Central Perk

sâmbătă, 22 decembrie 2012

Mish's Global Economic Trend Analysis

Posted: 22 Dec 2012 03:45 PM PST

Earlier today I received an email from Jonathan Ingram at the Illinois Policy Institute that I wish to share. The email is regarding the sorry state of Illinois Pensions.

Dear Mish

Illinois has a long history of fake reforms – legislative proposals that promise to solve the great policy challenges of the day when passed, but never actually accomplish these goals and often make problems worse.

In the mid-1990s, Illinois lawmakers were facing a serious problem: the unfunded liability of the state's five public pension systems had reached $20 billion.

As a way to combat this growing problem, the state created a repayment schedule, often called the "pension ramp."

The pension ramp, which was passed by the Republican-controlled General Assembly and signed into law by former Republican Gov. Jim Edgar, promised to reach 90% funding levels by 2045.

According to the repayment schedule, the five systems should be nearly 57% funded today. Instead, the systems are just 39% funded and the state's pension debt has grown to $95 billion.

What happened?

You'll often hear that the pension debt was caused by the state "skipping pension payments." What you won't hear is that taxpayers have actually paid $8 billion more than the original ramp projected.

How can the five pension systems be just 39% funded?

The systems simply weren't able to get the kinds of returns they promised and the underlying actuarial assumptions didn't reflect reality.

These are problems with the underlying structure of Illinois' pension plans. The defined-benefit structure guarantees that a large share of the actual costs will be hidden and largely unknown until the systems come back to taxpayers asking for more money to make up for poor returns and mistaken assumptions.

This creates massive uncertainty for future budgets. For example, the state's fiscal year 2014 pension contribution was originally projected to be $3.7 billion. The actual contribution for fiscal year 2014 will be $6.8 billion. That's nearly twice what was predicted.

That's why we need a government retirement system that is reliable for workers, but still affordable for taxpayers.

We must freeze all of the defined benefits workers have already earned and move to a defined-contribution plan for all future work, similar to the 401(k) plans available in the private sector and the 401(a) plans already offered to many state university workers.

Illinois has the worst-funded pension system in the nation. The only way to move toward those solutions is to get politicians out of the retirement business altogether and give employees real control over their retirement savings.

Jonathan Ingram
Director of Health Policy and Pension Reform

While Illinois burns, Moody's threatens next downgrade

Ingram is of course preaching to the choir, but I don't object one bit. It's important for Illinois citizens to be informed about the pathetic state of Illinois finances.

Please consider another look at the sorry state of affairs in Illinois, by Ted Dabrowski at the Illinois Policy Institute: While Illinois burns, Moody's threatens next downgrade.

It's no secret that Illinois has the worst-funded state pension systems in the nation. That's an accepted fact by those on both sides of the aisle. Unfortunately, that fact hasn't motivated any action from the state's politicians.

Now recent news point to even deeper troubles for the state. Moody's Investor Services has threatened to punish Illinois again with another credit downgrade by revising the state's outlook to "negative" from "stable". The agency already gave Illinois the nation's worst credit rating, an A2, in January 2012 – and things look to get worse.

What's ironic is that as the situation worsened during the past year, Springfield's lack of action became increasingly more obvious. Moody's called out this fact, saying: "The state repeatedly failed to act on pension reform – during the regular session that ended May 31, during a one-day special session convened by the governor on Aug. 17, and again during the state's 'veto sessions' in November and December."

A growing problem

A recent release by the Illinois Policy Institute shows the true extent of the crisis in Illinois. Politicians often talk about Illinois' official funding shortfall, now equal to $96 billion. But when the state's liabilities are measured under new accounting and transparency rules proposed by Moody's, Illinois' pension shortfall exceeds $209 billion.

The state also has $54 billion in unfunded liabilities for retiree health insurance and $15 billion in pension bonds that Gov. Pat Quinn and his immediate predecessor, former Gov. Rod Blagojevich, issued to avoid pension reform.

