Rebane's Ruminations

Bit by Slow by Plan?

George Rebane

Are they really going to string us out until the election season next year?  Admittedly, we do have short memories.  And if we get the money too soon, we'll forget who all our benefactors were when we go to mark our ballots.  Ahh, the stratagems of vote buying - neither simple nor cheap.

… and now on two legs

George Rebane

Recall the four-legged pack mule robot (here) that clambered up the hillside and could recover from strong shoves.  Well, technology continues to accelerate and Boston Dynamics has now developed its two legged cousin Petman whose walk is eerily human.  (Control and estimation theory rules!)

Can you see it all coming together?

A Disconbuberated Boob at the Rood Center

George Rebane

This is a hard post to write.  I have been agonizing since leaving the Board of Supervisors meeting at the Rood Center a little after mid-day.  This was the day when Nevada County’s CFO Joe Christoffel gave his scheduled quarterly report on the county’s fiscal health to a full chamber.   Everyone had come to find out about the county’s significant unfunded pension liabilities.  As announced in these pages (here), Michael McDaniel of SESF gave a short and workmanlike presentation on the pension liabilities which was then followed by Mr. Christoffel’s main event wherein he would cover the county’s position on these liabilities.  This was followed by some Q&A, and we all walked out for the noon recess.  By then my head was spinning.

 

To frame these remarks, let me begin by saying that our county’s leadership and staff are about the best that any citizen, at least of my political leanings and ideology, could expect to have working for them.  Oh, I could pick nits with some of the supes, but as a group they are head and shoulders above damn near any set of politicos you could vote into office these days.  And our staff under CEO Rick Haffey is a first class team.  So what set my head spinning as I scribbled many pages of notes?

Waiting for Your Flu Shot

George Rebane

The news about getting swine flu (H1N1) vaccine into your neighborhood has been all over the place lately – the bottom line is that most of us can’t get vaccinated for the next several weeks, if then.  If you read carefully, you’ll notice that the reports talk of the vaccine being imported from some mysterious places not mentioned.  And you correctly conclude that we’re not making much of it anymore in the U.S.

A couple of years ago or so we were all worried about avian flu (H1N5) because it had a very high mortality rate (60 – 90%).  I represented SESF on our county’s bird flu task force charged with coming up with various community response mechanisms if and when the flu reached a pandemic level in the country.  A factor that kept affecting all of our planning was that avian flu vaccines would not be available until about six to nine months after the pandemic’s onset.

There were the same technical reasons for the delay as there are today – what strain? length of manufacturing sequence, antiquated processes, distribution problems, etc.  But the big factor that emerged was that the U.S. no longer had the capability to manufacture massive amounts of vaccines.  Drug companies had exported those manufactories overseas, or abandoned vaccine manufacturing altogether.

Further digging revealed that this was due to the legal liabilities to which American vaccine manufacturers were exposed.  When coupled with the low profit margins and other regulatory hurdles in place to increase risk for low return, it was reasonable for most American companies to exit this market.

Europe and Asia now are the main sources of flu vaccines.  And as we were reminded during the H1N5 days, during a worldwide pandemic no country will allow the export of vaccine until its own needs are satisfied.

Isn’t it interesting that we don’t hear of people in Europe or Asia concerned about delays in getting their swine flu shots?  It’s only pictures of long lines and people being turned away in America that are making the news.  And none of the news outlets are talking about the out-migration of vaccine manufacturers.  Does that mean that the long arm of the ABA is longer than we thought?  Here’s a list of flu vaccine manufacturers from the World Health Organization.

‘All is Well’

[This editorial appears today (24 October 2009) in The Union’s print and online opinion sections.  In there it is retitled ‘Unfunded liabilities time bombs are ticking away’.  This is the submitted version. gjr]

George Rebane

Nevada County’s unfunded liabilities to its Calpers pension commitments total over $80 million.  By now most people know that Calpers is the world’s biggest public employee pension fund management agency.  It currently invests over $200 billion of contributions from the various California taxing jurisdictions (counties, cities, towns, agencies, and, of course, the state).  Other lesser known pension and healthcare fund management organizations in the state, whose unfunded liabilities (UL) added to Calpers’, bring the California total UL to over $130 billion.

