Econ 2009

[ewmayer]

Thought of the Day: In the wake of President Obama`s long-awaited decision to up the ante in Afghanistan/Pakistan:

"A continuation of the wars on Shadows and Things is the wrong way to go. You cannot win a war against Terror. Terrorism is a tactic: it has no consciousness; it cannot be aware that it won or lost, same with the war on drugs. Perhaps BO can come up with some different shadows and things to wage wars against to distinguish himself from Bush and Reagan and bankrupt our country even faster than them." -- anonymous ZeroHedge reader


November Unemployment Shows "Surprise Drop"

...Down from 10.2% to 10.0% - lots of BLS "birth/death black box" mystery meat as usual. Main result -ignored by the MSFM as usual - is the continuing increases (at a rate of a half-million per month or more) of long-term-unemployed, "marginally attached" and "not in labor force", as folks who`ve been out of work for on the order of a year or more simply give up looking. Numbers there not quite a disastrous this month as earlier this year, but still not remotely indicative of the much-touted "recovery". Lastly, the sharp difference between the ADP November payroll numbers (based on actual employer data, and not put out by the government) and today`s BLS report makes me suspicious that the BLS numbers may have been upwardly fudged even more than usual ... call it the "Obama post-jobs-summit town-hall meeting pump". For a guy presiding over the highest unemployment rate since the Great Depression, he sure is not shy to take credit for all his various "accomplishments". Apparently the latest plan - to be announced by Obama next Tuesday - is to use some $170 billion in TARP monies repaid by the banks to fund "Stimulus 2: The Next Job Generation". The resulting wave of hopeful optimism for Change You Can Believe In^tm and Putting America to Work will sweep the nation, revive housing prices and support a huge V-shaped recovery resulting in a boom in tax revenues which will allow the government to eliminate the budget deficit, re-fund the $50 Trillion missing from the Social Security "Trust Fund" and related mandatory spending programs and live in happiness and sustainable prosperity ever after. Or something like that - a few small details remain to be worked out, obviously.


Black Friday Sales: A Boots-On-The_Ground Perspective

I sent the following link and commentary about SF_Bay Area Rapid Transit ridership numbers serving as a useful proxy for shopping-district activity to several of my favorite econo-bloggers yesterday afternoon ... I see Karl Denninger has run with it.

anc7news.com | San Francisco News - BART ridership down during Black Friday - 12/02/09

SAN FRANCISCO (KGO) -- BART ridership to San Francisco's Union Square shopping district was down nearly 18 percent on Black Friday. Nearly 49,000 riders took the train to Union Square last year, as compared with only about 40,000 this year -- the lowest number in four years.

BART doesn't rely on Black Friday to get in the black like retailers, but there is more at stake than fares alone.

"Think about it this way, when people aren't spending money it hurts us two ways: one, obviously is the ridership revenue that we receive. And two is the sales tax they would spend here, we don't get that either so it's a double-whammy," said BART spokesman Linton Johnson.

And it's not as if the shoppers came in cars instead.

The Union Square Merchant's Association says parking was down 10 percent at the Sutter-Stockton and Union Square garages.

Retailers aren't revealing sales results, but when the association asked merchants if they agreed with the prediction that this year's sales would be down one percent from a year ago and 55 percent agreed.

Gumps CEO Marta Benson was in the 45 percent who disagreed.

"We were really pleased with Black Friday and the whole weekend," she said.

My Comment: I’ll take this kinds of boots-on-the-ground metric of shopping-day traffic over vague “we feel really good about holiday sales” (as touted by the Gumps CEO) self-pumping by merchants and retail organizations any day. The BART numbers correlate well with a Reuters article (which got little play in the MSFM) indicating that Black Friday was in fact a bust this year.

Note in the article that not only was BART traffic down, but so was parking – in other words, this wasn’t a result of more people driving to go shopping in downtown SF.

House Readies Legislation to Replace Previous Regulatory Failures with New Ones:

Systemic-Risk Bill Approved by House Panel, Advancing Financial Overhaul: A House panel approved legislation strengthening U.S. authority to police large, complex firms that pose risks to the economy, advancing the Obama administration’s effort to overhaul U.S. financial rules.

The House Financial Services Committee voted 31-27 today for a bill creating a council of regulators to monitor systemic risk, shifting the cost of a failure to the financial industry and giving regulators the power to break up healthy firms.

