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03/16/2003 Archived Entry: "Still waiting for war..."
On the Political/Economic Front:
For those who need a smile, I recommend the cartoon search engine that allows you to search the 'Net for cartoons by key words or by artists.
In the event/inevitability of war, the use of deadly force has been officially authorized against war protestors who trespass at Vandenberg Air Force Base. Presumably, this is true of other military facilities as well.
More on what to expect from pension funds... John Maudlin, email@example.com, offers his perspective on $19 billion dollar, public pension shortfall in Texas in his free e-newsletter this week. I quote Maudlin at length because it is important to realize how the budget deficits are going to impact the average person:
"For the first time, Republicans finally control both houses of the [Texas] legislature and statewide offices. They ran on a no new taxes platform. They are scrambling, as is almost every state, to balance a huge budget deficit without raising taxes. It is doubtful they will be able to do it. It they had to kick in another $3 billion a year, or close to 5% of the state budget, just to get us to balance within 10 years, there would be panic in Austin. There is no way they could find another $2-3 billion a year without substantial new taxes.
This is typical of states throughout the union. It is much easier to assume 10% equity growth, increase funding a little and hope the problem goes away. If we see a sustained secular bear market, there is no way that state governments can meet the kind of pension shortfalls I am suggesting are possible, which is precisely what I think is going to happen.
What will happen? Will the public pension fund world come to an end? No, politicians will eventually step in, when things start to get grim. There will be declarations of crisis and emergency, and to "save the system," benefits are going to be cut or frozen. Future retirees will not be happy. It is probable in many states that defined benefit plans will be changed to defined contribution plans. Some states will honor current retirees, but younger employees will not be able to retire under the current system.
The longer this secular bear market goes, the worse things will get and the more money states will have to come up with in the future. The unintended consequences of the current policy of benign neglect will mean either future tax increases, cuts in services or both. As medical costs rise, the state funded portion of those costs will rise as well. The pension benefits for younger workers will be cut, and they will be forced to either save more or face a less robust retirement.
Unless steps are taken soon, it is possible we could see shortfalls approaching $1 trillion dollars in state sponsored funds by the end of the decade. A deficit of this size on state levels can truly be called a crisis. A tax increase or other adjustments to fund this will be a large drag on the economy. This does not take into account the many municipal (police, fire and employees) and county pension funds, which have the same underfunding issues. The problem, in reality, is much larger than the 123 state funded plans discussed above."
On the Personal Front:
Brad and I are waiting for war, and finding it difficult to work or concentrate on anything else. I declared Saturday to be "St. Patrick's Day," even tho' it was really the ides of March, because we will not be able to celebrate anything on the 17th. We expect outright war to start as soon as the 18th. But we pushed all that away for a day and Saturday was a pleasant kick-back, with "Irish" food -- soda bread, Irish sausages (pork spiced with ginger and cayenne), grilled potato-cakes, chocolate-whiskey cake -- Irish whiskey, and a video of an oldie but goodie..."The Molly Maguires." I am Irish on both sides of my ancestry, with a few random Scots thrown in, and I'll be d*mned if anything, including war, takes away my St. Patrick's Day bash. I *do* wish the day bore a different name, however, as I am not fond of the changes St. Patrick wrought in Ireland's history and culture. The snakes he drove out of Ireland were the Druids and pagans, and with them went part of what was uniquely Irish.
Best to all