Yes, I’ve been silent all week. I still don’t have any one thing quite post-worthy, but let’s run through some thoughts:
– CNBC had a banner earlier today asking whether the International Monetary Fund could “save the world”. My memory may not be what it used to be, but when the IMF tried to save Mexico, South America, and Asia, they had to be bailed out by (you guessed it) the US. There just isn’t any money out there anymore.
– Speaking of no money out there anymore, I find it interesting that gold, the haven of last resort in fiancial troubles, is down 15% from late summer. If that is not a sign of money simply evaporating from the global market, I don’t know what is.
– As bad as you think things are here, they’re worse in Europe. The Euro and British Pound are both down over 20% against the dollar. By contrast, the Japanese Yen and Chinese Yuan are up slightly against the dollar, with most of the rest of Asia down. Once again, I attribute that to money simply disappearing from the global market.
– There is but one reason why GM/Ford/Chrysler are at the head of the bailout line – the UAW. I can’t remember which Dem Congressman admitted the only reason they want to bail out the “Big” Three is so that the fat union contracts stick around. Left unspoken is that the UAW donates millions upon millions of dollars to those same Dems, and Barack Obama proved that money talks.
– If the Dems are successful in killing the 401(k) program by making it ordinary taxable income, I honestly don’t know where the bottom for the equity markets is. There is not nearly enough ability between the pension funds and 403(b)s (which I imagine will still receive favorable tax treatment as they’re union and government creations), and money-market IRAs (which, even if they didn’t suffer the 401’s fate, are far more limited in money) to prop up the market.
– If you think the government has that cash, guess again. I just heard on CNBC that an auction of 30-year T-bonds yesterday went very poorly. Even with the market crash, the equity markets still have far more value than either the entire federal budget or the national debt (something north of $20 trillion versus roughly $3 trillion and $11 trillion respectively). Again, where’s the money?
– Speaking of deficit, Jim Doyle just admitted that there’s a $5 billion hole in the state budget for the next biennial period. That is an 8.4% typhooning of total state spending over that two years and nearly-150% increase in the structural deficit from the estimates at the time (if memory serves). If filled the way the Dems usually fill (if they were honest about filling it), it would also represent an 18% 2-year tax increase. Of course, they want to lop on a tax doubling for their version of CubaCare (which would more-likely require a tripling or perhaps a quadrupling).
– Back to fat union contracts; 80% of spending by the city of Oak Creek is on (mostly-)union-negotiated compensation. After all, where else but government, which never really cuts back in absolute terms, can one get 50% of one’s salary in benefits? So far, tax levy increases have been “limited” to the anti-freeze provisions, but that is only because of massive fund transfers and a fresh infusion of cash from We Energies (via the state). Guess what? Those funds are empty, and that We Energies payment is as high as it’s going to get.