Check kiting on a grand scale. Is Portland too big to fail?

I think states and big cities are starting to see themselves like big banks... "we're too big to fail so bail us out or we'll take you down with us!"

I await the Photoshopped image of the laser laboratory scene from the film Goldfinger where Gert Frobe's character haughtily laughs:

"No, Mr. Municipal Bonds, I expect you to die!"

...And the federal deficit is out of control, and we owe $900 billion to the Chinese, and we send $28 billion a day overseas to import oil. (See T. Friedman column today in NY Times). The current US debt to GDP ratio is reported to be comparable to that of countries like Portugal. Yet the report of the bipartisan commission on the national debt has already been fractured along far left and right polar lines. So few of our elected officials in Washington seem to have the mettle to face, let alone speak to, the depth of these problems. Instead they are, for the most part, bitter and paralyzed, (while our media is fixated,) over whether to let the Bush tax cuts expire for couples with annual income over $250k.
So our states will start to fail one by one, and (unlike for AIG and Morgan Stanley) there may not be enough capital or credit faith in our Federal treasury to do anything meaningful about it. And then, I fear, we'll start to resemble our old nemesis, the dreaded Soviet Union, with extensive social entitlement programs, a bristling, bloated and far too expensive military, and a shrinking economic base that can't support either.
Does anyone really see a workable way out of this mess that doesn't involve a catastrophic meltdown which might make the current recession look like the good old days.

Is debt swamping the name of the game?
and for whose benefit and for what purpose?

or is it something that just happened across the board here?

"You aint seen nothing yet"

Al Jolson, sort of, chanelling through any muni bond analyst.

The whole thing is nothing but illusion anyway.

Our paper money has been without value for quite a long time now.

How long can the power brokers continue to keep the illusion alive?

There is one upside, the rich are richer than anytime in all of human history, so there are winners in all this mess.

The masses may have to perish, but we have seen that before haven't we?

Mario Savio's quote:There is a time when the operation of the machine becomes so odious, makes you so sick at heart, that you can't take part; you can't even passively take part, and you've got to put your bodies upon the gears and upon the wheels, upon the levers, upon all the apparatus, and you've got to make it stop. And you've got to indicate to the people who run it, to the people who own it, that unless you're free, the machine will be prevented from working at all!

In my opinion, we need to stop taking for granted that somehow the pendulum will swing back to where it was, or that other people will take care of the situation. We the people need to get engaged on matters. We cannot depend on our elected officials to do the right thing here for our public interests.

Example of people engaged:
The Lents people who stopped the stadium and stopped the loss of their URA money for it and loss of park space for it.

The St. Johns community who years ago stopped 75 huge Douglas Firs and Cedars at Pier Park from being cut by our own City under Vera Katz and Park's Commissioner, Charlie Hales - even though the tree's already had red x's on them.

Now,The Clackamas and Milwaukie petition on the light rail matter.

I am sure there are other examples of what can happen when people become engaged. Do not feel powerless to act here.

There'll be a wholesale political housecleaning if/when that happens in Portland/Oregon. When tough decisions need to be made, we won't close down schools, end bus service, double property taxes, or even stop urban renewal spending, we'll renegotiate PERS and police/fire pensions in bankruptcy. They're both our Achilles heel and our panacea. Public employees and the police and fire people have a lot to lose by supporting our spendthrift pols.

the federal deficit is out of control,

This is fundamentally a revenue problem; it can't be cured by cutting spending. Federal tax revenues have declined sharply because of tax rate reductions under George Bush and because of high unemployment since 2007. (The Bush tax cuts if renewed or extended, taken all together, will "cost" an estimated $3 trillion for the next ten years, $700 billion of which represent tax savings for those who have incomes over $250,000.) Looking forward, health care spending will produce massive additional budget deficits if historical trends are not changed.

we owe $900 billion to the Chinese

People seem to believe we need China to buy and hold our debt in order to finance our budget deficits. We don't. China's debt results from our buying Chinese goods in amounts that exceed our sales to China. It's a trade deficit, in other words, the cumulative effect of which is that China holds dollars or dollar debt instruments. China could dispose of these, but that would depress the value of the dollar, making Chinese goods more expensive for us and therefore depressing the Chinese economy.

Our paper money has been without value for quite a long time now.

