Sunday, December 09, 2012
Motown's Mental Breakdown
Review & Outlook: Motown's Mental Breakdown - WSJ.com
The political gospel according to Democrats is that the auto bailout saved Detroit.
If only it were so. Alas, costly labor agreements have driven Motown like GMGM -0.39% and Chrysler to disrepair. Perhaps the only fix now is to let Detroit go bankrupt.
Michigan lawmakers have kept Detroit on life support for the past six months and may need to do so indefinitely barring a miraculous economic recovery. The city will run out of cash this month unless the state releases $30 million in bond proceeds, which are being held in escrow under a consent agreement that council members reluctantly approved in April. The rescue package ties $137 million in state aid to reforms and lets Mayor Dave Bing redo labor contracts.
The city has already drawn $40 million from the state drip and may soon be cut off since council members last month rejected a contract for a legal firm to advise the mayor, a condition of further aid. The council cashiered the contract because the legal firm Miller Canfield helped craft the agreement, which the unions virulently oppose.
While the council is digging Detroit's grave, Mr. Bing is performing triage. The Democratic mayor has slashed wages across the board by 10%; increased health premiums and co-pays; reduced current-worker pensions and suspended retirees' 2.25% cost-of-living raises. This quadruple bypass operation will save about $60 million this year, but the city will still likely end the fiscal year next June $50 million in the red.
Meanwhile, third-party actuaries are pegging the city's retirement liabilities at $11 billion, nearly twice as much as the city has estimated. Detroit will spend $160 million this year and $135 million in 2013 on retiree benefits even after Mr. Bing's labor reforms are phased in. Some of the problem is demographic and has been exacerbated by defined-benefit pensions that let workers retire in their 40s. Many retirees living into their 80s are drawing benefits for nearly twice as long as they work.
The mayor has also floated raising the retirement age and moving new hires to 401(k)-style plans as the state did in 1997. He's even put the nuclear option—freezing pensions for all workers—on the table. Federal law requires private employers to do this if their pension funds become insolvent, but there are no such diktats for local governments.
Another idea is outsourcing operations to private companies. According to the Mackinac Center for Public Policy, the city could save about $110 million annually by contracting out its bus system, garbage collection and water management. Selling its electrical system to an investor-owned utility could raise $300 million to $500 million. Unions oppose all of the above.
Egged on by the city council, the unions have also sued to block the consent agreement and the mayor's labor reforms. State courts threw out their lawsuits this summer, but the unions hope that voters' November repeal of a state emergency manager law, which provides the framework for the consent agreement, will also void the reforms.
In any event, Gov. Rick Snyder and Republican lawmakers are rewriting the nullified law to assist other insolvent cities. One option is to allow distressed municipalities to file for Chapter 9 bankruptcy without state authorization, which is currently required. Some Detroit council members are importuning the state to let the city go bankrupt so they can escape the strictures of the consent agreement. But a bankruptcy judge is unlikely to be more lenient than the mayor.
And make no mistake, Detroit is on its deathbed. Its unemployment rate is nearly twice as high as its surrounding metropolitan region. It has the highest violent crime rate of any major city in part because its police force has been stripped to pay for retirement bills while two-thirds of its street lights are broken. Its schools are among America's worst. The city has lost a quarter of its population over the last decade, and its abandoned lots cover more acreage than Paris.
If the council wants to bolt from its state rehab program, the only way to rescue Detroit may be through an orderly bankruptcy (i.e., not politically negotiated) that restructures its $2.5 billion in general fund-backed debt and $11 billion in retirement obligations. Detroit would be the largest city to date to file for bankruptcy. Its restructuring could drag on for several years, slash pensions for many retirees and impair the city's ability to borrow for decades.
But at the very least, it would provide an instructive lesson for other chronically insolvent cities like Chicago and Los Angeles that have delayed reforms because they believe they're too big to fail.
The political gospel according to Democrats is that the auto bailout saved Detroit.
If only it were so. Alas, costly labor agreements have driven Motown like GMGM -0.39% and Chrysler to disrepair. Perhaps the only fix now is to let Detroit go bankrupt.