That debt now totals more than $275 billion — or $58,000 in debt for each and every household in Illinois.

Only 24% Funded

It's becoming clear that the state's pension systems are running out of time. Under new rules proposed by both Moody's and the Governmental Accounting Standards Board, the five state pension systems have reached dangerously low levels of funding. Under Moody's rules, the state's overall funding levels are now just 24 percent. The Teachers' Retirement System, or TRS, for downstate and suburban teachers is only 24-percent funded and among the worst-funded systems in the nation. One major stock market correction and that fund will be effectively insolvent.

Those findings only confirm what Dick Ingram, head of the TRS, said in February: Without reforms, TRS may be insolvent by 2029.

TRS Insolvency on the Way

Dick Ingram, head of the TRS (not to be confused with Jonathan Ingram at the Illinois Policy Institute) is an optimist.

Without reforms, TRS is highly likely to be insolvent far soon than 2029. In fact, I think it is insolvent now.

Pension plan assumptions regarding expected rates-of-return are preposterous, most likely because they have to be. All it will take to wipe the the entire plan out is another big decline in asset prices, and that is something I am confident is coming (time unknown).

If you wish to be better informed about the sorry state of affairs in Illinois and nationally, please sign up for Jonathan Ingram's Health Policy and Pension Newsletter email list

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Fiscal Cliff Jackasses Complain Shoppers Are Spooked

Posted: 22 Dec 2012 09:57 AM PST

It was bound to happen. Analysts are bitching the fiscal cliff is holding back retail spending.

Please consider "Fiscal cliff" spooks shoppers in last lap of holiday race.

Fears about imminent tax hikes and cuts in government spending are taking a toll on U.S. shoppers and could deprive retailers of a strong finish to the 2012 holiday shopping season.

The acrimonious debate in Washington over how to avoid the so-called "fiscal cliff" has cast a pall over shopper sentiment as consumers head to malls on the last Saturday before Christmas - typically one of the busiest shopping days of the year.

About 17 percent of the 1,514 Americans who participated in a Reuters/Ipsos poll conducted December 17-20 said the impending "fiscal cliff" was making them spend less this season.

"We just try to stay on a budget. We're not going crazy," said Tom Chowinski, a market researcher at Nielsen, who was shopping with his wife for their four adult children on Saturday morning at a Wal-Mart store in Westbury, New York.

HO-HUM CHRISTMAS

"What could have been a merry Christmas is going to turn to a ho-hum Christmas, and we can thank our, you know, politicians for getting in the middle of it all," NPD analyst Marshal Cohen said. "This great unknown puts a big damper on the consumer feeling confident to go out and spend more."

More than 60 percent of U.S. consumers have already finished more than three-quarters of their holiday shopping, according to a Reuters/Ipsos poll released on Thursday. This means retailers will have to offer deeper discounts to force Americans to open their wallets in the last lap of the holiday race.

Ho-Hum This

As far as I am concerned, people spending less for Christmas is a side "benefit" of the fiscal cliff. The Government needs to tighten it's budget and consumers do as well.

For those who do go on a last minute spending spree, who doesn't want lower prices (other than retailers and NPD analyst Marshal Cohen)?

Tough times will return (not that they ever left in the first place for millions of Americans), and the last thing people need to do is overspend on junk that will be thrown out in a month or items dear Aunt Suzie will donate to the Salvation Army.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Damn Cool Pics

The Worst Photoshop Disasters of 2012

Posted: 21 Dec 2012 11:30 PM PST

These people should really check their ads before they publish them. Some of these are pretty obvious.

Via: psdisasters

December Mozscape Index is Live!

Posted: 21 Dec 2012 07:06 AM PST

Posted by carinoverturf

Happy Holidays!! The December Mozscape index is now live! The latest index has just been released and you will see fresh Mozscape data in Open Site Explorer, the Mozbar, PRO campaigns, and the Mozscape API.

