My Blog

Category: Politics

  • Is the Fed Promoting Recovery or Desperation?

    A lengthy beating to the Fed begins:

    On Friday, the Department of Labor reported that March non-farm payrolls increased by 120,000, falling well short of consensus expectations in excess of 200,000. …  On the payroll front, our present expectation is that April job creation will deteriorate toward zero or negative levels.

    Immediately after the payroll number was released, CNBC shot out a news story titled “Disappointing Jobs Report Revives Talk of Fed Easing.”  …

    via Hussman Funds.

    And so begins an excellent analysis of when we stand economically.

    Hussman has a few words on QE:

    How QE “works”

    Keep in mind that the U.S. banking system has trillions of dollars sitting in idle deposits with the Fed already. Quantitative easing simply does not relieve any constraint that is binding on the economy. Rather, QE is a method by which the Fed hoards longer-duration, higher-yielding securities like U.S. Treasury bonds and replaces them with cash that bears zero interest. At every moment in time, somebody has to hold that paper. The only way for the holder to seek a higher return is to trade it for a more speculative asset, in which case whoever sells the speculative asset then has to hold the cash. The process stops when all speculative assets are finally priced so richly and precariously that the people holding the cash have no further incentive to chase the speculative assets, and are simply willing to hold idle, zero-interest cash balances.

    Why does the Fed want this? Simple. Chairman Bernanke believes that by creating a bubble in speculative assets, people will “feel” wealthier and keep consuming – regardless of the fact that real incomes are stagnant and debt burdens are already intolerable, and despite the fact that there is extremely weak evidence for any such “wealth effect” in the historical record. …

    A simple — and accurate — way of looking at the QE operation.  Nothing more than an illusion.  Some lightly rose colored glasses on the eyes of an unsuspecting public.  All the while, the rich — who understand it’s just a trick — keep getting richer, and the poor — who accept the con — continue to spend and spend and spend, making themselves poorer.

    Ya want proof?  Just look at the jobs data:

    Last week, we observed “Real income declined month-over-month in the latest report, which is very much at odds with the job creation figures unless that job creation reflects extraordinarily low-paying jobs. Real disposable income growth has now dropped to just 0.3% year-over-year, which is lower than the rate that is typically observed even in recessions.  …

    If you dig into the payroll data, the picture that emerges is breathtaking. Since the recession “ended” in June 2009, total non-farm payrolls in the U.S. have grown by 1.84 million jobs. However, if we look at workers 55 years of age and over, we find that employment in that group has increased by 2.96 million jobs. In contrast, employment among workers under age 55 has actually contracted by 1.12 million jobs. Even over the past year, the vast majority of job creation has been in the 55-and-over group, while employment has been sluggish for all other workers, and has already turned down.  …

    Beginning first with Alan Greenspan, and then with Ben Bernanke, the Fed has increasingly pursued policies of suppressing interest rates, even driving real interest rates to negative levels after inflation. Combine this with the bursting of two Fed-enabled (if not Fed-induced) bubbles – one in stocks and one in housing, and the over-55 cohort has suffered an assault on its financial security: a difficult trifecta that includes the loss of interest income, the loss of portfolio value, and the loss of home equity. All of these have combined to provoke a delay in retirement plans and a need for these individuals to re-enter the labor force.

    In short, what we’ve observed in the employment figures is not recovery, but desperation. Having starved savers of interest income, and having repeatedly subjected investors to Fed-induced financial bubbles that create volatility without durable returns, the Fed has successfully provoked job growth of the obligatory, low-wage variety. Over the past year, the majority of this growth has been in the 55-and-over cohort, while growth has turned down among other workers. Meanwhile, overall labor force participation continues to fall as discouraged workers leave the labor force entirely, which is the primary reason the unemployment rate has declined. All of this reflects not health, but despair, and explains why real disposable income has grown by only 0.3% over the past year.

    Go read the entire piece.

  • Derrick Smith Using William Beaver’s Defense

    Today’s Story:

    Victor Henderson, the lawyer for accused Illinois State Representative Derrick Smith tells “The Don and Roma Show” on WLS, that the reason federal authorities charged Smith with bribery, was because they wanted him to give up information about possible wrongdoing by Illinois Secretary of State Jesse White, Smith’s long-time political mentor.

    via WLS 890AM.

    February 25th, 2012:

    Cook County Commissioner William Beavers, an old-school Chicago politician who likes to call himself “The Hog With the Big Nuts,” has been indicted on federal tax charges.  …

    But Beavers, 77, called the indictment “horse s— I’m not worried about.”