Michigan lawmakers have kept Detroit on life support for the past six months and may need to do so indefinitely barring a miraculous economic recovery. The city will run out of cash this month unless the state releases $30 million in bond proceeds, which are being held in escrow under a consent agreement that council members reluctantly approved in April. The rescue package ties $137 million in state aid to reforms and lets Mayor Dave Bing redo labor contracts.
The city has already drawn $40 million from the state drip and may soon be cut off since council members last month rejected a contract for a legal firm to advise the mayor, a condition of further aid. The council cashiered the contract because the legal firm Miller Canfield helped craft the agreement, which the unions virulently oppose.
While the council is digging Detroit's grave, Mr. Bing is performing triage. The Democratic mayor has slashed wages across the board by 10%; increased health premiums and co-pays; reduced current-worker pensions and suspended retirees' 2.25% cost-of-living raises. This quadruple bypass operation will save about $60 million this year, but the city will still likely end the fiscal year next June $50 million in the red.
Meanwhile, third-party actuaries are pegging the city's retirement liabilities at $11 billion, nearly twice as much as the city has estimated. Detroit will spend $160 million this year and $135 million in 2013 on retiree benefits even after Mr. Bing's labor reforms are phased in. Some of the problem is demographic and has been exacerbated by defined-benefit pensions that let workers retire in their 40s. Many retirees living into their 80s are drawing benefits for nearly twice as long as they work.
The mayor has also floated raising the retirement age and moving new hires to 401(k)-style plans as the state did in 1997. He's even put the nuclear option—freezing pensions for all workers—on the table. Federal law requires private employers to do this if their pension funds become insolvent, but there are no such diktats for local governments.
Another idea is outsourcing operations to private companies. According to the Mackinac Center for Public Policy, the city could save about $110 million annually by contracting out its bus system, garbage collection and water management. Selling its electrical system to an investor-owned utility could raise $300 million to $500 million. Unions oppose all of the above.
Egged on by the city council, the unions have also sued to block the consent agreement and the mayor's labor reforms. State courts threw out their lawsuits this summer, but the unions hope that voters' November repeal of a state emergency manager law, which provides the framework for the consent agreement, will also void the reforms.
In any event, Gov. Rick Snyder and Republican lawmakers are rewriting the nullified law to assist other insolvent cities. One option is to allow distressed municipalities to file for Chapter 9 bankruptcy without state authorization, which is currently required. Some Detroit council members are importuning the state to let the city go bankrupt so they can escape the strictures of the consent agreement. But a bankruptcy judge is unlikely to be more lenient than the mayor.
And make no mistake, Detroit is on its deathbed. Its unemployment rate is nearly twice as high as its surrounding metropolitan region. It has the highest violent crime rate of any major city in part because its police force has been stripped to pay for retirement bills while two-thirds of its street lights are broken. Its schools are among America's worst. The city has lost a quarter of its population over the last decade, and its abandoned lots cover more acreage than Paris.
If the council wants to bolt from its state rehab program, the only way to rescue Detroit may be through an orderly bankruptcy (i.e., not politically negotiated) that restructures its $2.5 billion in general fund-backed debt and $11 billion in retirement obligations. Detroit would be the largest city to date to file for bankruptcy. Its restructuring could drag on for several years, slash pensions for many retirees and impair the city's ability to borrow for decades.
But at the very least, it would provide an instructive lesson for other chronically insolvent cities like Chicago and Los Angeles that have delayed reforms because they believe they're too big to fail.
A version of this article appeared December 4, 2012, on page A16 in the U.S. edition of The Wall Street Journal, with the headline: Motown's Mental Breakdown.
DHS grants 'like winning the lottery' for state, local officials
DHS grants 'like winning the lottery' for state, local officials | WashingtonExaminer.com
"Political factors created upward pressure on the program as more and more cities wanted to receive funding," the report said.
Local governments are not required to put up any money of their own.
They also are not required to demonstrate how the money would make them safer from terrorism.
So explanations like using 13 Sno-Cone machines to generate ice packs in a medical disaster was enough for Montcalm County, Mich., officials to justify the cost, pegged at $6,200 in the Coburn report but $11,700 in local news accounts......
The zombie skit provided training on how to deal with "extreme medical situations where people become crazed and violent, creating widespread fear and disorder," according to the justification cited in the report.
Getting a DHS grant is like "winning the lottery" one local official told Coburn's researchers.
