Another California Brainfart

George Rebane

"The sages of Sacramento have done such a splendid job of not adequately funding California's public pensions that now they want to do the same for non-government workers. Their latest brainstorm is to establish state-administered retirement plans for workers in the private economy.  This is not a joke. … ." as reported in the 22aug12 WSJ.

Wending its way under the Sacramento dome is SB1234, a bill to create another huge bureaucratic mess in California intended to extend the power of a totally inept, corrupt, and bankrupt state government over one more aspect of our lives – private sector pensions.  The idiots in our legislature are using the imminent Social Security funding shortfalls to argue that our state government, that can’t manage the proper funding of a cup of Starbucks, will now pick up the slack to provide a happy retirement for our private sector.

These capitol turkeys have done nothing but catastrophic damage to the private sector every time they touch it with their incompetent hands – check the impact of their latest AB32 green jobs disaster.  As soon as this Senate bill goes through the Assembly’s little amendments, they’re taking it to Gov Moonbeam for his siggy that is forthcoming as sure as the morning's sun.

This new law and bureaucracy are awful as witnessed by the heavy small business lobbying against it (here) since it was introduced last February.  “The legislation would require employers that don't already sponsor retirement plans to enroll their workers in state-administered "individual retirement accounts," but they are really defined-benefit pensions in disguise.”

Oh, and did I mention that union dominated CalPERS – you know, the 7.5% return boys – want to pitch in and help mismanage the new retirement portfolio?   That this is being considered may be “no joke”, but if we look at this latest abomination from another direction, it may yet be the biggest joke on the California economy concocted by our capitol cretins.

Comments

[billy T]

Dilution is the solution. Them Cal-pers folks can't get enough moneies pouring in to cover their arses, so lets increase the size of the Johhnie-on-the-Spot. Don't got a retirement plan? No worries. Everybody will get one. Of course, I won't join the chorus of "help me masta" cause no way would I ever, ever, ever pay those management fees charged by the Cal-Pers overseers. NEVER. Besides, Cal-Pers is its own private equity firm and all us Californians know those kind of people are not welcome here in the New Age of Power to the People. Sure, Cal-Pers bankrolled Magic Johnson's inner city movie complex and it paid off. Other funding "feel good" ideas such as buying that rent control apartment building in NYC did not work out so well. They should have checked the New York mandated maintance and upkeep costs along with the no rent increase clause before leaping headfirst into that 99%er friendly venture. Can't win them all. Of well. Maybe we should all just hold hands and form a circle while I play Dylan's Everybody Must Get Stoned on the turntable. Extending pensions to Ma and Pa Kettle would make California the shinest turd in the outhouse.

[billy T]

Forget the hope, how about a little loose change. http://finance.yahoo.com/news/analysis-u-cities-avoid-pension-120226037.html

[Todd Juvinall]

In the early to mid 70' I lived in Palm Springs and worked in the hotel industry. The Teamster's were run by Jimmy I think. He took the truck drivers pension money and bought some hotels across America. A couple were in PS. Well, they all went belly up when the Teamsters managed their assets and it set back their pension fund by a whole lot. Rather than learn their lesson the management of the Teamsters upped the members contributions. It is the same in government.

[TomKenworth]

In RE: billy T | 23 August 2012 at 12:40 PM

Funny you don't feel the same way about the medical plans Congress and the executive branch get. Where's your outrage there? OF course they extend similar goodies to every Federal employee, so they go a ready batch of voters to keep the rest of us from insisting that they play by the same rules they dictate to us.

[George Rebane]

TomK 1120am - the liberal worthy who composed your panel does not understand the relationship of stock markets to the workings of economies. Profits rebound when there is pent-up demand, as occurs when recessions are deemed to bottom out. The problem relating profits to jobs in these pre-Singularity years is that pre-recession levels of revenues no longer require as many workers to produce as before. And this trend will continue as technology accelerates and the global economy becomes more integrated. The fate of the American workforce has been a regular topic in these pages.

A deeper factor, unknown to liberal propagandists, is that recessions also take down companies and reduce competition for the recovery phase, thereby supporting higher profit margins. In our times, our govt's insane growth of regulations has made the cost of entry very high (sometimes prohibitive) for competing businesses to enter markets with effective grand-fathered oligopolies.

[Ryan Mount]

So letting the recession naturally bottom out and presumably recover will fix this demand issue we have? But with no(or notably fewer) net-new producers? Did I read you correctly Mr. Rebane?

And, are you suggesting that even if we do clear this the demand deficit, when the dust finally settles, we will have higher prices (inflation, I'm presuming) due to a distinct lack of competition? And this lack of competition has been artificiality created by [increasing] onerous regulations?

Are you saying, and forgive my presumptuousness, that the current dove/demand-side policies are actually creating the behemoths that the Progressive Left fears?

(I know I've put question marks at the end of my above questions/comments, but they also seem like assertions begging for rebuttal.)

[TomKenworth]

"The fate of the American workforce has been a regular topic in these pages."
~ George Rebane | 24 August 2012 at 11:48 AM~

It certainly has, and other than letting them die in the gutters, I don't see anyone holding out any plans for a bright future, or path to get there. In time, the automated factories will have no consumers who have any money left. The rich can decide to stay the course, and let the jails courts and prisons become the new America for the bulk of the population, or they can put their Big Boy thinking caps on. I'd say it is time for the latter.