The Big Data team was hoping to provide a special holiday treat launching two indices in one month again, but, unfortunately processing was bitten by a full machine failure. We've had really good luck running Mozscape processing on the larger, high compute AWS machines, but, sadly, just a few days before the index was complete, an entire computing machine failed which forced us to have to re-run a few steps. Even with the failure, the December index is a few days earlier than our scheduled release date on December 27th - a pre-holiday treat for everyone!

In even bigger Big Data news - our private cloud is fully up and running in Virginia and we are about 25% done with our first production ready index! If all goes well, we'll be releasing the first Mozscape index created in our own private cloud in mid-January. What a way to bring in the new year!

Here are the metrics for this latest index:

78,671,787,078 (78 billion) URLs
687,827,137 (687 million) Subdomains
136,539,340 (136 million) Root Domains
917,094,026,686 (917 billion) Links
Followed vs. Nofollowed
- 2.32% of all links found were nofollowed
- 56.69% of nofollowed links are internal
- 43.31% are external
Rel Canonical - 14.07% of all pages now employ a rel=canonical tag
The average page has 72 links on it
- 61.38 internal links on average
- 10.45 external links on average

And the following correlations with Google's US search results:

Page Authority - 0.36
Domain Authority - 0.19
MozRank - 0.24
Linking Root Domains - 0.30
Total Links - 0.25
External Links - 0.29

The histogram for the freshness of the index's crawl data shows a pretty high volume of fresh crawl data coming from middle of November. This index will have data ranging as old as the end of October, but a large volume of the data was crawled from the middle to end of November.

We'll be keeping an eye on things over the holiday, so send us your feedback - we always love to hear your thoughts! And remember, if you're ever curious about when Mozscape is updating, you can check the calendar here. We also maintain a list of previous index updates with metrics here.

Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

Weekly Address: The President and First Lady Extend a Holiday Greeting and Thank our Troops for their Service

Saturday, December 22, 2012

Weekly Address: The President and First Lady Extend a Holiday Greeting and Thank our Troops for their Service

In this week’s address, President Obama and First Lady Michelle Obama wish everyone a Merry Christmas and Happy Holidays, and thank our brave troops and their families for their service. The President and First Lady ask the American people to visit JoiningForces.gov to find ways to honor and support our veterans and military families, and say that we must all come together, as we always do, to care for each other during this holiday season.

Watch President Obama's weekly address.

Weekly Wrap Up

On Sunday, President Obama traveled to Newtown, CT, and spoke at an interfaith vigil for the victims of the shooting and their families. "We can’t tolerate this anymore. These tragedies must end. And to end them, we must change," he said. "We will be told that the causes of such violence are complex, and that is true. No single law -- no set of laws can eliminate evil from the world, or prevent every senseless act of violence in our society. But that can’t be an excuse for inaction."

On Monday, we published a list of resources specifically designed for parents and guardians to provide guidance on talking to children after a traumatic event. Get more information here.

On Wednesday, the President delivered a statement from the James S. Brady Briefing Room at the White House, where he discussed his commitment to reducing the epidemic of gun violence that plagues this country every single day. "We know this is a complex issue that stirs deeply held passions and political divides," he said. "There's no law or set of laws that can prevent every senseless act of violence in our society. We're going to need to work on making access to mental health care at least as easy as access to a gun. We're going to need to look more closely at a culture that all too often glorifies guns and violence. And any actions we must take must begin inside the home and inside our hearts. But the fact that this problem is complex can no longer be an excuse for doing nothing."

On Friday, President Obama recorded a message for the hundreds of thousands of Americans who called for action to deter mass shootings and reduce gun violence using We the People. "I just wanted to take a minute today to respond and let you know: we hear you," he said. The President reiterated his support for legislation to ban the sale of military-style assault weapons and high-capacity ammunition clips, as well as measure to ensure that criminals can't take advantage of legal loopholes to get their hands on a gun. He also discussed an effort he's asked Vice President Biden to lead -- to come up with a comprehensive set of proposals to help keep our children safe.

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