Sudden Stop

Mistress Bailout?

Why should the mistress suffer so in these tumultuous times? Surely Congress will consider a girlfriend bailout?  [WSJ Blog]

The most surprising stats in the study relate to gender and what might be termed “length of service.” Fully 82% of men in the study said they planned to lower the allowances to their mistresses, while more than three quarters planned to provide fewer gifts, less expensive gifts and fewer perks, like jet rides, resort vacations and top restaurant meals.

The Bailout: Bigger than WWII

Via Bigpicture...  WWII, what a bargain:

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

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data courtesy of Bianco Research

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That is $686 billion less than the cost of the credit crisis thus far.

The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: $288 billion, Inflation Adjusted Cost: $3.6 trillion

Not photoshopped. Really

Some of the greatest, hey-that's-been-'shopped, photos that aren't.

Fiscal stimulus? Nah

Facing higher unemployment and a deepening recession, Massachusetts politicians rush to action.

"The fact is, the Massachusetts gas tax is below the national average," DiMasi said in a statement issued this afternoon by his office. "While we would all prefer not to burden drivers with any new cost in difficult times, I believe the gas tax is a fairer way to share our costs and it should be fully considered before any tolls are increased."

God knows we can't pay less than the national average!

In the worst of both worlds, we may be in recession, but at least the taxes are going up.

Stormier New England Economy

The theory is, according to the Forbes article, New England faces 'significant recessions' -  experts, and theNew England Economic Partnership, that because of the 1) higher incomes and businesses dependent upon those higher incomes in the region, 2) the lower dependence on the housing related business, that those incomes and businesses will be affected more slowly by the deepening recession, but will also recover more slowly. 

"The challenges facing job growth and economic development in the state continue to be a lack of leadership in both public and private sectors, high tax rates, an unfriendly business, environment, dependence on public jobs rather than private employment and a poorly performing education system," Edward Mazze, professor of business administration in at the University of Rhode Island and the state's forecast chair, wrote in a summary of the report.

Maine could be next in line, with a projected peak unemployment rate of 8.7 percent.

Connecticut and Massachusetts would land in the middle, with each at 8.3 percent.

And New Hampshire could peak at 7.4 percent, with the lowest spike in unemployment in Vermont, at 6.9 percent. South Coast Today

Related: 

New England Economists, It's not the big one

New England could lose 250,000 jobs

More state debt burden

Adding to the highest bond load of any of the 50 states, the underfunded Massachusetts public pension just got underfuned-er.

Travaglini said losses for the Massachusetts system on US stocks are 37 percent for the year so far, while international equities are down 42 percent.

Together, those two categories make up about half of the system's total investments.

Offsetting those losses were better performance from bond holdings, down only 5 percent for the year, while private equity investments were off 2 percent and hedge funds were down 15 percent.

It's hard to guess how the managers know the hedge funds and private equities are down only 15 and 2 percent respectively since those funds typically don't have the same mark-to-market reporting.  It's easy to hypothesize that these are optimistic guesses, not reality, that are yet to adjust valuations.

Also, it's too early to know how the $14.3 billion dollar decline from the peak will affect the net underfunded liability, but this much is certain:  (1) the liability will increase; (2) the Governor's 9C "cuts" mean the current year contribution towards that liability are down; and (3) taxpayers with 401(k)s that have suffered 30% or so decreases also have to backstop the public pension so that public employees don't have to suffer a loss. 

Debt tipping point

'midst the bluster of toll hikes, and the paltry $90 million or so that'll bring in, (notice how small millions, and lately, even billions has become?) Governor Patrick's plan is vividly silent as to who will assume the MTA's debt of approximately $2.2 billion, including approximately $1.2 billion in senior lien debt and $953 million in subordinate lien debt.

With $16 billion in outstanding general obligation bonds and $29 billion in total net tax-supported debt, we respectively "enjoy" the first and second highest among the 50 states, on a per capita basis and as a percentage of personal income. That's 9.8% of total personal income in 2008, which is 300% of the 50-state median of 2.6%, or $4,500 for each resident of the State.

On deck is $6.0 billion of authorized borrowing through the Massachusetts School Building Authority (MSBA); already the State has 'guaranteed' through January 2009, $800 Million of turnpike authority deb, and of course, the $3.5 billion bond bill signed earlier in 2008.

With at least 25% of the State's debt variable, a debt ratings downgrade would be calamitous considering that each 1 percentage point increase on 25% of the debt is about $40 million.

Ghost of Romney

The last line in the article: "But Patrick spokesman Kyle Sullivan said, “The governor has put together a responsible plan on how to deal with a sad legacy inherited from prior administrations.” 

The buck?  Yeah, the buck, it stops back there.  There ought to be a grace period, beyond which an Administration must, by statute, take responsibility for its own governance.

The last one not on the dole turn out the lights

Turn out the lights. But leave your wallet.

I disagree with my fellow conservatives who think the Obama-Pelosi-Reid-Frank liberal behemoth will so obviously screw up that they'll be routed in two or four years' time. The President-elect's so-called “tax cut” will absolve 48 per cent of Americans from paying any federal income tax at all, while those that are left will pay more. Just under half the population will be, as Daniel Henninger pointed out in the Wall Street Journal, on the dole. By 2012, it will be more than half, and this will be an electorate where the majority of the electorate will be able to vote itself more lollipops from the minority of their compatriots still dumb enough to prioritize self-reliance, dynamism, and innovation over the sedating cocoon of the nanny state. That is the death of the American idea — which, after all, began as an economic argument: “No taxation without representation" is a great rallying cry. “No representation without taxation” has less mass appeal. For how do you tell an electorate living high off the entitlement hog that it's unsustainable and you've got to give some of it back?  ...

Mark Steyn, The death of the American Idea

Massachusetts Ethics

Governor Patrick names 12 person panel to study ethics.  Save the manpower.  All that is required is that Open Meetings statutes and Open Record statutes be applied to the Governor and Legislature's offiices, much the same as is applied to local government and let the public police its lawmakers.