This is the gold bug's view — that money or currency has value only if it can be exchanged for something with "intrinsic" value. It is no longer conventionally accepted. Our currency — any currency — has value based on the issuing country's capacity to produce and sell goods and services. Once we reach the limits of that capacity, more money in the system only pushes prices up. But until that point, more money is a solution more than it is a problem. Because we print our own currency, we can't go broke. The states, on the other hand, are more like Greece and Portugal. They can't (except for stopgaps like California's "scrip") make their own currency, so they're limited by their capacity to borrow. Once it's tapped out, they're done. This is worth remembering as we watch states spend borrowed money, driving up their interest costs, and lay people off and cut projects, depressing the private sector as their revenues fall. This is a potential death spiral, and not just for the Arizona transplant candidates who have been crossed off the list of the living for budget reasons.

Does anyone really see a workable way out of this mess that doesn't involve a catastrophic meltdown which might make the current recession look like the good old days.

The economic solution is not difficult, just as it is not difficult in Europe. More public sector spending for us, and more deleveraging in Europe through elimination of public sector debt would do the trick. Austerity now is counterproductive. Deficits balloon, but the time to address them is when the respective economies are growing. In Europe, lending banks will get stiffed, but isn't that what they charge interest for?

The problems aren't economic, they're political. You have a so-called bipartisan commission ranting about our federal deficit when the real problems are in the state and local governments and in the private sector, and the real, immediate, and urgent solution involves a bigger deficit. The commission and the government are proposing and implementing programs, like the federal salary freeze, that are counterproductive and whose most redeeming feature is that they are just window-dressing, not big enough to cause real trouble.

If these were just economic problems, there would be reason to be optimistic. But they're political, and thus in the hands of people who have political agendas and ideologies that will make solutions difficult and risk the kind of outcome that Drew fears.

"has value based on the issuing country's capacity to produce and sell goods and services."

The value is based upon other's willingness to accept that currency in exchange for goods.

Switzerland has one of the strongest currecnies in the world along with Australia right now. I don't think I'd call either a manufacturing power-house, just a safer haven.

"This is fundamentally a revenue problem; it can't be cured by cutting spending."

BS - When every upside in revenue gets spent and then some, you're on a hamster wheel. You need to implement some sort of spending controls or any plan is doomed.

I mean Bush had revenues actually increasing then he decided to have govt pick up liability for prescription drugs. Nice intent, but it sure didn't help the deficit since it is one of the larger entitlements not.

Yes, willingness to accept money is the other side of the coin, so to speak. It is influenced by one's expectations about what the money will buy, which is why capacity matters, along with expected inflation.

There is nothing objectionable about controlling spending, except for possible adverse effects on federal revenhe. What I am saying is that if you look at the sources of deficit increase, starting in 2008, revenue decline is the big factor.

A revenue problem?

Is that what the city has?
TriMet?
The State?
California?

No.

It's mission creeping bloated government at every level trying to be too many things to too many people.

Including helping us eat the right portions.

http://www.smallstep.gov/portion_control.html

This is a good example

http://www.benefits.gov/benefits/benefit-finder#benefits&qc=cat_1

"What I am saying is that if you look at the sources of deficit increase, starting in 2008, revenue decline is the big factor."

Now we're talking chicken-n-egg. Spending in terms of stimulus money (>$1T of which OR got about $2B and promptly spent it) and entitlement growth (unemp benes, prescription drugs, PERS plans, etc.) are spending.

These programs all have good intentions, but we are getting to the point of picking whose oxen will be gored.

Be careful (not to be abducted on the street and tortured to death incommunicado and ignominiously -- for dissent) not to spread Truth because it might panic the public! Like we used to say when we got the herd corraled and in the midst of loading the cattle truck about to drive them one-way to the slaughter house, "hope nothin' spooks 'em now."

Listen folks: The crash and devestation was pre-planned and is engineered. Repeat: The 'free market' (fiction) 'capitalist system' (fascism) is NOT going to 'bounce back' and is NOT going to save us because the capitalists rigged it NOT to.