This column’s readers know how Calpers pension liabilities are calculated, and how local electeds commit their jurisdictions to pay for their promises.  Unfortunately, not all the electeds here and across the state are so informed.  As a result, many have continued to burden their jurisdictions with liabilities they neither realize nor can resolve.

Next Tuesday 10am October 27th at the Rood Center, the regularly scheduled Board of Supervisors meeting will feature a presentation on county finances by Joe Christoffel, the county’s Deputy CEO and Chief Financial Officer.  Mr. Christoffel told me that he also plans to include the county’s UL situation in this quarterly review. 

Michael McDaniel, Executive Director of the Sierra Environmental Studies Foundation, will then give an overview of the county’s unfunded pension liabilities.  Mr. McDaniel will be speaking at the invitation of the Nevada County Tea Party Patriots who requested extended BoS coverage of this issue.  He will also present recommendations that may help get us out of the financial holes in which the county and its cities find themselves.  Mr. McDaniel is the lead author of ‘Unfunded Liabilities – Our Community’s Fiscal Time Bombs’ published by SESF in December 2007 and available at sesfoundation.org.

The county’s hidden UL problem did not just grow out of the recent financial crises, but has been building over many years.  Two years ago, before the current recession when SESF raised the issue locally, the county’s pension UL was just under $50 million, and Grass Valley and Nevada City had undisclosed debts of about $4 million and $700,000 respectively.  Then Calpers’ well-documented investment disaster last year reduced the monies available, but not the obligated amounts to be paid out.

The jurisdictions in which the retired public sector employees worked are still responsible for all retirement payments. The markets’ downturn, along with TBD BoS in/actions over the last two years, have increased the county’s UL to the over $80 million number.  The county has neither highlighted nor disclosed any plan to make up these UL.  Well, that’s not entirely true.

Some local bloggers and folks in the Rood Center seem to think that the entire problem is really not ours, and can be laid at Sacramento’s feet.  This longstanding ignorance is unfortunate.  When the SESF report was presented to the BoS and the local media, it was essentially ignored.  In the interval some of us, who have continued to point out the coming train wreck, have been accused of “demagoguery” for bringing the problem to public attention.  A day late and a dollar short, the country’s UL have become national news with daily articles outlining the fiscal calamity facing communities across the land and especially in California.  (For more, please visit pensiontsunami.com.  See also The Union’s online edition and Rebane’s Ruminations)

Politicos and their staffs across the country are pointing fingers at state capitols and Washington to place blame and expect solutions.  In California the ignorance and/or inattention (I’ll leave out perfidy) of local elected officials created our problems.  These same officials hired and fired, and determined the retirement benefits for their public-sector employees.  And if they saw their actions creating an unsustainable fiscal future for their jurisdictions, why did they remain silent?

These same worthies now expect that someone else up there will pull our fat out of the fire.  But the remaining ‘solutions’, as some of us have outlined elsewhere, are few and stark –

• Adopt a two-tiered system treating new employees differently (give them less) than existing employees and the retirees.
• Hyper-inflate (i.e. destroy) the dollar so that all contracted liabilities can be paid off in cheap/worthless dollars.
• Declare Chapter 9 bankruptcy (like Vallejo) and abrogate all unfunded liabilities.
• Pass a state law that stiffs the retirees and current employees by cutting their pension benefits to a fraction of what was contracted.
• Hope that retirees will start dying early and at a high rate (i.e. that the actuarial tables will quit working).
• Hope that the people in Ohio will chip in to pay California’s debts.
• Hope that a miracle happens and the security markets will return over 15% annually so that the Calpers investments will make good all unfunded liabilities.
• Ignore the whole thing and hope that your term is up before things get nasty.  This tactic has worked well in the past, and may still have some legs.

Yes, some of these alternatives do require higher intervention, but only cynically can they be called solutions.  The remarkable thing is that the public employees continue to ignore all of this and remain quiet.  When you come next Tuesday, find out what Nevada County’s solution will be.  If you don’t hear one, or hear one that makes sense, step up to the mike and ask.

An article in the 15oct09 Wall Street Journal warned that “The cost of shoring up Calpers, the troubled $200 billion pension fund for California public employees, will ultimately fall on the state's 38 million residents, who are already dealing with tax increases and reduced public services.”