    He said the feds only indicted him because he refused to wear a wire on fellow Commissioner John Daley, the brother of former Mayor Richard M. Daley and of former White House Chief of Staff Bill Daley.

    So let me write… again…

    Assuming this is true, isn’t this just about the last thing you want to say?  How does this help Beavers Smith or Daley White?  It doesn’t.

    Can you imagine some knuckle-dragging bent nose Tony Soprano wanna’be getting indicted and walking out of booking shouting, “They wanted me to wear a wire on Tony.”  Now what you’ve done is tie the two of you together and make both of you look guilty of somethin’.

    Absolutely hilarious!!

  • Chicago Teachers Union Wants to Strike

    The Chicago Teachers Union says internal polling shows there is support for a strike if contract talks with Chicago Public Schools break down.

    A new state law requires the union to get approval from 75 percent of its members before a strike, leading many to question if the union could muster support for a walkout.

    CTU spokeswoman Stephanie Gadlin said members at several schools were polled.

    “The preliminary results indicate that if a strike vote were held today, teachers in those schools would vote unanimously for a walkout,” Gadlin said.

    via Chicago Tribune.

    CTU’s voting block is just as out of touch as the Occupy Movement.

    I wrote awhile back about how teachers are overpaid.  Now they want a 30% raise over two years.  Clueless or ambivalent to the financial state of affairs in this town, county, state, country.

    I say go ahead and strike.  Show the world what you’re really all about.

  • Fioretti: Not So Fast Rahm

    Mayor Rahm Emanuel’s plan to have five financing giants bankroll $1.7 billion in Chicago infrastructure projects ran into opposition Monday from aldermen concerned about “hidden fees” and long-term leasing of city assets.

    During closed-door briefings with aldermen, sources said Chief Financial Officer Lois Scott stuck to the script and talked only about the $225 million in energy retrofits to government buildings expected to generate $20 million in energy savings used to repay investors.

    That wasn’t good enough for Ald. Bob Fioretti (2nd). He’s demanding to know what other projects Emanuel wants to finance with the Infrastructure Trust, how those projects will be chosen and what, if any, user fees may be imposed to make certain that investors get their money back with interest.

    via Chicago Sun-Times.

    Two things about this little power play:

    1. Ald. Fioretti is exactly right.  I’ve written in the past about how no one at City Hall can calculate a ROI or time value of money.  Sad that not one elected official seems to every taken a single semester of economics or finance.
    2. Rahm brought this on himself.  Ald. Fioretti would have been pretty happy just being alderman of the 2nd Ward for some time.  But Rahm wasn’t happy about Bob wanting to run for Mayor and therefore had to be punished.  So if you take a look at the new ward maps, Fioretti’s house is placed all by itself in a ward the bulk of which is miles away.  It’s a joke.

    The Machine is at it again.   Trying to grind it’s way into your pocket with back-room deals between the city and undisclosed entities.

    We get exactly what we vote for.  We voted for this, we deserve it.

  • Illinois Teachers’ Pension Troubles

    It’s important to note that this fund do NOT include CPS teachers.

    Illinois public school teachers and retirees could have reason to worry about the kinds of pension checks they will be getting down the line.  …

    The Springfield State-Journal register reported over the weekend that pension director Dick Ingram sent a memo to his board on Feb. 9, saying he was no longer confident that the state’s largest pension system will continue to pay it enough money to stay above water. The state owes Ingram’s fund $43 billion.  …

    Ingram said pension funding is under severe threat from the state’s unpaid bills, soaring Medicaid costs and the $85 billion in overall unfunded pension liability, which is expected to rise.

    “If that is the case, the only other option available that would significantly change the amount owed is to reduce past service costs for active members and retirees,” Ingram wrote in the memo.  …

    Gov. Pat Quinn addressed the pension crisis shortly after releasing his budget plan in February.  …

    “Everybody is going to get a haircut. No one will get scalped – that’s the basic concept,” the governor added.

    via CBS Chicago.

    Decades of the Machine running both Chicago and the state have led to every government entity in the state not being able to meet it’s obligations.

    This is a wake-up call to not only teachers, but police officers, firefighters, and government workers of every sort.  The good ‘ole days are over.  The gravy train is ending.

    Time to get real.

  • Clout Boosts Ex-Police Chief $30k per Year

    The Machine taking care of its own:

    At first blush, a pension bill adopted by the General Assembly in 2007 seemed to have a laudable goal: extending retirement benefits to local police force employees’ widows after they remarried.