The legislation would give the Federal Deposit Insurance Corp. the authority to dismantle systemically risky firms and merge two bank regulators, the Office of Thrift Supervision and the Office of the Comptroller of the Currency.

The legislation was amended by Representative Paul Kanjorski, a Pennsylvania Democrat, to let regulators dismantle healthy, well-capitalized financial firms whose size would threaten the economy.

My Comment: If that makes you feel better about yourselves, great - but it sounds to me like more feel-good legislation with no teeth. We had plenty of regulators throughout the Greenspan Ponzi-bubble era, who were either bought off, deeply-conflicted industry insiders, or who were simply there to collect a government paycheck and didn`t want to "make any waves" by actually doing their job.

[ewmayer]

Deflation Trade in Post-Boom Ireland:

`Vultures' of Irish Recession Snap Up Champagne and Mercs From Liquidators: The worst recession in Ireland’s modern history has turned the country into a bargain basement with cut-price champagne, country houses and Mercedes cars.

The liquidator of Dublin wine importer Parbind is selling boxes of six bottles of Bernard Remy rosé champagne for 132 euros ($199), down from the original tag of 205 euros. Elsewhere, prices of empty homes have been slashed by as much as two-thirds as property developers are forced to wind up.

“It’s a bit like old vultures over the carcass,” said Donall O’Murchu, a retired school teacher, avoiding shoppers with trolleys laden with cases of Parbind wine. “You see all sorts of places coming down. The recession seems to be biting.”

Ireland’s decade of breakneck economic growth made it one of the richest countries in the world, alongside Switzerland and Austria, and with that new wealth came unprecedented demand for faster cars, fancier homes and finer wines. The abrupt end to that boom has made the country prime ground for deal-hunters.

Accounting firm KPMG LLP is selling 23,000 cases of wine at a discount of as much as 60 percent as it liquidates Parbind to try to pay creditors. The wine wholesaler joined developers, pub owners and car merchants struggling to meet debts as consumers spent less and unemployment rose to a 14-year high.

My Comment: This is the flip side of U.S.-style bailouts of failed companies and overleveraged banks: Such bailouts vainly attempt to reinflate asset bubbles whose popping is vital to freeing up remaining capital and thus prolong the agony, while at the same time providing perverse incentives ("moral hazard") which only encourage new misallocation of capital ("asset-price bubbles"). Instead, allowing the imprudent and overleveraged to fail and using interventions only in genuine emergencies (e.g. to stave off wide-scale panic and prevent disorderly collapse from taking down otherwise-healthy sections of the economy, e.g. by providing means by which functioning revenue-positive companies can meet payrolls even if the financial firms that normally handle the short-term-credit aspects of such day-to-day business transactions go under) frees up capital, lowers prices for those who were prudent (thus speeding the process of new-business creation vital to a real recovery), and makes a repeat occurrence less likely, at least until enough generations have passed for the lessons of the bust to have once again been forgotten. (Note that roughly 3 generations passed between the Great Depression and the Greenspan Credit Bubble - just enough time for most folks who lived through the GD as adults to die. Somehow, reading about it just ain't the same as hearing about it firsthand - such is the power of "living memory").


Friday Humor

An oldie but a goodie -- The inimitable Mark Twain weighs in on currency debasement:

Riverdale-on-the-Hudson, OCTOBER 15, 1902.

THE HON. THE SECRETARY OF THE TREASURY, WASHINGTON, D. C.:

Sir,--Prices for the customary kinds of winter fuel having reached an altitude which puts them out of the reach of literary persons in straitened circumstances, I desire to place with you the following order:

Forty-five tons best old dry government bonds, suitable for furnace, gold 7 per cents., 1864, preferred.

Twelve tons early greenbacks, range size, suitable for cooking.

Eight barrels seasoned 25 and 50 cent postal currency, vintage of 1866, eligible for kindlings.

Please deliver with all convenient despatch at my house in Riverdale at lowest rates for spot cash, and send bill to

Your obliged servant,

Mark Twain, Who will be very grateful, and will vote right.

[ewmayer]

Greece My Be First EU Default: Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since the aftermath of World War II.

“It’s five minutes to midnight for Greece,” Buiter, who will join Citigroup Inc. as its chief economist next month, said in a Bloomberg Television interview today. “We could see our first EU 15 sovereign default since Germany had it in 1948.”

