Central Perk: 7 apr. 2012

sâmbătă, 7 aprilie 2012

Mish's Global Economic Trend Analysis

Illinois Admits $83 Billion in Pension Liabilities, $54 Billion in Retiree Health Liabilities, $9 Billion in Current Unpaid Bills; Who is to Blame?
U.S. Local Governments Cut Payrolls to Lowest Level Since 2006
Over 20% of All Real Estate Loans in Spain are Delinquent; Construction Firm Delinquencies Ended 2011 at 17.65%; Late Payment on All Loans Ended 2011 at 7.61%

Illinois Admits $83 Billion in Pension Liabilities, $54 Billion in Retiree Health Liabilities, $9 Billion in Current Unpaid Bills; Who is to Blame?

Posted: 07 Apr 2012 10:43 PM PDT

Illinois has combined $137 billion in pension and healthcare liabilities on top of $9 billion in current unpaid bills. Yet, Illinois legislators will not even ask 6-figure pensioners to pick up a portion of their health premiums.

The Chicago Tribune reports Surprise! You owe another $54 billion

If Springfield won't ask six-figure pension beneficiaries to pick up a portion of their health premiums, what are the odds that state legislators will confront their pension monster?

The state of Illinois admits to $83 billion in pension underfunding, a staggering weight on today's and tomorrow's taxpayers. Add to that the as yet uncalculated billions in unfunded pension obligations for city, county and other local governments.

A second, often overlooked time bomb merrily ticking for governments nationwide is the cost of health insurance for all those retirees. That number, too, is hard to gauge, because health care costs — like future investment returns — are unknowable. Yet governments typically don't put aside money for future health care, as they do for future pensions. The culture is to pay-as-you-go.

In Illinois, that means pay-as-you-go-even-more-broke. The Illinois Policy Institute, a right-leaning think tank, now is releasing 133 pages of frightening data. Beyond that $83 billion in unfunded pensions, state government alone faces an unfunded liability of more than $54 billion in retiree health liabilities over the next 30 years.

During the 2011 deliberations, two groups helped block retiree health reform: lawmakers of both parties who have state institutions (and thus state retirees) in their districts, and well-paid lobbyists whose prior careers in government entitle them to, yes, fat public pensions. If that happens this year, we want to read names.

By the last of the IPI's 133 pages, we conjured one question, then a follow-up:

How could Illinois pols do this to taxpayers?

And come November, will voters finally exact some consequences?

Who is to blame for this mess?

Public unions
Politicians in bed with public unions
Voters who vote for politicians who are in bed with public unions

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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U.S. Local Governments Cut Payrolls to Lowest Level Since 2006

Posted: 07 Apr 2012 10:37 AM PDT

In a much needed development U.S. Local Governments Cut Payrolls to Lowest Level Since 2006

U.S. local-government payrolls fell to the lowest level in more than six years in a sign that municipalities still face fiscal strains almost three years after the end of the recession.

Employment by local governments, adjusted for seasonal hiring swings, dropped by 3,000 in March to 14.1 million, the lowest since February 2006, the U.S. Labor Department reported today. State payrolls helped offset the loss, showing a third straight month of gains, rising 2,000 to 5.1 million. It's the longest streak of job increases at that level since 2008.

Municipalities, which depend largely on property taxes, are probably cutting jobs because the housing market is still rebounding and homeowners are pressing for lower assessments, said Alan Schankel, a managing director at Janney Montgomery Scott LLC in Philadelphia. State governments, which depend more on income and sales taxes, have also cut local aid to balance budgets in the wake of the recession that ended in June 2009.

State and local-government tax collections grew at the slowest pace in a year in the final quarter of 2011, the U.S. Census Bureau said last month. Revenue rose 2.1 percent from a year earlier to $387.2 billion. While it was the ninth straight advance, it was the smallest jump since the end of 2010. Property taxes rose 0.2 percent from a year before.

States and local governments have cut about 640,000 jobs combined since public-sector employment peaked in 2008.

Not Even Half The Battle

Unfortunately, firing useless bureaucrats is not even half the battle. Accrued pension benefits is the big problem for cities and states. Except in a handful of bankruptcies, little overall progress has been made.

Needed Steps

End collective bargaining of public unions
National right-to-work laws
Scrap defined benefit pension plans for public employees
Pension reform
Privatize services

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Over 20% of All Real Estate Loans in Spain are Delinquent; Construction Firm Delinquencies Ended 2011 at 17.65%; Late Payment on All Loans Ended 2011 at 7.61%

Posted: 07 Apr 2012 12:10 AM PDT

Some rather shocking delinquency numbers (to mainstream media readers but not readers of Mish, Acting Man, Zero Hedge, Max Keiser, the Slog etc.) have surfaced in Spain.

Courtesy of Google Translate please consider The default property is multiplied by ten since 2008.