It went like this: Get the oil. Worldwise Big Oil men realized, about 1970-75, that planetary oil supply was depleting to zero in about one lifetime from then. (Nothing arguable today about that fact; the point is simply that they had advance warning and a head start to make their maneuvers.) In essence, the motive for them staging Nine-Eleven Op was, and is, to go get control of the last oil reserves. And keep taxpayers docile (with TV news lies and broadcast propaganda) while their taxes fund the military invasions of oil conquest. After the oil is obtained, then the problem looks like this, to them: There is only so much oil left, they control it, and divided by the number of people on Earth the oil per person is less than the amount the US lifestyle grew up by, and runs on. Two possibilities then: Either each person has to reduce use and live with less (than US lifestyle to which they had become accustomed), OR reduce world population ... by about half. Globally powerful Big Oil men decided Option 2 for me and you. So: Get the oil. Them murder half of humankind. Result: powerful Big Oil men stay in power. Me and you stay dead.

And when the Big Plan became public knowledge, (as now), public sheep bleat, "oh, no, we don't believe it; the seers are wearing pointy tinfoil hats; broadcasting LIARS say everything's okay, (as long as Muslims are murdered first), and broadcasting LIARS wouldn't lie to us ... hey, what game is on TV tonight?"

Camden City Council approves massive layoffs, By Matt Katz, Phila.Inquirer Staff Writer, Fri, Dec. 3, 2010

Camden City Council voted unanimously Thursday to begin handing out layoff notices to municipal employees even as union leaders and city officials restarted negotiations in an attempt to save some of the 383 threatened jobs.

After emotional and angry pleas from residents, business owners, firefighters, police officers and government workers, Council voted, 5-0, to eliminate nearly half the Police Department and almost a third of the Fire Department.

"We'll start buying weapons, because I don't see any choice," said Carmello Villegas, 65, owner of Villegas Laundromat in East Camden for three decades. "We're going to have to defend ourselves. We're going to have to defend our families. I really don't know what else to do."

Two of Villegas' sons and one daughter are Camden police officers; another of his children is a firefighter. Family connections in Camden's workforce are not uncommon, and employees told Council that the loss of jobs would put many at risk of homelessness.
[...]
"Jan. 18 will be the worst day in Camden since the 1971 riots," said Karl Walko, president of the Council 10 union representing nonuniformed employees. "It's essentially the end of government as we know it, and for many people in the city, it's the end of hope."

Walko said 40 percent of the police dispatch unit would be dismissed along with 42 percent of the clerical staff in the courts. He said 25 of the city's 40 laborers would be let go, a loss he said could paralyze the city in a snowstorm.

Council President Frank Moran asked for concessions from the police and fire unions while putting the blame on Gov. Christie.

"We didn't put a price tag on public safety," Moran said. "Unfortunately, the governor of the State of New Jersey put [on] that price tag on public safety," Moran said. "Unfortunately, the governor of the State of New Jersey put [on] that price tag."
[...]

Meet the biggest 'get' celebrity attraction who appeared on LIARS Larson's thought-programming in the last two weeks:

For fawning press, Gov. Christie's $400 million blunder gets flushed down the memory hole, by Eric Boehlert, Media Matters for America, December 01, 2010

It's awfully friendly the way reporters look away from a telling example of how Christie actually governs and instead focuses its attention on the YouTube clips Christie's flacks post online showing the governor yelling at people at town hall forums.

Nothing like style over substance, right?

If you live in New Jersey, you might recall that in August the state was shocked to discover it had narrowly missed out on $400 million worth of desperately needed education aid from the federal government because New Jersey's application for the grant was flawed. In other words, a clerical error cost state schools $400 million dollars.
[...]
But if you live outside the New Jersey area, that's probably news to most people. Why? Because as the national press continues its voluntary/obedient role in hyping Republican Christie (apparently any governor now with a 51 percent approval rating is to be hailed as being "popular), the press has flushed the embarrassing $400 million episode down the memory hole.

In fact, in the last week, both New York and Newsweek printed up obligatory Christie's-a-star profiles and both managed to avoid mentioning how the governor's blunder cost the cash-strapped state $400 million in education aid.

What a coincidence.

And oh yeah, guess what else the press, led by New York and Newsweek, flushes down the Christie memory hole?
A) While serving as a U.S. Attorney for New Jersey, Christie often overspent on his travel expenses (i.e. fancy hotels) and left the DOJ holding the tab.
B) The self-styled, small-government conservative earlier this year announced a massive state-run take-over plan that would have the New Jersey government virtually running Atlantic City, in charge of everything from the casinos to the police and garbage pickup.
C) Christie's New Jersey still hasn't paid back the federal government the nearly $300 million it owes after the governor pulled the plug on building a new rail tunnel to New York City.
[...]