My Comment: Spain, Ireland and the Baltics also flashing huge warning signs.

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Stimulus Checkup - 100 Ridiculous Projects Funded by the American Recovery Act

As this and the last report, 100 Stimulus Projects: A Second Opinion, suggests billions of dollars of stimulus funding have been wasted, mismanaged, or directed towards silly and shortsighted projects. Many projects may not produce the types of jobs that most Americans had hoped for or expected.

Some of the close to seven billion dollars in projects in Stimulus Checkup create few jobs; benefit private interests over the public good; or make improvements where they are not necessary. Some send money to companies facing fraud charges. Others take millions of dollars to do work local officials and experts admit are not needed or will not help.

Stimulus money has been, or will be, spent on dinner cruises, golf courses, puppet shows and stimulus road signs. Many Americans will question whether investing $787 billion in these projects are the highest national priorities.

My Comment: But I told them to put "Spinal Tap" *above* "Puppet Show" on the sign ...

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ZeroHedge has Bob Ivry's Eulogy For Mark Pittman, the Bloomberg reporter who nailed the ratings agencies for their AAA-plated fraud and who was the prime mover behind Bloomberg`s suing the Federal Reserve - which is still fighting the suit - to require it to disclose what assets it has purchased, from whom and at what prices, under the Freedom of Information Act. Great stuff ... the line (by the six-foot-four-inch Pittman) "I'm tall enough to see above the bullshit" is classic.

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Federal Tax Receipts Belie Economic Recovery Propaganda

Collapse In Tax Withholdings Refutes Improvements In Either Unemployment Or Corporate Profitability

Even as the BLS and the administration are trying to cover up the real state of unemployment affairs using assorted semantic gimmicks of just what it means to be unemployed, and as companies provide adjusted EPS numbers, while actual earnings continue to collapse, the true barometer of spending, provided by the Financial Management Service, tax withholdings (net of refunds), continues to paint the truest picture of just what is really happening with both America's consumer and the corporate world. And it ain't pretty. On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company withholding are down a walloping [sic] 64%, from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury's pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America's short, medium and long-term future.

My Comment: And speaking of the exploding national debt, a startling statistic puts into perspective just how deep the hole into which America has dug herself is:

Citizens lay down law on U.S. debt: Americans from around the country weigh in on how lawmakers should deal with the fast-growing fiscal challenges facing the United States.

To solve the country's fiscal problems, the gross domestic product would need to increase by double digits on average for the next 75 years, according to estimates from the Government Accountability Office. Oh, and that's on an inflation-adjusted basis.

So unless someone finds a serious stash of economic fairy dust, lawmakers are left with three unpopular choices: cut spending, raise taxes and stop making promises the country can't afford.

Instead, they've done just the opposite. They've increased spending and lowered taxes as the country's long-term obligations continue to grow - obligations both to those who buy government debt and to the Medicare and Social Security programs, from which Uncle Sam has been borrowing surplus revenue for years.

My Comment: Ah, but there is another way to keep the debt from exploding, and it is precisely the one the pols - who would never have the spine to raise explicit taxes anywhere near enough to cover their out-of-control spending - have been doing, or acquiescing to as the U.S. Treasury and Fed do it for them: Impose a "savings tax" by debasing the dollar, whose purchasing power has dropped by a factor of more than 20 times in the past century, starting with the printing used to help finance WWI, the Great-Depression-era government spending, WW2 and all the other wars the U.S. has fought (and continues to) and the explosion in entitlement programs which coincided roughly with LBJ`s "Great Society" program - it is no coincidence that Nixon took the U.S. off the gold standard a few years later, as the nation was pouring unheard-of amounts of money into the Vietnam war and all the new entitlements. And entitlements are extremely persistent things ... once people become dependent on them, it`s an addiction which is almost impossible to break, as long as the money-printing presses are supplied with paper and ink. (And nowadays the paper and ink are metaphors for "computer keystrokes by central bank officials").

[ewmayer]

The focus of today`s installment is Europe, whose casinos are currently up on news of a UAE kinda-sorta bailout of the nearest-term chunk of Dubai World`s debt:

Greece's Papaconstantinou Under Siege as Deficit Woes Hurt Ratings, Bonds: Greek Finance Minister George Papaconstantinou began the week with his office protected by baton-wielding riot police taming student protests. Now, investors have him under siege as the country’s bonds tumble.

