Moonhowlings

From the Richmond Times Dispatch:

Sen. Mark R. Warner, D-Va., said Friday that he feels like someone walking around Washington with a sign that says, “The end is near. We’ve got to act.”

During a stop in Richmond, Warner expressed disappointment that budget deficit talks led by Vice President Joseph R. Biden Jr. had collapsed Thursday when House Majority Leader Eric Cantor, R-7th, and Sen. Jon Kyl, R-Ariz., walked away, blaming differences over taxes.

“People are still playing political games,” Warner said. “The idea that we can solve this on one side of the balance sheet is a fundamental lack of basic Econ 101.”

Warner, who has for months been working toward a solution with a bipartisan group of senators known as the “Gang of Six,” said Thursday’s developments gave new urgency to that effort, which has languished since Sen. Tom Coburn, R-Okla., departed weeks ago.

“We’ve still got a few items outstanding, but if we can’t get those finalized, we ought to at least present what we have,” Warner said, adding he hopes they can do so in the next week. Read more…

USAToday.com

WASHINGTON — Social Security made $6.5 billion in overpayments to people not entitled to receive them in 2009, including $4 billion under a supplemental income program for the very poor, a government investigator said Tuesday.

In all, about 10 % of the payments made under the agency’s Supplemental Security Incomeprogram were improper, said Patrick P. O’Carroll Jr., the Social Security inspector general.

Error rates were much smaller for retirement, survivor and disability benefits, which make up the overwhelming majority of Social Security payments, O’Carroll told a congressional panel.

Read more…

Trailer: Too Big to Fail

Tonight is the premiere of Too Big to Fail, the story of our near-financial disaster in 2008. The film airs on HBO at 9 pm and is billed as the definitive story of what really happened during this crisis. It should provide interesting discussion as we watch the financial status of not only our nation, but our own personal wealth hover on the brink of disaster.  It does open the vault on the financial crisis we so nearly avoided. 

More about tonight’s film:

Often PBS Television comes into the sights of some Republicans for defunding.  This year is no exception.  Already the speeches are being made with various people holding Kermit and Big Bird puppets.  TV commercials are beginning to pop up on shows on PBS.  What disturbs me is why PBS.  I can’t see what’s not to like.

Most people don’t give a rat’s ass about the politics of PBS, if there are any.  Most people just like NOVA, Antiques Road Show, Masterpiece, and American Experience.  There are numerous kids shows, some entertainment and some educational.  At least 2 or 3 generations grew up on shows like  Sesame Street and the Electric Company.  These shows were on the airwaves.  No cable was needed.  Poor kids got some solid education, even if their parents didn’t have cable or if there were no satellite TV. 

Read more…

Huffington Post:

Investors will continue to ride the speediest rally in U.S. stocks since the Great Depression despite growing concerns that the market is overbought and due for a correction.

Wall Street posted its third consecutive week of gains with the S&P 500 now up 6.8 percent for the year and more than 20 percent in just six months

Regardless of where the stocks start off in the morning, they crawl upwards by afternoon.  Analysts expect a correction but they aren’t sure when.  There seems to be a tendency for more and more investors to buy.  

But there is a perceptible level of anxiety in the market. Trading volume has been exceptionally low recently and the CBOE Volatility Index .VIX, Wall Street’s so-called fear gauge, is up on the week despite the gains in stocks.

So what does all this mean?  Are lots of people buying now?  What is spurring this buying spree?  I sure hope we aren’t headed for another downturn.

Pat.Herve’s link on 401K

According to the Washington Post:

Members of the conservative Republican Study Committee said the GOP must keep its campaign pledge to immediately slice at least $100 billion from non-defense programs, an effort that would require lawmakers to reduce funding for most federal agencies by a third over the next seven months. And the group called for even deeper cuts over the next decade to return non-defense spending to 2006 levels.

“One hundred billion dollars is the number the American people heard last fall. And, frankly, when you look at it in the context that there’s a $14 trillion debt, it seems to me we should be able to find $100 billion,” said Rep. Jim Jordan (Ohio), chairman of the study committee, a group of economic and social conservatives whose ranks have swelled since the GOP won back control of the House in the November midterm elections.