Upfront Notes:

The following translation is somewhat choppy, and I present it as is.
Recall that decimal points "." in Euroland are the equivalent of commas "," in the US. Thus "62.366 million" should read as 62,366 million or 62.366 billion euros.
Many of the following just released numbers are as of the end of 2011. Rest assured numbers as of the end of the first quarter of 2012 are much worse.

With those notes out of the way, please consider the following translation.

Since the crisis began in 2008, the Spanish financial sector accounts have been seriously damaged by late payment of real estate companies, which rose from 1.98% in the first quarter of this year to 20.9% it closed 2011.

According to recent data published by the Bank of Spain of 298.267 million euros to the Spanish financial institutions were granted at the end of last year to real estate companies were delinquent 62.366 million, a figure that grew by 4.789 million in one quarter. In fact, between July and September 2011, the delinquent real estate companies stood at 18.97%, as there were 57.577 million euros a portfolio outstanding of 303,506,000.

As for the interannual evolution, real estate delinquencies rose seven basis points from 13.98% recorded in the last quarter of 2010 to 20.9% one year later, for a real estate loan portfolio totaled 315.782 million then , which fell in that period 17.605 million.

The Bank of Spain data also reflect strong growth in the delinquency of construction firms, and ended the year with 17.65% of outstanding claims, well above the 12.12% they had in December 2010. Compared to the previous quarter, the difference was just over one and a half points, as it stood at 16.09%.

The real estate and construction activity has gone from being the main driver of the Spanish economy its biggest drag in just four years, as has happened with the accounts of banks, which carry a much lower overall arrears of these depressed sectors .

In particular, late payment of credit extended by banks, savings banks, cooperatives and credit institutions closed 2011 at 7.61%, its highest level of the previous 17 years, particularly since November 1994 when it stood at 8%. This rise in defaults is a result of increased bad debts, which in December 2011 reached the EUR 135 838 000 134 227 000 compared to November, according to Bank of Spain.

Of that amount, the questionable real estate and construction touched the 80,000 million euros, standing at 79.759 million, which means that 58.7% of defaults across the Spanish financial sector came from this sector. But the situation was much worse a year ago, as the unpaid real estate accounted for 73% of total bank dubious, almost three quarters of the portfolio outstanding.

Meanwhile, the total credit portfolio of banks, savings banks, cooperatives and credit institutions fell to 1.782 billion euros in December, from 1.785 billion that were awarded in November.

Most mainstream media is woefully late in reporting this kind of news even though it is generally available with a bit less of a lag in Spain.

More importantly, some of us have predicted this catastrophe far in advance. Thus, what is shocking to many Johnny-come-lately analysts is simply a realization of what had to happen.

A few of us insisted from the get-go that Greece, Spain, and Portugal would all blow sky high, and that process is clearly underway now. The party is not over yet because those countries, and perhaps even Italy are destined to leave the Eurozone (or extract equivalent punishment out of Germany, Austria, the Netherlands and France).

Mathematically this must happen, so it will. Delays and bailouts will increase the costs.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Damn Cool Pics

Swedish Man Takes On A Moose
Google Glasses
Wang Jiayun: Blowup Doll-like Chinese Girl

Swedish Man Takes On A Moose

Posted: 06 Apr 2012 10:57 PM PDT

A Swedish man demonstrates just how manly he is by defending his property and woman from the scourge known as a moose. He managed to do all of this with an iron bar and not hurting the animal at all. His viking ancestors would be proud.

Google Glasses

Posted: 06 Apr 2012 09:38 PM PDT

Google has announced Project Glass, a technology-in-development that will allow users to wear Android-based display glasses to stream information right in front of their eyes.

A video released by Google on Wednesday, which can be seen below, showed potential uses for Project Glass. A man wanders around the streets of New York City, communicating with friends, seeing maps and information, and snapping pictures. It concludes with him video-chatting with a girlfriend as the sun sets over the city. All of this is seen through the augmented-reality glasses.

Wang Jiayun: Blowup Doll-like Chinese Girl

Posted: 06 Apr 2012 09:00 PM PDT

17-year-old Chinese female student Wang Jia Yun became famous overnight in the Chinese and Korean blogospheres last month. First revealed as a life-size inflatable doll born in Kowloon, Hong Kong, Wang Jia Yun is actually a normal high school student, currently studying in Shenzhen, Guangdong Province, China.

Due to her incredible Barbie look, Wang Jia Yun became a top search term amongst many Chinese and especially Korean search engines between February 16th and 17th. With large round eyes, sharp oval face, pointed chin and slender body, Wang Jia Yun was instantly nicknamed "Chong Qi Wa Wa" 充气娃娃 in Chinese, which means blow-up doll in English. Her height is 164cm and weight is 42kg.