[Greek Prime Minister George] Papandreou appointed Papaconstantinou, who holds a doctorate from the London School of Economics, after he led the socialists to victory in October elections, winning a 10-seat majority in parliament. While the party won on a platform of higher wages that contrasted with Karamanlis’s pledges for a pay freeze, Papaconstantinou was within weeks forced to publish revised figures that cast doubt over Greece’s fiscal health.

Data showed Greece’s deficit this year would be more than twice the previous government’s forecasts and four times the EU limit. Other revisions showed that, rather than being one of the few European economies still growing amid the worst global slump since World War II, Greece had been in a recession for a year.

Papaconstantinou defends his government’s strategy to reduce the deficit by more than 3 percentage points of GDP to 9.1 percent next year.

“What exactly has changed in the last 40 days to justify a downgrade?” he said of the Fitch [Ratings] decision [to further downgrade Greek debt to BBB+].

My Comment: Uh, I`d say the boldfaced paragraph makes quite clear what has changed ... the grossly over-optimistic economic delusions you used to justify impossible-to-keep election promises has been blown to bits, that`s what changed. And the fact that you are still in denial mode does not make me optimistic about the chances that the Greek government will take the drastic measures needed to tackle the debt monster in time to avoid a default.


Adios Christmas as Spain's Recession Bites: Hit hard by the continuing economic downturn, Spanish shoppers are paring back sharply on holiday spending—or canceling Christmas altogether

Spanish holiday spending will drop 9.1 percent this season, according to Deloitte, more than the 6.3 percent decline forecast for western Europe. El Corte Inglés SA, the nation's biggest department store operator, is advertising 70 percent discounts to lure shoppers.

The credit crunch exacerbated the collapse of Spain's housing boom last year, leaving people struggling to pay household debt that is among the highest in the euro region. The protracted crisis means more than half the jobless, including Serrano's husband, have been out of work too long to get full benefits. Spain's unemployment rate is 19 percent.

The outlook for next year doesn't give consumers much reason for holiday cheer. The economy is forecast to contract 0.8 percent in 2010, lagging behind the European Commission's estimate for European expansion of 0.7 percent. Spanish unemployment is expected to rise to 20 percent.

My Comment: That estimate of GDP contraction for 2010 is likely both overoptimistic and inclusive of government deficit spending. I expect as in the U.s. the one sector of the Spanish "work force" which will get raises next year is government employees.


Austria Decides to Nationalize Hypo Alpe-Adria Bank: Austria will take over Hypo Alpe-Adria Bank International AG and inject as much as 450 million euros ($660 million), the country’s second bank nationalization since the start of the financial crisis.

My Comment: A half-billion Euros is peanuts compared to what`s coming. Tick, tick...


Friday Humor: [Deferred to Monday] Courtesy of our friends-in-Britain-with-too-much-time-on-their-hands, a humorous spin on executive bonuses in tough economic times:

UK suicide Bombers Set to Strike in Dispute Over Virgin Allotments

Muslim suicide bombers in Britain are set to begin a three-day strike on Monday in a dispute over the number of virgins they are entitled to in the afterlife. Emergency talks with Al Qaeda management have so far failed to produce an agreement.

The unrest began last Tuesday when Al Qaeda announced that the number of virgins a suicide bomber would receive after his death will be cut by 25% next January from 72 to only 60. The rationale for the cut was the increase in recent years of the number of suicide bombings and a subsequent shortage of virgins in the afterlife.

The suicide bombers` union, the British Organisation of Occupational Martyrs (or B.O.O.M.) responded with a statement that this was unacceptable to its members and immediately balloted for strike action. General secretary Abdullah Amir told the press, "Our members are literally working themselves to death in the cause of jihad. We don`t ask for much in return but to be treated like this by management is a kick in the teeth."

Mr Amir accepted the limited availability of virgins but pointed out that the cutbacks were expected to be borne entirely by the workforce and not by management. "Last Christmas Abu Hamza alone was awarded an annual bonus of 250,000 virgins," complains Amir. "And you can be sure they`ll all be pretty ones too. How can Al Qaeda afford that for members of the management but not 72 for the people who do the real work?"