    But buried within the legislation was something considerably less altruistic: a provision that enabled a member of one of Chicago’s better-known political families to boost his pension by more than $30,000 a year — while saddling unsuspecting taxpayers in Oak Brook with nearly $750,000 in funding liabilities, the Chicago Sun-Times and Better Government Association have learned.

    The recipient of that larger pension, Thomas Sheahan, is a former police chief in Oak Brook, the current village manager in Lyons and a member of a Democratic clan that has helped rule Chicago’s Southwest Side for decades.

    Sharp-tongued and unapologetic about benefitting from the provision that no one else has used, the 59-year-old Sheahan said of his pension: “I worked for 24 f—— years [in the public sector], I deserve every penny of it and I deserve a lot f—— more.”

    Retiring from Oak Brook last spring, Sheahan now is drawing an annual payout of nearly $77,000. Although pension records show that’s about $32,000 more than he would have received had he retired at the same point without the legislation, Sheahan said it’s still a relatively modest sum. “I get about what a sergeant gets,” he said.

    Sheahan — brother of former Cook County Sheriff Michael Sheahan and James “Skinny” Sheahan, a long-time aide to ex-Mayor Richard M. Daley — wouldn’t say if or how he was involved in the origin of the pension sweetener.

    via Chicago Sun-Times.

    When will the people rise up and say “Enough!”  A foul-mouth connected punk thinks he deserves more.  Go get a real job in the private sector and find out what you’re really worth.

    But that’s not even the end of the story:

    The main sponsor of the bill, then-state Rep. Bob Molaro (D-Chicago), told members of the Illinois House that the tweak to the state’s pension code was intended to help one person, according to a transcript that didn’t identify the person.  …

    Molaro declined to be interviewed, but released a statement to the Sun-Times indicating he did not know Thomas Sheahan at the time the legislation was crafted, something Sheahan echoes. They came to know each other, however, after Molaro left the Legislature in late 2008 and, with a partner, became a $5,000-a-month lobbyist for Oak Brook.

    Molaro said in the statement: “Any attempt to connect the sponsorship of this bill and my being part of the lobbying team for the village of Oak Brook is completely unfounded and absurd.”  …

    Sheahan now is village manager in Lyons, where he said he’s paid roughly $65,000 a year for fewer than 20 hours a week.

    So this political hack is now drawing $140,000 per year from the taxpayers.  Unbelievable.

    And Molaro… the tool that he is, doesn’t even know who he’s working for.  He’s just doing what he’s told; nothing more than a warm body filling a seat collecting $80,000/year from the taxpayers to be Michael Madigan’s bag man.

    Speaking of Madigan… Where’s Lisa Madigan in all this?  Shouldn’t the state’s highest law enforcement officer look into the matter to see if a crime’s been committed?

  • WI Billboard: Truth to Power on Teachers’ Unions

    This is an idea I’ve discussed with CTU reps at a meeting one time.  CTU cannot represent “the children.”  The truth is that CTU, WEAC, and all other teacher’s unions have a fiduciary duty to the union members.  The union cannot do anything which would advance the interests of non-members (i.e. children) to the detriment of the members (i.e. teachers.)

    Glad someone’s bring the truth forward.

    A group purporting to advocate for education reform is putting up a billboard attacking the state teachers’ group, Wisconsin Education Association Council, or WEAC, as a tool of big labor uninterested in educating children.

    Reforming Education And Demanding Excellent Results-Wisconsin, or READER-WI, is fronted by Jeff Waksman, spokesman for the Republican Party of Dane County, and David Blaska, former Isthmus blogger.

    The group argues that public education is failing miserably and points to unions as the culprit: “Laws do not allow teachers to use children for partisan political advocacy, but that has not been the case, particularly in Wisconsin. Elementary school children have been forced to take part in anti-Scott Walker activities, even those young enough to not have any real grasp of the actual political issues facing the world. Big Labor has made the classroom much more political than it should be.”

    via The Daily Page.

    Did I mention that this is awesome!!

  • McCarthy (Rahm) Shakes-up Police Brass (Not Really)

    This past week Rahm launched an ambitious plan to revitalize the city.  However in order to make that work, he must first prevent Chicago from becoming Gotham.  The post below talks about how the lack of enough police officers is causing a false reduction in the number of crimes being reported.  I personally think that Rahm and McCarthy know this. But while money’s so tight, they just have to make due until sunnier days come along.