In another accounting, $1,150 Billion gone into Iraq/Afghan 'patriotic terror-prevention war' in the last 350 weeks, (7 years times 50 wks/yr), figures out to be $3 Billion a week. (Most 'war' accountants say $1,150 Billion is low-ball, actual Treasury drain is double that, or more ... who knows? the figures are Top Secret, for 'national security.')

And another 'little' example, a dot that connects, somehow, when we think about it together: Saudi Arabia and other Middle East 'sovereigns' are holding more US debt, (IOU's and Treasury Notes), than China holds.

And the Middle East is NOT manufacturing 'goods' of Wal-Mart in 'trade' for the debt. Rather, taxpayer money went, and goes, out the automobile exhaust -- gigaTons of CO2 -- into the atmosphere and destablizing global climate balance into climate chaos ... but that's another story.

There is so much to think about that one person or group can not do all the thinking -- we all have to think about it.

stimulus money (>$1T . . . .)

I'm glad to have a conversation about cause and effect, but it should be factual. That number isn't. Actual stimulus spending authorized was much less than half of that, with a big part of the authorized stimulus being tax cuts.

Does anyone really see a workable way out of this mess that doesn't involve a catastrophic meltdown which might make the current recession look like the good old days.

No, prepare accordingly.

This is fundamentally a revenue problem; it can't be cured by cutting spending.

We can't tax our way out of this. Fedgov's biggest expenditures in 2010: Social Security 20%; Medicare 13%; Defense 19%; Welfare, unemployment other entitlements 16%; Medicaid 8%

This is unsustainable. Sorry but it is the truth.

"That number isn't."

I'm including things like banks bailouts and GM handouts.

However, you need to implement some sort of spending control. Just to use OR, we've had several opps to save or make a rainy day fund for reference:
2007 - 20% increase in revenue - Gone into general funds
Tobacco settlement - ABout $700M - GOne into general funds
Stimulus - About $1.8B - Gone into general funds.

This is the way pols see life. If you get a dollar, you spend since you may not see it tomorrow - Which is not prudent.

I'm angry tonight, so sorry.

Angry that people are gullible for false and/or misleading information, and that gullibility in the minority few is deadweight enough to sink us all.

Such as on the Social Security & Medicare 'thing.' Those are separate, 'earmarked,' DEDICATED taxes. Those are NOT in the 'General Fund.' Those are NOT 'public money.' Congress has NO discretion in WHAT to spend those revenues on - Congress can NOT take Soc.Sec. withholdings and spend it on a bomb for the Pentagon, or chalkboards for Education, or farm subsidies for Agriculture, or park ranger stations for Interior, NO. Soc.Sec. money goes to Soc.Sec.Admin ONLY. NO discretion. Medicare taxes goes to Medicare ONLY. NO discretion.

Soc.Sec. & Medicare are NOT part of 'The Budget' (of Congressional Appropriations). Fed taxes supplies Congress about 1.0 Trillion to 'play with' this year. 'Defense' (includes freaking Homeland Security), plus interest on The Debt gets about 1.0 Trillion of that, (i.e., ALL of it). The other Dept's (Educ., Agri., Interior, Justice, State, everything gets another 1.0 Trillion, which Congress does NOT have from taxes, so they 'charge it.' That's the deficit. this year.

Also 1.0 Trillion Medicare revenues is collected - that goes to Medicare. ONLY. And it is not enough to pay total claims filed by hospitals, doctors, pharma, and medical-associated insurance claims. Since hospitals, doctors, et al. have inflated their prices so unreasonably freaking much, because, after all, the Gov't always pays the claims. Any 'shortage' of collections against claims is another amount on the 'charge card,' tacked onto the deficit.

Similar with Soc.Sec. About 1.5 Trillion in Soc.Sec. withholdings (7%, say, of employee gross, and then employer matches it, so employer sees employee pay as 107% of the amount employee sees it as), is collected this year. and less than 1.5 Trillion is spent, (and that 'overage' of collections against benefits paid out, is 'played' in funny and fraudulent accounting 'games').