Speaking from the shed in the West Midlands where he currently resides, Al Qaeda chief executive Osama bin Laden explained,

"We sympathise with our workers` concerns but Al Qaeda is simply not in a position to meet their demands. They are simply not accepting the realities of modern-day jihad, in a competitive marketplace. Thanks to Western depravity, there is now a chronic shortage of virgins in the afterlife. It`s a straight choice between reducing expenditure and laying people off. I don`t like cutting wages but I`d hate to have to tell 3,000 of my staff that they won`t be able to blow themselves up." He defended management bonuses by claiming these were necessary to attract good fanatical clerics. "How am I supposed to attract the best people if I can`t compete with the private sector?" asked Mr. Bin-Laden.

My Comment: Well, it's nice to know what al Qaeda's orificial policy is on this matter, at least .... as with California, explosive growth in "retirement benefit" payouts is blowing holes in the budget.

I hear there's a thriving trade in eBay's middle east branches in "Gently used virgins".

[Batalov]

Housing outlook for 2010

(Fortune magazine) -- In a dour year for the economy, the housing market has offered some glimmers of hope. Home sales have improved, recently hitting their highest level in more than two years. There's been talk of bidding wars resuming in places like Silicon Valley and New York City. And cocktail party chatter everywhere has started to turn to talk of a bottom. So at least where housing's concerned, things are looking not so bad -- right?

If that's what you think, you may not want to invite Mark Zandi to your next cocktail party. The chief economist of Moody's Economy.com, Zandi has some sobering predictions: Home prices are going to fall 5% to 10% more -- and over 30% in places like Miami -- between now and this time next year. Then they might start turning around. (Emphasis on "might.")

At the top of Zandi's list of worries are foreclosures -- specifically, the millions of loans that are in foreclosure or headed there that can't or won't be modified. According to RealtyTrac, nearly 2 million housing units in the U.S. are in foreclosure or bank-owned, and millions more are likely to join them.
...

[wblipp]

Originally Posted by Batalov

There's been talk of bidding wars resuming in places like Silicon Valley and New York City

I talked with a Brooklyn bidding war loser last weekend.

[ewmayer]

Originally Posted by wblipp

I talked with a Brooklyn bidding war loser last weekend.

Unprecedented money-printing in a desperate attempt to prop up still-inflated (in most of the Greenspan-bubble areas) housing coupled with 9 months of incessant "green shoots" propaganda from the govt and the MSM will have that effect. Consider:

- The Fed has been buying on the order of $100 billion (you read that right, as in $10^11) of MBS per month in order to keep the mortgage-securitization market on life support ... in fact the Fed now *is* the mortgage-securitization market, as they appear to be overpaying for the MBS paper (although we really have no idea how much they're paying nor who they're buying it from ... but Bernanke is on record last year saying that if the govt were to start buying MBS, they should overpay in order to "instill confidence" or some such nonsense) and there is no private demand for the stuff at anywhere near par value;

- The Fed has also been buying agency paper (Fannie & Freddie's MBS) and Treasuries (usually by way of using the primary dealers overbidding to create the illusion of demand, then the Fed buys the paper from the PDs a few weeks or months later) in order to keep mortgage rates artificially low;

- The FHA is now making subprime loans on a scale exceeding Countrywide Financial's heyday;

- The original $8000 giveaway for first-time homebuyers has been extended and expanded to include "trading up" home purchases.

Couple those things with hefty price drops (but still not enough to bring prices in line with longtime Case-Shiller income-normalized averages) in most bubble areas, banks keeping millions of foreclosed homes off the market in order to create the illusion of scarcity, and high rental demand (in no small part from victims of foreclosure and folks who lost their jobs in the past year), and you get a large number, and bidding wars - especially at the lower end - is what you get. Here in silicon valley a large portion of the buying is being done by investors who are looking to rent out the homes in the near-term and then either keep them as rental properties or resell them for a (hoped-for) profit "when prices recover" to bubble levels.

[xilman]

Originally Posted by ewmayer

My Comment: Spain, Ireland and the Baltics also flashing huge warning signs.

Q: What's the difference between Ireland and Iceland?
A: One letter and six months.

Courtesy of my youngest brother, who lives and works in Dublin.


Paul

[ewmayer]

Originally Posted by xilman

Q: What's the difference between Ireland and Iceland?
A: One letter and six months.

Courtesy of my youngest brother, who lives and works in Dublin.

Reminds me of a quip from my physics days:

Q: What's the difference between a cosmologist and a cosmetologist?

A: Two letters and a whole lot of hubris.