Read more…

Sideshow Bobby is at it again.  This time he wants to mint our own money here in Virginia–Not real money but not exactly funny money either.  Delegate Bob Marshall (R-13)  wants to not only mint our own coins but he also wants to establish a bank of Virginia.  From insidenova.com:

The 20-year veteran plans to introduce legislation during the Jan. 12 session of the General Assembly that would call for the Commonwealth to study minting its own coins in order to compete with what he calls “the monopoly of the Federal Reserve System.”

“We can’t mint money, but we can mint gold and silver coins,” Marshall said Wednesday night. “It sounds like a small difference, but it is a difference legally. If you look closely on a [dollar] bill, it doesn’t say that it’s money. It says it is legal tender ‘for all debts, public and private.’”

Marshall said that the Federal Reserve has created inflation that is detrimental to the economy because there is no competition in terms of payment.

“When you have a monopoly, you can do what ever you want,” he said of the Reserve.
The minting of gold and silver coins, which he compared to that of companies making commemorative coins, is something states can legally do as long as the coins meet the weight requirements.

And minting coins is just the first step.

“Obviously, it won’t always be convenient to carry around gold and silver coins,” Marshall said. “You could set up a debit system where you’d have a claim of gold or silver deposited with the trustee.”

Marshall would also like to see a bank of Virginia established.

What will Bob Marshall think of next?  Where is the features, advantages, benefits plan?  What’s in it for Virginians?  Is this just another way to get sued by the feds?  Marshall and Cuccinelli are the Frick and Frack of Virginia politics.  Next thing I know he will come up with a secessionist plan all our very own. 

Delegate Marshall need to go to Richmond and work on jobs and transportation.  He needs to figure out ways to support education and repay the VRS fund.  He needs to help his colleagues develop a plan to lure companies into Virginia to pump up our economy.  We don’t need bad publicity to drive them away.  He and the AG seem to be trying to out do each other on extremist plans to embarrass the state.  What is he thinking?!! 

Governor McDonnell had a town hall meeting today  with state employees to deliver some sobering news. 

There will be no pay raises next year and state employees will have to pony up a portion  of the VRS contribution.  (Has that passed the General Assembly yet?)   According to the Richmond Times Dispatch:

He did not say how much but cited a Joint Legislative and Audit Review Commission report that found the Virginia Retirement System and other state-supported pension plans have unfunded liabilities of $17.6 billion.

The state has been paying employees’ 5 percent share since 1983. When a state employee at the town-hall forum pointed out that that payment began in lieu of a pay raise, McDonnell said “you are exactly right” but said the state employees will have to begin making a “shared sacrifice.”

What is a” shared sacrifice?”  Who else is sharing this sacrifice?  McDonnell did share some good news after the double whammy.  He informed state workers that there would be no furloughs and health insurance would not go up.  The furloughs were particularly troublesome in the past. 

The good news is, people still have jobs. 

Has pay been frozen for the General Assembly and for the executive branch of the state government? 

This was the first town hall meeting for state employees.  Most employees said that they appreciated the candor.  Those who were not present could view the town hall meeting on the governor’s website. 

Virginia public employees may have to start paying their own 5% VRS contribution if some lawmakers have their way.  According to the Richmond Times Dispatch:

Virginia legislators are preparing to take a fresh look at whether to require state and local government employees to pay their full share of pension costs.

Faced with rising rates to pay for long-term liabilities, members of the General Assembly are considering requiring all public employees — not just those hired after last June 30 — to pay 5 percent of their salary toward their pensions.

The legislature also is likely to discuss whether to offer state employees the option of contributing to a 401(k) plan they can manage themselves instead of a defined-benefit plan run by the state.

“There is no doubt this issue is going to be revisited this session,” said Del. S. Chris Jones, R-Suffolk, chairman of the House Appropriations Committee’s subcommittee on compensation and retirement.

Jones also said he is disappointed that most local governments and school systems chose to pay for new employees’ share of pension contributions.

A new law took effect last July 1 that allowed localities to hold new employees responsible for their own contributions.  Very few localities took advantage of this offer.  About 80% continued paying this benefit for new employees.

…[T]he governor and the legislature also deferred paying $620 million into the state and teacher pension plans to balance the $70 billion biennial budget. That diminished the retirement system’s ability to pay future liabilities at the same time it lowered its expectations for returns on market investments. The result is intensified pressure on contribution rates, which will be reset in 2012.