To review: Fed.Taxes 1. Trillion. That's ALL Congress can spend -- 'Budget' this.
1. Trillion Medicare taxes collected. No Congressional discretion to spend it.
1.5 Trillion Soc.Sec. taxes collected. No Congressional discretion to spend it.
Total 3.5 Trillion flows to Wash.DC, and they call that 'lump sum' the 'Budget' BUT IT IS NOT what Congress can Budget.

And people's eyes glaze over, people don't know the difference between a Trillion and a Billion nevermind where it goes, and Congress gets more and more derelict and corrupt and mashes all the money together with the INTENTION of confusing as many people as much as possible. Blurring distinctions, shuffling Budget 'line items,' razz-a-ma-tazz pea under the moving walnut shells.

Okay, okay, Guilty guilty, I 'rounded off' my numbers extremely, but they're not false numbers and the proportionality is about right 1.0 - 1.0 - 1.5 (taxes - medic - soc.sec.). The chart is for only Fed taxes - what Congress can spend however it likes. (So: Medicare & Soc. Sec. NOT shown in chart, as it shouldn't be.) The whole pie shows spending about 1.4 - 1.6 Trillion this year, and 'Defense' is half of the pie, about .75 Trillion, ( = 750 Billion), purportedly, but the Actuals exceeds 1.0 Trillion; for 'Defense and Nat'l Security' things (example: CIA Intel.Community = .1 Trillion not shown in pie).

But Fed Tax Revenues is only about 1 Trillion (1000 Billion -- figure 100,000,000 workers taxed $10,000 each [25% of avg. $40,000 wages] = 1000 ooo,ooo,ooo = 1000 billion). So the pie is 'spending' 1.5 Trillion, the IRS is collecting 1.0 Trillion to put in the pie, the 'shortage' difference is this year's deficit, say .5 Trillion. Remove 'Defense' and there could be a .25 Trillion (250 Billion) 'surplus' - or how about a 25% 'refund' of your Fed Taxes? Take the Big Things out first.

'Defense Nationalism' is over half of what Congress chooses to spend, over half of 1.5 T$. Say, 60%. But if Med.& Soc.Sec. amounts are tacked on -- which Congress has NO spending choice about -- then a combined 'Total Budget' number like 4.0 T$ is 'puffed up' and, against that, the paltry .8 T$ for 'Defense' is a measly 'reasonable' one-fifth or 20%.

Defense Nationalism spending is NOT reasonable. Mainly because it does NOT 'defend' us against anything. There are NO terrorists coming after us; the 'terrorism troops' is a TOTAL FICTIONAL bogeyman to make up an 'enemy' then we need to be 'defended against.'

That's why reporters can not go into the 'battle zone.' Because then they'd see there is NO 'al quaida' there.

The Pentagoners have hired a few mercenaries to shoot at US troops and blow up stuff around the place, think: Blackwater. So our tax money for 'Defense' pays for the 'eneby' and pays for 'defense' against the 'enemy' too -- we buy a Black Army and we buy a Red Army and they 'war game' each other and they are both 'on the same side,' or both their 'breads' are buttered on the same side and US taxpayers is the 'butter'.

All of which has NOTHING to do with Social Security or Medicare numbers.

This phony-baloney 'Commission' to 'reduce' the deficit -- Alan Simpson: croak, already -- says to 'raise the Soc.Sec. retirement age. Bulls**t. Simply remove the withholding cap, which is what?, Jack, at about $100,000 now? Or $120,000? Those of us who do not earn over $100,000(?) mostly don't know that there is NO Soc.Sec. withholding above that amount. Someone 'earning' 1 million bucks a year does NOT pay 7% Soc.Sec. on the 'last' $900,000 of it.

Remove the cap. Make someone earning 1 million bucks pay 7% into Soc.Sec. revenues all the way up their gross 'earnings.'

Remove the cap and {presto!} Social Security becomes solvent. Surplus revenues every year at least until 2070. Even if the retirement age is lowered, back down to 65, or even 62, say, like it is now in civilized (European) countries.

And -- on another matter -- the Feds need revenue to 'reduce the deficit' or, better yet, balance the budget? Do DeFazio's idea: a half-a-percent (0.5% or .005 tax rate) 'sales tax' on Stock Market transactions. Actually, it's a 'buyer tax' -- if you buy $100,000 worth of Stocks, add $500 more as a tax on your purchase. If you sell the Stocks 10 minutes later at the same price you paid for them, you 'lost' 500 bucks in 'the market.'