[THEMIKEYMCD]

As an employer I chuckle. The more The State tries to manage my business for me the more I must react/revolt. Next step (already laid off employees/stopped hiring in fear of Obamacare/tax increases/etc) is to update existing employees from w-2 to 1099 (independent contractors).

TomKenworth: It is the enormous chasm between your opinions pertaining to economics and the laws/realisties of economics that makes for a frustrating debate. The government's attempts to regulate/tax/manipulate = stop employers from employing. Economic growth is the solution and there exists no larger obstacles/impediments than those designed by government. I was born a producer, yet, the government has sucked my will to produce via taxes, regulations.

I sincerely suggest watching this exchange: http://www.youtube.com/watch?v=dAHIf5IPQfU&feature=related

[TomKenworth]

~ THEMIKEYMCD | 24 August 2012 at 01:42 PM~

It hasn't sucked your will to live the good life, which will become harder as more and more of the population gets desperate. What is the tipping pint for a society in terms of number per 100 in jail or prison? Currently we have 1 in 100 Americans in the slammer, in California it costs $47,000 per year per prisoner. Going to the Lake with a full larder? In time each overcrossing will be viewed with apprehension. As you have already pointed out, you can't tax yourselves enough to pay for the police state you are trying to set up with your antiquated social attitudes. Wake Up, America!

[George Rebane]

RyanM 1213pm - So many questions, where to begin ;-)

Yes, when demand finally gets satisfied, prices will come down. But net new producers may be low or zero, depends how onerous the cost of entry is made by government. Look into the EU, say, Germany to see how hard it is to start a new company.

Inflation is a monetary phenom(Milton Friedman) that the government controls. I believe inflation is inevitable because that is the only way for us to escape our national debt and unfunded liabilities - the dollar must be destroyed. I have yet to hear of a Plan B that does not bring peals of laughter.

Don't know what "dove/demand-side policies" are. But yes, as the state grows, it gains control of production by reducing the number of producers to a manageable few who know that their only means of survival is to become and remain a well-behaved member of the state-industrial complex. Hitler showed the way; Stalin skipped it and went directly into state-owned industries.

Post-WW2 Britain tried an amalgam of those approaches, and almost went down the tubes before the Iron Lady force fed them the only medicine to save them from totalitarianism. Most of the EU is now in the inevitable dither brought on by slippery-slope socialism.

(Can't tell whether TomK's 1235pm is joking or not. Probably not, which obviates a response.)

[billy T]

TomK, hi buddy, hows it hanging? Two things: First, my medical plan is much better that the Feds and Congress. I have run the numbers. Much, much cheaper as well. I would refuse Dennis K's plan, fyi. I even heard that some goberment workers are paying up to 600 clams/month to cover their whole families with medical, dental, and vision, lol. What sorry saps. Second, may I humblely sumbit for your consideration that Wall St and Main Street are two different creatures. Unemployment sucks, consumer confidence and spending is flatlined. Manufacturing sucks. Housing sucks. Small business start ups suck. Disposable income is on life support. But the market is soaring near all time highs (well, highest in the last few years). Why, pray tell, is the market up, up, up? Glad you asked. Because the market is always forward looking, always based of emotion, always guessing what is coming down the pike. Wall St is up because everybody and their mother thinks that Uncle Ben will open the floodgates and a tsunami of printed money will happen in September and some of that money will make it into the market. Same with Euroland and especially Old Europe. Once the Germans give the nod and play nice, the ECB will print trillions of euro paper so that broke nations can sell their IOU's to the ECB and some of that will make it into the markets. In reality, most of Europe is in a recession and the other part on teetering on the edge with one foot on a banana peel and the other foot in the grave. China is going down into the muck and mire because of structrual problems. Emerging markets are hitting the wall. That is Main St, that is reality. But, Uncle Ben MIGHT print more of his green rice and the markets takes off. And that's the way it is. Too many speculators in the market, which is why I am an investor. The only thing the market has got right recently is Facebook shares are worth a wee bit more than tiolet paper. Should be a $12 stock. All hype and no cigar.

[George Rebane]

Dammit billyT (341pm), we've got to introduce you to the beauties of the paragraph. Your great confabulations would massage my old eyeballs with a mite more comfort if there was some structure to those word blizzards. Just for the hell of it, hit 'Enter' every once in a while ;-) (Please)

[billy T]

Dr. Rebane, since you asked nicely, I will oblige your request. Not because you said "please", but because that is the wonderful kind of guy I am. I must also add that your usuage of the word "hell" is quite inapproriate. But I will overlook your lack of self control, again, because that is the kind of guy I am. You have been heard. Oh, is this where I put the concluding sentence?

[George Rebane]

billyT 409pm - Much grass Mr Tozer. And I am grateful that you have enough self control for the both of us.

[billy T]

Speaking of brainfarts, where are all them green jobs that will trailblaze California into the future? http://www.foxnews.com/politics/2012/08/09/after-federal-grant-us-battery-maker-taken-over-by-chinese-firm/?intcmp=obnetwork

[George Rebane]

billyT 1137am - That important question will be answered straight away by the chief executive of the Sierra Business Council, Mr Steven Frisch. He supports AB32 and opposed Prop23, and knows all the comings and goings of green jobs.

[billy T]

Dr. Rebane. Perhaps the new green jobs will carry us into the 20th century, as Joe Biden said last week.

[George Rebane]

billyT 155pm - They will indeed; to the 1930-39 epoch by my estimation. And this time it will take WW3 to get us out of it.