McDonnell has promised to begin making up those deferred payments in the coming year, but he wouldn’t say last week whether he will propose to reverse a 27-year-old deal that allowed the state to cover employee shares of their pensions instead of raising their pay.

In an interview last week, McDonnell said he will recommend changes to the retirement system when he reveals his proposed budget amendments Friday, but he would not elaborate.

“What I’m interested in is the long-term solvency of the retirement system,” he said, adding that he has 22 years of state service vested in the system.

McDonnell said he created a work group several months ago to consider pension options. He cited concerns about unfunded, long-term liabilities; the increasing number of employees retiring; and the potential for big increases in employer contribution rates next year.

The amount borrowed from VRS keeps changing.  At one point it was in the neighborhood of 6 billion dollars.  At one point, VRS received accolades  for being one of the best handled retirement systems in the United States.  How could things have gone south so quickly.  Perhaps Eric Cantor’s wife can explain it.  She is chairman of the board of directors of VRS.   We cannot ignore the fact that large sums of money were borrowed from the pension fund and that is part of the reason it isn’t in as good of shape as it once was.  

Of course the VRS lost money during the \crash of 2008.  However, it lost around 20% which is a whole lot less than what most individuals lost.  The investments were very solid.  As for employees electing to go the 401k route rather than the pension route…what fool is going to fall for that one?  No one would do that unless the pot were sweetened a great deal.

Many people rely on the VRS for their retirement.  All state employees, judges, magistrates, commonwealth’s attorneys, sheriffs, police, county employees, and teachers are part of the system unless the locality elects to have its own form of retirement.  It is unfortunately that this retirement system appears to have appendages on the chopping block because of state deficits.  Strange that it was the first place the state looked to borrow from when the budget needed balancing. 

Back in the day when employees had to pay their own 5%, they weren’t given an option to join or not join.  It was required.  How is that different than being required to have health care?  Can   a government require an individual to buy retirement?  Perhaps Cuccinelli will sue the state over that one, should it come to pass.  Wait…he is the state.  Ooops.

[note:  highlighting by administration.]

[UPDATE:  noon  12/12/10-  Blue Virginia's take on this issue   http://www.bluevirginia.us/diary/2572/pension-plan-pay-cut]

Virginia participants

Warren Buffett is one of my favorite persons of money.  I have always listened to him.  He has more money than God and yet remains a humble man.  He isn’t rolling his bucks over to his kids in great quanities either.  I guess he thinks it will ruin them.  He also knows he isn’t an economist, but he has certainly handled billions of dollars, quite well I might add.

Warren Buffett has written a letter to his country, Uncle Sam, about the crash of 2008 that we are still coming out of.  Buffet understands the severity  and Buffett isn’t second-guessing.  In its entirety from the New York Times:

Omaha

DEAR Uncle Sam,

My mother told me to send thank-you notes promptly. I’ve been remiss.

Let me remind you why I’m writing. Just over two years ago, in September 2008, our country faced an economic meltdown. Fannie Mae and Freddie Mac, the pillars that supported our mortgage system, had been forced into conservatorship. Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.

Read more…

Sarah Palin and Newt Gingrich have both turned their sites onto to Federal Reserve and its leader, Ben Bernanke.  Both Palin and Gingrich have started taking their shots via Twitter.  The 2012 Wannabes are expected to follow suit.   Attacks on The Fed, before September 2008, were pretty much confined to the gold bugs, conspiracy theorists, and the financial press.

Post election 2010 much has changed.  According to the Huffington Post:

The tea party itself — judging from its 10-point “Contract From America,” at least — did not make the Fed a top concern; they were focused on spending issues.

But the tea party tide also swept in numerous libertarian hard-money types and fellow travelers, a cadre soon to grow. They hate the very idea of the Fed, not to mention Bernanke’s activism in running the place.

Hopefully Benanke will put on earplugs and blinders and do what he has to do.  The Fed is an independent agency.  Bernanke  is appointed.   He will not run for election or re-election.  And meanwhile,  Sarah Palin, the eternally ill-informed candidate who should not have run,  continues to be mean as a snake.  Maybe she will put a sock in it.  I can’t imagine anyone whose advice I would be less likely to take.   Palin witch hunts just about everything.  She Ben Bashes but offers nothing positive.  

