Saturday, July 20, 2013

SAR #13201

"Dreams are born of imagination, fed upon illusions, and put to death by reality." Tyler Durden
Not So Fast: A Circuit judge has ruled that Detroit's bankruptcy would lessen the pension benefits of public employees, which is explicitly prohibited by the state constitution, must be withdrawn. Wanna bet how this plays out?

Sucinctly: Don’t worry about labor force participation. It’s not coming back. The unemployment rate will continue to decline – but not because the economy is picking up, but because ever more people will drop out of the labor force. Magically, less employment will lead to less unemployment. When will people begin to re-enter the labor force and start looking for jobs? Probably around 2030. Maybe 2040.

Secrets Is Secret: The administration maintains that eavesdropping on everyone all the time is simply "in the public interest" and thus constitutional. Besides, it is a secret and because no one can know the secret, no one knows enough about the secret to challenge it in court. Not even in one of the ever-popular secret courts.

Wait, Wait: The EPA now says its report on the evils of fracking will not be released until 2016, by which time most of the sweet-spots will have been fracked.

Fine Print: Senator Warren, claiming it was obscene for the federal government to make $51 billion in profits from its student loan program, has offered a bill that would allow students to borrow money at the same rate banks do - currently about 0.75% - instead of 6.8%. In response a "bipartisan group of senators" (bipartisan here meaning they represent a wide variety of banks) has reached a compromise that would lower borrowing rates for 2015 and only 2015, after which the rates would climb to 8.5%, or maybe 9.5%. Well, 10.5% for sure. 
Danger, Will Robinson: The number of people becoming realtors is surging; the lure of easy money. Ditto, buyers.

Forecast: Residential construction took an immense dive last months, why? The homebuilders' association claims it is just the native caution of the builders, not wanting to get too excited. Others blame the weather – too hot, too rainy, too Philadelphia... Or maybe it's the increase in interest rates that is dampening enthusiasm. But as long as the population keeps growing, sooner or later we're going to need more houses and construction will pick up. Despite the weather.

Politics As Usual: Pennsylvania earned over $1 billion in profit from the state lottery last year, so Republican Governor Tom Corbett plans on selling the lottery to his friends to privatize the program.

Competition: The Arizona Public Service Co. wants to charge customers who install rooftop solar panels $50 to $100 or more a month to cover the cost of maintaining the power grid. The charge is not for an interconnect that would let the customer sell power back to the company, but simply to punish fleece the customers. 
Day in the Park: As a public service, the state of Ohio has a deal with their electric utilities to shut off the air conditioning in the state's prisons when the temperature puts a severe draw on the electrical supply. Money, of course, changes hands.

Money For Nothin': In the last quarter, Microsoft made nearly $5 billion in profit, selling CDs and such - not bad for essentially nothing. Sure they had to pay the coders and such, but $5 billion a quarter in profits?

Quoted: "Under Obamacare, "a few people will be hurt — young, healthy individuals too affluent to qualify for subsidies, wealthy taxpayers, etc. — a much larger number of people will be helped, some of them enormously... Conservatives are right to be hysterical about [Obamacare]: it’s an attack on everything they believe — and it’s going to make poorer Americans’ lives better. What could be worse?"

Porn O'Graph: Working In America, The Collapse 
The Parting Shot:
Wild potato vine, Ipomoea pandurata.


Anonymous said...

Not So Fast: A Circuit judge has ruled that Detroit's bankruptcy... Wanna bet how this plays out?

With the Robbers' Court as the final backstop, there's a bet?

OkieLawyer said...

Re: Not so fast

As a former bankruptcy attorney, I can tell you that the "automatic stay" trumps everything as to the city of Detroit. However, I was reading that the actual lawsuit is not against the city of Detroit, but some other party that is not covered by the automatic stay, so apparently the lawsuit can move forward despite the stay.

Having said that, bankruptcy law, being federal law, will trump state law because of the Supremacy Clause of the U.S. Constitution.

What I find interesting is the question of who, then, will have to cover the worker's pension benefits, given the Michigan constitution's provision that no pension can be reduced? The overwhelming number of comments on the websites that are covering the story are appalling in that they are virtually unanimously calling for all of these retired and soon-to-be retired workers to receive nothing, ever. There is a cabal that is calling for all worker benefits (particularly all government worker benefits) to be completely eradicated. The seeming chorus of voices all saying in unison (and saying it in almost identical ways) that workers (all workers) should receive no benefits whatsoever (because, it is argued, such benefits are never affordable) strikes me as some sort of PsyOps operation. The responses advocating the elimination of all worker benefits in the United States (which are already pretty scant) with a seeming groundswell of support that drowns out other voices (the number of comments stating that all retirement benefits should be completely eliminated appears to be about 99:1 of the comments made in response to these stories). Almost no one is responding to say that the Detroit retirees should receive what they were promised.

What is really alarming about this are the responses that state "these workers should have known better than to contribute to what they knew was an unsustainable retirement program, and thus they should not receive anything." These same comments continually also seek to blame these workers for "having voted for the Democrat [sic] policies."

The use of the bankruptcy code to deprive workers of the retirement benefits they were promised is an outrage. And, no, it isn't just happening to municipal workers. Private companies have been creating these "crises" for years, mostly unnoticed due to the anecdotal nature of the cases.

Furthermore, I doubt that these workers will end up with a resolution to their deprived benefits. One hallmark of the Republicans in national office is a hatred of workers, especially government workers, and even more particularly unionized government workers. There is most likely no upside for them to provide some relief for these workers. Therefore, I doubt there will be a favorable resolution for these disenfranchised municipal workers.

Charles Kingsley Michaelson, III said...

okielawyer - any objection to most of your comment being an item come Monday's SAR?

OkieLawyer said...

No objection.

Blissex said...

«Sure they had to pay the coders and such, but $5 billion a quarter in profits?»

In many profitable software companies developing, testing and documenting the software costs less than the expense account of marketing and sales, that is around 5-10% of sales.

Another 5-10% goes in general administration overheads, sales and marketing cost several times that, usually around 40-50% and about as much goes to shareholder profit and bonuses and stock options for management.

That's why venture capitalists have been extraordinary keen for decades to invest in software companies.