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Followup on the Austrian Hypo Alpe Adria Failure

Barry Ritholtz - or better, guest poster Edward Harrison of the Credit Writedowns blog - provides some perspective on the nationalization by the Austrian government of the insolvent bank Hypo Alpe Adria (note to our non-German-speaking readership: The "Hypo" in the names of many of these troubled German and Austrian banks derives from the German "Hypotheke" which is a catchall for a debt instrument such as a mortgage or commercial loan ... there is an English word "hypothec" which comes from the same Latin and Greek root and means the same thing, but it appears to be a little-used term in English), reminding us that Austrian banks have emerging-market financial exposure that is 70% of GDP:

The Austrian government has nationalized the insolvent bank Hypo Group Alpe Adria (HGAA). The financial institution, which has 40 billion Euros in assets, is the country’s sixth largest bank. But, in relative terms, this is a very large bankruptcy – using GDP at purchasing power parity, an American HGAA would have assets of $2.5 trillion, larger than any of the American banks. So, this is a very big deal and it speaks to the size of Austrian banks’ international exposure, renewed risks in banking and the possibility of contagion.

My Comment: I similarly commented on the huge exposure of various Austrian banks to toxic eastern-Europe real estate loans several times this past year, but the name that was top on my list was Raiffeisen ... the name of the most-recent imploded bank may differ, but the symptomology is the same. To its credit, though, the Austrian government dealt decisively with the matter (this article in Austria`s Kurier daily uses the term "Kahlschlag", which is borrowed from forestry and translates as "clear-cutting" ... in a non-arborist context it means roughly "cleaning the slate") and will spend the coming year poring over all of HPAA`s financial machinations and selling off viable parts of the enterprise, instead of attempting to keep the bank afloat in quasi-nationalized form, allowing it to gamble with an explicit taxpayer backstop and no clear exit strategy. Are you listening, Messrs Geithner, Bernanke and Summers? Yeah, I thought not.

This is most definitely *not* the kind of "Austrian Economics" the world needs.

[ewmayer]

Now we know why - in addition to opening the way to pay huge executive bonuses - big banks like Citigroup are so eager to "repay TARP bailout funds":

U.S. gave up billions in tax money in deal for Citigroup’s bailout repayment

The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis.

The Internal Revenue Service on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government. As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.

While the Obama administration has said taxpayers are likely to profit from the sale of the Citigroup shares, accounting experts said the lost tax revenue could easily outstrip those profits.

My Comment: So the alleged "repayment" is just a front for yet another multi-billion-dollar backdoor bailout scheme courtesy of Uncle Scam.


Pittsburgh To Tax Students For City Pension Shortfalls

Pittsburgh Sets Vote on Adding Tax on Tuition: The mayor of Pittsburgh calls it the “Fair Share Tax.” But to officials at the city’s 10 colleges and universities and many of their 100,000 students, it is anything but.

On Wednesday, the City Council is expected to give preliminary approval to Mayor Luke Ravenstahl’s proposal for a 1 percent tuition tax on students attending college in Pittsburgh, which he says will raise $16.2 million in annual revenue that is needed to pay pensions for retired city employees.

My Comment: Sheer insanity ... pandering politicians spend years making wage and pension promises guaranteed to bankrupt the city except under ludicrous Ponzi-stock-market-appreciation-in-perpetuity, then when the scheme inevitably blows up, they gouge some of the folks least able to afford extra taxes. If this passes, the ensuing "brain drain" from area universities will cost Pittsburgh far more than they estimate to gain from the surtax.

[__HRB__]

Originally Posted by ewmayer

Pittsburgh To Tax Students For City Pension Shortfalls

Pittsburgh Sets Vote on Adding Tax on Tuition: The mayor of Pittsburgh calls it the “Fair Share Tax.” But to officials at the city’s 10 colleges and universities and many of their 100,000 students, it is anything but.

My Comment: Sheer insanity ... pandering politicians spend years making wage and pension promises guaranteed to bankrupt the city except under ludicrous Ponzi-stock-market-appreciation-in-perpetuity, then when the scheme inevitably blows up, they gouge some of the folks least able to afford extra taxes. If this passes, the ensuing "brain drain" from area universities will cost Pittsburgh far more than they estimate to gain from the surtax.

My comment to your comment:The solution is to create an even larger education-bubble where the government subsidizes 2nd, 3rd and 4th educations, because every mental retard has already been swindled into buying 4-year college education for $200,000.