Virginia has spent millions on college drop outs.  According to the Richmond Times Dispatch:

Richmond, Va. –

Virginia taxpayers spent $177.7 million over five years on 35,461 college students who dropped out after their first year, according to a national study on the cost of attrition.

Federal grants to those students totaled an additional $33.7 million, the American Institutes for Research says in a report being released today that looked at freshmen who didn’t return to four-year schools during the 2003 to 2008 academic years.

Nationally, those costs exceed $9 billion, said the report, which is intended to focus attention on institutional accountability at a time when the state and federal governments are seeking to increase the numbers of students who earn degrees.

“If you don’t finish the first lap, you can’t cross the finish line,” said Mark Schneider, the American Institutes for Research vice president and a former U.S. commissioner of education statistics.

Why are we spending this kind of money?  When do we decide WHO CARES?  If we are going to cut back on spending, here would be a great place to start. 

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The Social Security Administration has announced that there will be no social security COLA again this year.   A COLA is a cost-of-living adjustment.  This will be the second time in history that there has been no automatic adjustment.  The first time there was no COLA was 2010. 

According to the Richmond Times Dispatch:

The cost-of-living adjustments, or COLAs, are automatically set each year by an inflation measure that was adopted by Congress in the 1970s. Based on inflation so far this year, the trustees who oversee Social Security project there will be no COLA for 2011.

The projection will be made official on Friday, when the Bureau of Labor Statistics releases inflation estimates for September.

The timing couldn’t be worse for Democrats as they approach an election in which they are in danger of losing their House majority, and possibly their Senate majority as well.

“If you’re the ruling party, this is not the sort of thing you want to have happening two weeks before an election,” said Andrew Biggs, a former deputy commissioner at the Social Security Administration and now a resident scholar at the American Enterprise Institute.

“It’s not the congressional Democrats’ fault, but that’s the way politics works,” Biggs said. “A lot of people will feel hostile about it.”

This past Friday, the same bureau delivered another painful blow to Democrats: The U.S. lost 95,000 jobs in September and unemployment remained stubbornly stuck at 9.6 percent.

Democrats have been working hard to make Social Security an election-year issue, running political ads and holding press conferences to accuse Republicans of plotting to privatize the national retirement program

I am not at all sure how this affects the Democrats.  Supposedly those on social security will feel hostility and that they are not getting ahead.  It would seem to me that the idea that there was low inflation might slip into those thoughts but I guess not.  On another not, this kind of news usually affects other retirement plans such as pension COLAS. 

Read more…

Jon Stewart tries to make sense out of the mortgage crisis and the subsequent foreclosures:

He says it started with the mortgage companies bundling bad loans and then trading bails of sh!!! back and forth. Then it all came to a screeching halt.

Meanwhile, according to TV, Jon Stewart is having trouble negotiating the use of 400+ porta potties.  The Marines are using the area on Sunday.  Stewart has offered to split the cost.  The Marines won’t play ball.

InsideNova:

RICHMOND, Va. (AP) — Virginia is holding its fourth annual tax holiday on energy-efficient products.

Gov. Bob McDonnell said Monday the tax holiday will begin on Oct. 8 and run through Oct. 11.

During that time, residential consumers can save money by buying sales-tax exempt items like heat pumps, dishwashers, washing machines, insulation, toilets and showerheads. Other products include air conditioners, refrigerators, ceiling fans, compact fluorescent light bulbs, programmable thermostats and faucets.

New and used items must be priced at $2,500 or less and certified as being energy efficient with the Energy Star and WaterSense designations.

Online purchases also will be exempt from the 5 percent sales tax if the orders are placed during the tax holiday and the sellers have the items available for immediate shipment.

The governor’s office says some retailers also may choose to pay the tax on any nonexempt merchandise.

October 8-11.  That is a mighty small window of opportunity. I think that having a tax moratorium on energy savers is an excellent idea. I would like to see the time frame last at least a week. There is also the matter of the merchant having the item in stock for immediate shipment. I can see room for bait and switch in this model. Also, are there incentives for merchants to pay the sales tax for the customer?

But over-all, good for Virginia for holding its 4th annual tax holiday. Perhaps next year that small window of opportunity will open up a bit more.   Perhaps Virginia might also consider a spring and fall moratorium.