    Nevertheless, they have to maintain the appearance of doing something to stay on top of criminal element.

    So along comes this story about McCarthy moving some top folks around at CPD:

    With Chicago suffering a 35 percent spike in murders this year, police Supt. Garry McCarthy announced a reshuffling of his command staff Friday, replacing commanders in five of the city’s 23 districts.

    McCarthy also promoted three supervisors to deputy chief positions. He said the changes were made to “strengthen the department’s ongoing efforts to reduce violence” and create a “more efficient departmental structure.”  …

    A police spokeswoman said no district commanders were demoted to make way for the changes in those five districts. They replaced commanders who were promoted to other positions or retired, she said.  …

    As of Thursday, there have been 114 murders this year in Chicago — up 35 percent compared with the same period last year.But department records also show that, through March 18, overall crime has dropped 10 percent throughout the city compared with the same period in 2011.

    via Chicago Sun-Times.

    This is not a shake-up.  A shake-up is where people are shown the door for poor performance.  People are held accountable.  …

    Rahm and McCarthy know that it’s not really these folks fault.  Everyone knows that the real problem is that there’s not enough officers to go around.  This is just a PR stunt — feeding something, anything to the masses — to create the illusion that Rahm and McCarthy are taking this seriously.

  • Crime? What Crime?

    Crime is out of control.  It’s not reported because in this town No Report = No Crime.  And because we have so few police — who are constantly running from call to call — a LOT of crime is going unreported.  Sometimes you can call 911 and wait 30-40 seconds before someone answers the phone.  But when it takes 40, or 50 minutes for CPD to arrive you get tired and get on with your life.  So many “petty” crimes simply go unreported.  e.g.

    A gang member tags your garage and you just want to repaint and don’t report it… No Crime.

    You get your wallet stolen on the Crime Red Line need to get to work and don’t report it… No Crime.

    Your car has a smashed window and you get it fixed without reporting it… No Crime.

    Dude gets stabbed and take himself to the hospital, says he cut himself shaving… No Crime.

    Because of the No Report = No Crime policy of CPD, if there were no police officers there would be… No Crime.

    But we know that crimes are being committed.  How?  Because we have record call volume at the 911 center.  So much so that it makes the news:

    Overtime at Chicago’s 911 emergency center more than doubled during the first two months of this year, thanks to a 13.2 percent increase in call volume and Mayor Rahm Emanuel’s decision to reduce the ranks of police and fire dispatchers, records show.

    Police dispatchers wracked up 10,024 hours of overtime in January and February, at a cost of $516,642, compared to 5,247 hours with a $247,662 price tag during the same period a year ago, records show.

    via Chicago Sun-Times.

    The wheels are falling off the bus.  Hopefully soon someone in the media will wake-up and begin really looking into this.  There’s a massive story here.

     

  • CPS Teacher’s Union Fights Everything

    Having absolutely no logic to defend their position:

    With a 90-day deadline on negotiations with the teachers union having passed, Chicago Public Schools can implement a teacher evaluation system that will see student performance count for 25 percent of an elementary school teacher’s assessment, a figure that will rise to 40 percent in five years.

    The Chicago Teachers Union has opposed such significant weight on student performance, but even at its highest the CPS proposal for student performance is less than the 50 percent used in states such as Colorado, Tennessee and Ohio.

    via Chicago Tribune.

    So we’re still going to be behind other states, but yet CTU is still fighting it:

    “We don’t disagree on every aspect, but we don’t agree on the plan as a whole,” said CTU’s lead negotiator, Carol Caref.  Currently, teachers are evaluated using a checklist that both principals and teachers have called useless.

    I see, the current system sucks and everyone knows it’s worthless but whatever you do, don’t include student performance in any new evaluation method.

    Caref said the union thinks having student performance count for 40 percent is too high because of concerns about the test data’s reliability. He said the union believes it’s a mistake to implement a new evaluation system without first trying it on a pilot basis to identify any problems.

    Ya, problems like it may show that teachers that suck have been given the green light to continue to not educate children year after year after year.  That would be a problem for the Union.

    Big win for the children though.

    CTU can’t die soon enough.  CPS has completely failed generations of students nearly entirely as a result of CTU pushing it’s significant weight around.  Can’t evaluate teachers… shear nonsense.

    CPS lost it’s moral imperative years ago.  We as a people owe it to our children to build a competitive network of schools which give parents a real choice — a voice — in their children’s education.

    If we’re really all in this together, then All Schools are Public Schools.