"Political factors created upward pressure on the program as more and more cities wanted to receive funding," the report said.
Local governments are not required to put up any money of their own.
They also are not required to demonstrate how the money would make them safer from terrorism.
So explanations like using 13 Sno-Cone machines to generate ice packs in a medical disaster was enough for Montcalm County, Mich., officials to justify the cost, pegged at $6,200 in the Coburn report but $11,700 in local news accounts......
The zombie skit provided training on how to deal with "extreme medical situations where people become crazed and violent, creating widespread fear and disorder," according to the justification cited in the report.
Getting a DHS grant is like "winning the lottery" one local official told Coburn's researchers.
Saturday, December 08, 2012
Number Of Workers Aged 25-54 Back To April 1997 Levels
Number Of Workers Aged 25-54 Back To April 1997 Levels | ZeroHedge
When people think of the conventional battery of options the BLS applies to fudge the monthly payrolls number, the labor force participation is the first thing that comes mind: after all the thesis is that old workers are increasingly dropping out of the labor force and retiring.
Nothing could be further from the truth as can be seen in this chart of workers aged 55-69, i.e. the prime retirement age.
But perhaps a far more important secular issue is the complete lack of pickup in the prime worker demographic, those aged 25-54, which in November dropped by 400k to 94 MM.
This is a level first breached in April 1997, in other words in the past 15 years not a single incremental job has been gained in this most productive and lucrative of age groups!
When people think of the conventional battery of options the BLS applies to fudge the monthly payrolls number, the labor force participation is the first thing that comes mind: after all the thesis is that old workers are increasingly dropping out of the labor force and retiring.
Nothing could be further from the truth as can be seen in this chart of workers aged 55-69, i.e. the prime retirement age.
But perhaps a far more important secular issue is the complete lack of pickup in the prime worker demographic, those aged 25-54, which in November dropped by 400k to 94 MM.
Unions Lose Big in Michigan
Unions Lose Big in Michigan | Via Meadia
Although Lansing passed right-to-work bills covering both types of unions, the bill covering public-sector unions only managed four votes against—a small minority of even the Democrats.
The vote for the bill protecting private-sector unions was much closer.
There could not be a more telling illustration of the deep trouble facing the public union movement.
Although Lansing passed right-to-work bills covering both types of unions, the bill covering public-sector unions only managed four votes against—a small minority of even the Democrats.
The vote for the bill protecting private-sector unions was much closer.
There could not be a more telling illustration of the deep trouble facing the public union movement.
'Bullish' November Data Mask The Ugly Truth About Employment
'Bullish' November Data Mask The Ugly Truth About Employment - Investors.com
OK, but we still have private-sector job growth, right?
Not really.
In the last six months, 621,000 of the 847,000 new jobs created have been in government, not the private sector, according to CNSNews.com.
That's 73% of all jobs — not a healthy labor market.
OK, but we still have private-sector job growth, right?
Not really.
In the last six months, 621,000 of the 847,000 new jobs created have been in government, not the private sector, according to CNSNews.com.
That's 73% of all jobs — not a healthy labor market.
Navy's Battle Plan: Don't Let Them Get Your Goat
Navy's Battle Plan: Don't Let Them Get Your Goat - WSJ.com
The measures are understandable.
The Navy animals have already gone missing twice in the past two weeks, in the run-up to Saturday's Army-Navy football game, the 113th meeting of one of college football's oldest rivalries.
Enlarge Image
So who's been getting the Navy's goats?
The measures are understandable.
The Navy animals have already gone missing twice in the past two weeks, in the run-up to Saturday's Army-Navy football game, the 113th meeting of one of college football's oldest rivalries.
Enlarge Image
So who's been getting the Navy's goats?
Friday, December 07, 2012
Eaton County Dumps Prevailing Wage Law
Eaton County Dumps Prevailing Wage Law [Michigan Capitol Confidential]
On Wednesday night, Eaton County repealed its prevailing wage law, opening up the local market to more competitive wages for construction jobs.
The 12-3 vote by the Board of Commissioners was along party lines with Republicans voting to repeal the restrictive wage law; Democrats voted to keep it in place.
Prevailing wage laws mandate that union-scale wages be paid on construction work funded by taxpayer dollars regardless of whether the company's workers belong to a union.