Cities and counties will have to cut (more) visible and important services in order to meet their legal obligations to retired workers.  Unattended, the various UL time bombs in Nevada County will go off, and any prayers for a bailout from someplace unknown will not be answered.  Next Tuesday people should ask - Where are we now?  How did we get here?  How are we going to work out of this UL mess?

For those not interested or with hopeful faces still turned toward Sacramento, please open page 142 of your hymnal and join in the singing of ‘All is Well’.

George Rebane is a retired systems scientist and entrepreneur in Nevada County who regularly expands these and other themes on Rebane’s Ruminations (www.georgerebane.com).

Things are looking up ...

George Rebane

... I think.

Ruminations - 22oct2009 (updated 23oct09)

George Rebane

- Soft-soaping the dollar.
- The Sierra Bravos lose one (and then gain one).

Ever since I can remember, at our house we always stuck the worn thin piece of soap to the new bar so that none of it would be wasted.  I guess all depression era families and European refugees learned that little trick to save pennies.  When Jo Ann and I started our family, sticking soap together also became part of our routine.  For decades our favorite brand of shower soap has been Dial (‘… don’t you wish everyone did?’), and in recent years we’ve noticed some hanky-panky going on – they started carving out curves and reshaping the product which was supposed to better fit your hand and contours as you lathered up that powerful body.

Well, the new shape (technically a hyperbolic paraboloid, or simply a saddle) also made it harder to stick the old piece on to the new bar.  And at the same time they could deliver less soap in a package that still required its familiar outward packaging so’s you wouldn’t notice.  I like to think that all of this has been the idea of some junior birdman with an MBA who became product manager for Dial some years back.  But as a twofer, it is clever merchandizing – it disguises the shrinking dollar while encouraging a higher consumption rate.  As I’ve mused before – the good thing about capitalism is that it always seeks to game the system, and the bad thing about capitalism is that it always seeks to game the system.  Michael Moore, you hypocritical commie, call your office.

“Wall to Wall Adulation”

[PG-13, reader caution advised, some strong language - Martha, send the children from the room]

George Rebane

That’s actually a quote from Charles Krauthammer describing the MSM in their sad attempts at journalism, at least when it comes to reporting on the Obama administration.  This set me thinking about the state of journalism today in light of the White House’s recent admissions about how they have controlled the news media since Obama’s campaign over a year ago.

Rahm Emmanuel, Anita Dunn, and David Axelrod are regularly interviewed on their lackey networks as they explain in a workmanlike manner how they “managed” and “controlled” the media.  They did it by releasing Obama and spokesperson videos and audios without giving the journalist an opportunity to engage them in any spontaneous give and take where embarrassing questions could be asked.  As a news producer, all you could then do was to run segments of it and go on with other topics, which for the MSM has been to surround the placed pieces with puff-ball analysis.

It became clear early in this administration that if you wanted White House access, you played ball according to the rules set down by the designated propaganda czars.  The result has been the ‘wall to wall adulation’ that the MSM has been spewing much to their discredit and loss of viewership.

Fox News, by presenting a complete spectrum of important news topics and balanced analysis (always with prominent liberal pundits like Juan Williams and Mara Liasson of NPR participating) not available on other channels, has now made the ratings game an embarrassment to the leftwing media.  Fox’s viewership alone totals more than all the others – CNN, MSNBC, ABC, CBS, NBC, … - put together.  No wonder Pelosi, Reid, and the other socialists in Congress are starting to work on the next version of their ‘media fairness doctrine’.  Totalitarians have always mentored nascent tyrannies to grab the mass communications channels if they nurture any hope of taking control of a people.

ObamaNation's Big Question

George Rebane

This question has been asked by hundreds of millions of people of autocratic regimes over the last hundred years.  And sooner or later they all answered it for themselves.  Big hat tip to a loyal RR reader in SoCal.

Stuck Again

George Rebane

It looks like the much bally-hooed American Redistribution and Re-election Act of 2009 is, like the song says, a sometime thing.  Wonder if we have to apply for some more again?  Smart money is riding on the major releases to come next year as the mid-term elections get closer.