It is NOT like Congresscritters DON'T know about this stuff. When the Economy crashes or melts down it is because they intended to crash it.
It's not like they CAN'T do these accounting things, it is that they WON'T on PURPOSE!

Blowing Billions on War While American Workers Go Under, by Robert Greenwald and Derrick Crowe, Common Dreams .org, December 5, 2010

When asked by USA Today's pollsters last week, sixty-eight percent of Americans said we worry that the cost of the Afghanistan War hurts our ability to fix problems here in the U.S. This week, we learned just how right we were about that. Friday's terrible jobs report shows that a crushing 9.8 percent of us are unemployed. And, millions of us are about to lose our lifeline because Congress refuses to extend unemployment insurance benefits. We're spending $2 billion per week -- per week! -- in Afghanistan while millions of people face going hungry during the holidays.

Do our elected officials not get it? We're drowning out here, and the administration is throwing money that could put Americans back to work at a failed war on the other side of the planet. In fact, that's where the president was when the jobs report came out this morning -- in Afghanistan, talking about "progress" again.
[...]
What are the 2 million people who are about to lose their unemployment insurance benefits supposed to think when they hear senators yelling about the cost of keeping them from going hungry, while at the same time those senators shove enough money to keep the benefits going into that money pit of a war?

Like Jack says, "tick, tick, tick ...."
Life is passing.

While gullible goofballs waste time talking about 'cutting expenses' 5 or 10 million dollars, here or there, "but NEVER cut the military." I call Bulls**t. I say ABOLISH the MILITARY. It's glory days and it's honorable time is past ... and take the airport crotch molesters out with it.

"but NEVER cut the military."

OK, cut the military, heck, cut anything - Sacred cow or not. I didn't think OR had that much military spending.

Military spending has been grwoing about as fast as anything else and it's always been about 50% regardless of party in power, so please cut away.

http://www.truthandpolitics.org/military-relative-size.php

You can continue the diatribe now.

There is no doubt the Pentagon has massive waste, fraud and abuse.

It has to be at least proportionate to their share of the budget.

But they also are subject to the same problem as every other part of government.
A massive dysfunctional government cannot fix itself.

Can anyone provide an example when it has occured?

It doesn't matter what the topic. When it gets this big and out of control there is no legislation possible that provides the kind of reform needed.

When Tenskwatawa gets angry, I scroll even faster than usual. That big fat "X" in the pie chart (in a blog comment) is hilarious, bro.

A massive dysfunctional government cannot fix itself.

I think you can argue that Clinton's tax increases in 1993 helped fix the problem at the time. This was the age of Ross Perot and the giant sucking sound of the federal deficit. Clinton raised taxes (responsibly in my opinion, although I suspect yours will differ), and the timing was perfect. Republicans argued that the increases would result in a major recession, hurting everyone in the process. The opposite occurred, and we had one of the largest expansions in American history. By 1998, the country had surpluses well into the future, and started decreasing the national debt. There were even economists at the time expressing concerns about bringing down the debt too quickly and the macroeconomic impact that might have.

So long as the Republicans care about nothing except making Obama a one term president, so long as the Democrats have no spine and refuse to get a pair, so long as we continue to think that their is a free lunch and so long as the only answers we get to our fiscal problems are either 1) Cut taxes or 2) tax the rich we will continue to wallow in the mess we are in. There is no political courage to speak the truth: we all need to work together and sacrifice. Not just expect the other guy to do it. Incease taxes for all, cut spending across the board and think in terms of dollars not votes.

"A massive dysfunctional government cannot fix itself.
I think you can argue that Clinton's tax increases in 1993 helped fix the problem at the time."

Yeah and I could argue that the contract with America did the same.

But you provide no definition for "helped fix", what else did, or what the "problem" was or what the "fix" was.

Without that it's just empty rhetoric to make those claims.

The tech boom, dot com bubble and false earnings reportings fed the phony economy of the 90s and government grew more out of control than ever as Republicans abandoned their fiscal conservatism.

Like I said before, if you can't apply any remedy to a local or state level how is it ever going to happen on a grand scal nationally? c