will never be implemented. This means that we are, from my perspective, doomed to have a stagnated economy for decades to come.
California WTF? Ouch!?
Last week, I received a bill from the hospital for $102,000 (plus change) netted from a $182,000 bill. The (excellent) insurance company had already paid $80,000. Now let me tell you that every penny, in my opinion, from the doctor's and hospital's end was well spent...I am alive, they took superb care of me, I will inevitably be worth well more than $182,000 to the American economy during my productive life, and my employers and I have paid far more than that during my prior working tenure.
Nevertheless, I was in shock. When I called the insurance company, they immediately said "there must me a mistake somewhere here and we will investigate." Less than one week later, they approved all my claims, except for a $250 co-pay which I will gladly remit.
Let's face it...the system is expensive and what drives the costs up are the waste, fraud and abuse that are endemic to health care. Not to mention that if I had been an indigent person, with no insurance, I have no doubt that the medical facilities would have administered identical treatment and would have "eaten" the invoice.
So all the assholes in Washington, including our oratorical President are running around trying to fix this thing, and sure, it isn't perfect. But I have never heard about someone who was refused care, or who didn't get what they could reasonably expect.
Yes, health care is a big problem in this country but I have never seen an enigma where government was the best "solver" and the vast issue here is that that Washington has been the greatest "waste sponsor" on Earth. Let's not put this one one the providers, the doctors and the FAT American public. We should just assume that Medicare and its counterparts are so fricking bloated that they can't deliver any efficiency at all.
Obama speaks well, but he also has the "forked tongue." If we follow all these political prescriptions, we are headed for socialistic medicine.
Here's a link to ponder:
In my blog posted on June 15th, 2009, I described what my family and I observed when we recently visited there...huge uncompleted projects, relatively empty casinos and shows, and great bargains everywhere, except in the vacant high-priced boutiques. Well in a Wall Street Journal article by Tamara Audi, we get a much more comprehensive look that reasonably confirms the intuitions that my family and I had when we were "fearing and loathing," so to speak. Here's the link:
Commercial Loan Failures
I predicted as early as last January, and have repeated the message that the next financial mess will involve commercial real estate failures. In a WSJ article by Lingling Wei and Maurice Tammon the press seems now to be catching on to this unfortunate but inevitable new trend.
Follow the story by chasing the link below:
Global Warming And China/India
A recent NY Times editorial seems to confirm the May 25th blog post entitled, "A Dirty Little Secret..." which suggests that until and unless we can get these two countries to conform to clean air practices, that all other efforts are not only futile, but also, are confiscatory on those countries that are attempting to assist the environment. Here's the article:
The Stimulus Trap
On April 28th, 2009 and July 14th, 2009 I detailed why the jobless situation in America has gone into condition red. I have repeated this assertion throughout this blog series. Now Paul Krugman from the NY Times is on the same bandwagon and he expresses his opinion as follows:
The Human Equation
Bob Herbert at the NY Times writes a most eloquent explanation about why there are no "jobless recoveries" as I have written many times, on April 28th, June 26th and July 14th, 2009. Please read Bob's wonderful analysis by going to:
I'll have more for you later this evening and tomorrow, but this should get you started.
Tuesday, July 14, 2009
So I am very sorry to have to write this, and it may be the last thing that I do write. Maybe if you read several blogs that lead up to this you will understand...or read many previous blogs. But I am about to give up on American progress and will, as you will too, sink into the abyss that puts us into that infernal middle-of-the-road.
In this country we are so fat (physically, really FAT) dumb and happy that we don't have the gumption to express ourselves in a political fashion as eloquently as the Chinese middle class. But the time is coming when the government will no longer be able to stifle all the misery that is out there.
In a separate note, Mort Zuckerman, publisher of US News & World Report (in full disclosure, my brother-in-law is a senior publishing executive there, but we have not discussed these subjects) is apparently paraphrasing (inadvertently) my blogs with respect to the problems with employment in this country. In an article entitled "The Economy Is Worse Than You Think," reported recently in the Wall Street Journal, Zuckerman picks up on ALL the items that I have been reporting on for months now (just go down the blog list, and you'll see that evidence.)
It's nice that high-profile folks are beginning to get the message...THERE IS NO SUCH THING AS A JOBLESS RECOVERY, AND THE GOVERNMENT UNEMPLOYMENT STATISTICS STINK TO HIGH HEAVEN.
Here's the link:
Thursday, July 9, 2009
The Wall Street Journal--June 11, 2009
Mass High Tech Journal--June 5, 2009 (You may need to copy and paste the following link into your browser.)
Tuesday, July 7, 2009
Monday, July 6, 2009
I am just sitting here waiting for the other shoe to drop. I confess that I have never understood the famous New Yorker cartoon, probably because having grown up in the Midwest, I am at heart a centrist. For the uninitiated, or those too young to remember, here's the famous image from 1976.
I spent nearly the entire 1990's decade working in and around California. First I helped acquire a company and converted it into a research laboratory for the new parent. Next I helped turn around a major software company which was later sold for more than 30X ($1B+) the price that it was trading at when I went there and finally, I was CEO at a thin-film (organic polymers) display company whose technology is finally seeing the light, (literally and figuratively) with products like the Kindle.
I came to cherish California as a wonderful place to ride my motorcycle on the weekends, and I suppose that I covered more than 8,000 miles around the state from top to bottom during accumulated weekends. I have never been on serious hikes better than what you find in the Ventana Wilderness, way up above Big Sur, and at the time, my little twin boys were there with me too (in tow with an experienced friend of course.) I made lifelong friends in California, and the business environment in the 90's was electric...so many talented people and innovative companies were stationed there.
I never felt that I could permanently move to California because, back then, a young guy like me might have to shift about (which proved true) many times and I wanted my family to find its roots somewhere...and that happened to be New Jersey. But we all had a very wonderful encounter with California, and I will never forget that.
Having said all this, it is utterly bewildering to me that the most populous state in America, its third largest geographically, and the eighth largest economy in the world (in GDP) is in very serious trouble right now. The eastern press isn't giving this story much play, perhaps leading some credence to that New Yorker cover, and California is now issuing IOUs to public employees, cutting basic services and candidly, has no concrete plan to move away from this terrible thing. The problem is that you can bail out Citigroup one time and hope for the best, but when a state, which is legally required to balance its annual budget goes belly up, then you need to deal with the issue year after year.
The federal government has thus far kept hands off, and I agree with that to an extent...after all, if you help California, then why not Pennsylvania which is also having some difficulties, as are other states. But the repercussions from this are enormous...and somewhat unfathomable. If California in whatever form, fails, and you can count among other things, unemployment, basic service disruption and such in that category, the impact on the so-called economic recovery will be immense.
So now I wish that I had an answer here, but I don't. There will be no tax increases, government employee furloughs are in full swing, tax revenues are in a shambles, companies are still laying off workers, real estate values have plummeted, loans are in default and properties are in foreclosure.
Particularly painful to me is that the innovative, vibrant California that I knew from the past has been mauled by an enormous bear, largely not of its own making (stupid politicians (who are always stupid) notwithstanding.)
So I just think we have to try to cycle through this thing and take our lumps in the meantime.