Linkscape Index Delay Explained

Posted: 06 Apr 2012 07:24 AM PDT

Posted by BrandonF

Last night we had to delay the Linkscape index launch date yet again to April 27th as can be seen on our release schedule. This is the second time we have had to adjust the launch date this processing cycle meaning there will be almost two months between index releases. We know this has a major impact on the SEOmoz community, so we felt like we owed you all a detailed explanation.

Back in December, Rand and the Linkscape team decided to ambitiously try to grow the index to over 100 billion URLs. Such an index would increase our coverage of many of the smaller sites on the web and also help us shape the breadth-versus-depth trade off in our crawl. We're very excited about this prospect, though the growing pains have proven to be a challenge which required us to tackle several issues all at once. In the interest of transparency, we want to fill you in on what's been going on.

In no particular order, here's the scoop:

We've been beefing up our crawlers
Balancing freshness against growth, and
Wrangling ornery hardware

It is difficult (at least for me) to comprehend 100 billion of anything. We've been in the "big data" business for a little while now, but to deliver an index of this scale at the quality we believe you deserve, we had to revisit some of our basic assumptions. One is the total rate of pages we crawl everyday. Not only was additional hardware needed, we had to improve our strategy for "politeness": the method by which we rate-limit ourselves to be a good web citizen, showing courtesy and empathy to our neighbors. Over the last four months, we've accomplished that goal and are now able to crawl well over double (and soon triple) the amount of pages per month compared to last year.

Simultaneously, we needed to improve our pipeline for turning crawl data into a final index, something we simply call "processing". Before January, our indexes always contained data from only the prior month of crawling. Depending on the exact duration we took to process the data, it was usually somewhere between 4-7 weeks old by the time it was released. Before any crawler improvements had been realized, the amount of data that we could collect in one month was simply not enough to get us to 100 billion URLs. So, we widened the window to include all data that was crawled in the last 2-3 months. That's why in January, we were able to launch our largest index to date at 58 billion URLs and again in February at 66 billion URLs.

In the December to January time frame, we started to see an increasing number of hard drive failures during each processing run. It turns out that spinning platter hard drives are one of the most fragile parts of a computer. Therefore seeing one or two failures each run is just a natural fact of life. To account for this, we check point every step of processing, so after such a failure, we can simply restore from S3 and continue from the last completed step. These backups are typically 100-200 terabytes large cluster wide. Historically, the restore process took no more than a day, so even if it happened 3 or 4 times in a month, we would only rarely slip our release date.

In December, that story changed. We experienced five hard drive failures and an additional machine failure, which caused us to restore from S3 a total of six times. Thus, we ended up shipping the index a few days late. In January, we again experienced five hard drive failures. Worse, several of these failures were clustered in one of the longest steps of processing. Since the index itself was growing, the restore step ballooned into multiple days each, causing us again to slip the index date. Additionally, we determined that the raw data stored on each processing machine would no longer fit within the local storage (or ephemeral storage in AWS's parlance), if we continued to grow the index. We engaged Amazon, our infrastructure provider, to see if they could help us deal with these issues.

As we were already using the largest available amount of local storage in AWS, the only real option was to move to Elastic Block Storage (EBS). This presented two downsides: performance and cost. EBS is not truly local, thus it entails a performance hit. It also costs both for total capacity and the rate of usage (or "IOPS"). Compared to ephemeral storage which is already included in the cost of EC2, this made a huge difference in the total cost to produce our index. Coincidentally, back in January someone asked on Quora how much producing the Linkscape index cost. Moving to EBS would double the total; since, in addition to the EBS cost, we needed to move to more expensive hardware to utilize faster networking. Still, we had no other choice, so we pushed forward. Additionally, the move to the larger machines required us to upgrade the operating system and change the virtualization layer that we were using, incurring more development time, which we paid for at the start of the year.

The good news for March was that after starting the index in late February, we realized that we were very likely to exceed the 100 billion URL goal that we had initially set out to achieve. In fact, we were expecting to release a new index at the end of March that contained over 150 billion URLs and over 1.7 trillion links. With that goal in hand, we started planning out the design and style for Rand's new facial hair, as was mentioned back in January's blog post. Believe me, we had some good ones.

Unfortunately, even though we increased the computing power of the machines that we were using, the performance hit of moving to EBS and the huge increase in data size caused way more growth in processing time than we had initially expected. Additionally, even though moving to EBS was supposed to be a more reliable solution, we still experienced hard drive failures. Fortunately, we had also switched to a higher redundancy RAID configuration, allowing us to save time when these drives did fail.

Sadly that leaves us in the state we are today having slipped past the end of March release date with no index ready to launch. So now, Rand's facial hair is safe, and we've disappointed our customers. We're really sorry for any trouble this has caused, but we assure you that we're trying to get things working as quickly as we can. We have be working tirelessly on several alternative solutions for increasing the computing power of our processing cluster to get a new index out as quickly as possible as well as trying to avoid this situation in following months.

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