Local governments can do nothing about federal and state prevailing wage laws, but they do have control over their own.
On Wednesday night, Eaton County repealed its prevailing wage law, opening up the local market to more competitive wages for construction jobs.
The 12-3 vote by the Board of Commissioners was along party lines with Republicans voting to repeal the restrictive wage law; Democrats voted to keep it in place.
Prevailing wage laws mandate that union-scale wages be paid on construction work funded by taxpayer dollars regardless of whether the company's workers belong to a union.
Local governments can do nothing about federal and state prevailing wage laws, but they do have control over their own.
The End Of The Free Internet?
Dickmorris.com
Until now, the work of the UN negotiators who are pondering how to regulate the Internet has been shrouded in secrecy. But as 1,950 delegates from 193 countries gather this week in Dubai to consider 900 proposals to regulate the Internet, their game is becoming clear.
The Russian-educated head of the International Telecommunications Union (ITU), the UN body seeking to control the Internet, Dr. Hamadoun Toure says: “The brutal truth is that the internet remains largely [the] rich world’s privilege.” He adds that “the ITU wants to change that.”
Here’s how:
The ITU wants to force companies — and eventually their users (us) — to pay for streaming video. The proposal is called “pay to stream” or “a quality based model.” According to the BBC, “This would see firms face charges if they wanted to ensure streamed video and other quality-critical content download without the risk of problems such as jerky images.” Presumably the revenues from this Internet Tax would go to building up Net infrastructure in the less developed world. And, undoubtedly, the cost will be passed onto the users throughout the world — including you!
But building up the Net’s third world infrastructure is not the real agenda here. It’s a facade.
Russia and China want firms like Google to have to pay to send streaming video into other countries, creating a charge that can be passed on to the users. The idea is to make it so expensive that nobody in their totalitarian countries downloads anything they shouldn’t which might open their eyes to the truth Moscow and Beijing want to keep out.
Until now, the work of the UN negotiators who are pondering how to regulate the Internet has been shrouded in secrecy. But as 1,950 delegates from 193 countries gather this week in Dubai to consider 900 proposals to regulate the Internet, their game is becoming clear.
The Russian-educated head of the International Telecommunications Union (ITU), the UN body seeking to control the Internet, Dr. Hamadoun Toure says: “The brutal truth is that the internet remains largely [the] rich world’s privilege.” He adds that “the ITU wants to change that.”
Here’s how:
The ITU wants to force companies — and eventually their users (us) — to pay for streaming video. The proposal is called “pay to stream” or “a quality based model.” According to the BBC, “This would see firms face charges if they wanted to ensure streamed video and other quality-critical content download without the risk of problems such as jerky images.” Presumably the revenues from this Internet Tax would go to building up Net infrastructure in the less developed world. And, undoubtedly, the cost will be passed onto the users throughout the world — including you!
But building up the Net’s third world infrastructure is not the real agenda here. It’s a facade.
Russia and China want firms like Google to have to pay to send streaming video into other countries, creating a charge that can be passed on to the users. The idea is to make it so expensive that nobody in their totalitarian countries downloads anything they shouldn’t which might open their eyes to the truth Moscow and Beijing want to keep out.
Catcher in the Rye dropped from US school curriculum
Catcher in the Rye dropped from US school curriculum - Telegraph
Books such as JD Salinger's Catcher in the Rye and Harper Lee's To Kill a Mockingbird will be replaced by "informational texts" approved by the Common Core State Standards.
Suggested non-fiction texts include Recommended Levels of Insulation by the the US Environmental Protection Agency, and the Invasive Plant Inventory, by California's Invasive Plant Council.
Books such as JD Salinger's Catcher in the Rye and Harper Lee's To Kill a Mockingbird will be replaced by "informational texts" approved by the Common Core State Standards.
Suggested non-fiction texts include Recommended Levels of Insulation by the the US Environmental Protection Agency, and the Invasive Plant Inventory, by California's Invasive Plant Council.
SHOCKER: Businesses Fleeing Greece For Greener Pastures.
Instapundit » Blog Archive » SHOCKER: Businesses Fleeing Greece For Greener Pastures.
“Greece is entering the latest stage of its long decline, as businesses flee the country and move their headquarters away from the collapsing country.
Those businesses that choose to remain not only face rising taxes and increased regulations; they are also risking credit downgrades for the simple fact that they are located in Greece.”
A glimpse of our future?
“Greece is entering the latest stage of its long decline, as businesses flee the country and move their headquarters away from the collapsing country.
Those businesses that choose to remain not only face rising taxes and increased regulations; they are also risking credit downgrades for the simple fact that they are located in Greece.”
A glimpse of our future?
73% of New Jobs Created in Last 5 Months Are in Government
73% of New Jobs Created in Last 5 Months Are in Government | CNS News
Seventy-three percent of the new civilian jobs created in the United States over the last five months are in government, according to official data published by the Bureau of Labor Statistics.
Seventy-three percent of the new civilian jobs created in the United States over the last five months are in government, according to official data published by the Bureau of Labor Statistics.
'Claim that there has been any statistically significant warming for past 16 years is therefore unsustainable' -- Reaffirms 'a 16-year 'pause' in rising temps'
UK Daily Mail: 'Claim that there has been any statistically significant warming for past 16 years is therefore unsustainable' -- Reaffirms 'a 16-year 'pause' in rising temps'
Climate Depot Note: Monckton was referring to the latest temperature data showing a 16 year stall in global warming.
Related links on 16 year global warming pause:
'The new data, compiled from more than 3,000 measuring points on land & sea, was issued quietly on internet, without any media fanfare, & , until today, it has not been reported.
This stands in sharp contrast to release of previous figures 6 months ago, which went only to end of 2010 – a very warm year...From beginning of 1997 until August 2012 there was no discernible rise in aggregate global temps.'
New Muskegon County jail cost savings would cover potential bonds for the project, committee told
New Muskegon County jail cost savings would cover potential bonds for the project, committee told | MLive.com
The basic recommendation is to build a new, much larger jail adjacent to its current facility at 990 Terrace St. and to redevelop the vacant Craig School in Muskegon for a new juvenile center.
The beds would be increased to a range of 480 to 582 depending upon which options would be selected compared to a current rating of 370 beds and an average daily population of 403.
The basic recommendation is to build a new, much larger jail adjacent to its current facility at 990 Terrace St. and to redevelop the vacant Craig School in Muskegon for a new juvenile center.
The beds would be increased to a range of 480 to 582 depending upon which options would be selected compared to a current rating of 370 beds and an average daily population of 403.
Muskegon vice mayor to county jail committee: Keep Pine Street open and juvenile center out of Craig School
Muskegon vice mayor to county jail committee: Keep Pine Street open and juvenile center out of Craig School | MLive.com
“We will not agree to vacate another downtown street and we have the final authority on that,” Spataro said during the county jail committee’s Thursday meeting to hear a financial plan for the proposed new jail and juvenile center.
“We will not agree to vacate another downtown street and we have the final authority on that,” Spataro said during the county jail committee’s Thursday meeting to hear a financial plan for the proposed new jail and juvenile center.
Wednesday, December 05, 2012
Muskegon County bond or millage: How should we pay for jail, juvenile center project?
Muskegon County bond or millage: How should we pay for jail, juvenile center project? | MLive.com: How are we going to pay for it?
That is the main question left unanswered regarding the replacement of the Muskegon County Jail and Juvenile Transition Center.
Muskegon County administration is scheduled to provide a presentation Dec. 6 at a county committee meeting on its proposal to finance the proposed project.
Jail/Juvenile Transition Center Committee
When: Thursday, December 6th - 1:30 PM
Location: Hall of Justice - Board Room, 4th Floor, 990 Terrace, Muskegon, MI 49442
I'll be at Carmen's at noon.
All invited.
We will leave at 1:15 for the "Jail" meeting.
Be there!
That is the main question left unanswered regarding the replacement of the Muskegon County Jail and Juvenile Transition Center.
Muskegon County administration is scheduled to provide a presentation Dec. 6 at a county committee meeting on its proposal to finance the proposed project.
Jail/Juvenile Transition Center Committee
When: Thursday, December 6th - 1:30 PM
Location: Hall of Justice - Board Room, 4th Floor, 990 Terrace, Muskegon, MI 49442
I'll be at Carmen's at noon.
All invited.
We will leave at 1:15 for the "Jail" meeting.
Be there!
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