Tuesday, February 22, 2011

Wisconsin Public Unions vs Taxpayers -- Dispatches from the Front

Reports from the front on the battle in Wisconsin between over-compensated public union workers and the over-extended taxpayers who foot the bill:

Howler.  A New York Times article (link) proclaims that a new Rasmussen poll on the dispute may be biased (presumably against the union side).  Yes, that New York Times, the apotheosis of bias, accusing someone else of it.  Well, I guess if anyone can recognize tripe it would be a tripe peddler, although Rasmussen is about the most trusted name in polling.  The only dupes likely to relish this serving of offal are the dwindling number of readers the New York Times has left.

The difference between lightning and a lightning bug.  Supporters of the union side are want to blur any distinction (link) between public and private unions -- hence the railing against "corporate power" and "big money." In fact, the differences between public and private are fundamental, significant, and in the Wisconsin dispute, dispositive (as the lawyers say).

Hmmm -- So that's why all those protesting teachers don't understand that they're grossly over-compensated:  "Only 39% of the 8th graders in Wisconsin public schools are proficient or better in mathematics, according to the U.S. Department of Education, despite the fact that Wisconsin spends more per pupil in its public schools than any other state in the Midwest." (link)

Uh-oh.  The unions have lost liberal Richard Cohen writing in the liberal Washington Post (link):  "It was one thing when unions went after giant corporations run by guys who played golf at restricted clubs. But when it comes to government workers, we are the boss and we pay the bill. To quote what Sam Spade told the woman he loved in the "The Maltese Falcon," "I won't play the sap for you." When it comes to public-sector unions, my sentiments exactly."

Welcome to the future -- a preview of medical care if the Democrats have their way:  At least three faculty physicians from the University of Wisconsin Family Medicine Department are filmed proudly handing out confirmation of illness statements to union protesters so they could obtain excused absences from their teaching duties, all proving too much even for a big liberal writing in the liberal Atlantic (link).  Hey, who says we need to do a careful interview and physical examination of the patient to make a diagnosis?  That old school stuff discriminates against doctors who can't do physical exams, or don't know how, to say nothing about how needing a doctor's statement discriminates against those who aren't actually sick.  Medical ethics is a retro-capitalist construct.  No doubt the UW Dept of Family Medicine is a hotbed of support for Obamacare. 

So that's why our school maintainence bill is so high.  Wisconsin unionized teachers drop their garbage where they stand (link).  Overheard by a mind reader: "hell, cleaning up after myself isn't in my union job description, and after all, I'm creating jobs for unionized clean up workers." 

But didn't Obama say all that violent rhetoric was off limits?  So much for the liberals' new age of civility -- (link).

Who are these guys?  Unions to bus in outside agitators to join Wisconsin protests (link).  Boy, that side really knows how to community organize.
John M Greco 

Related Post:
Wisconsin = Ground Zero in the Escalating Struggle Between Hard-Pressed Taxpayers & Coddled Public Workers

Sunday, February 20, 2011

Reflections on the Devolution in Chicago

The Wall Street Journal reported (link) this past week on some new data from the U.S. Census Bureau:
A larger-than-expected exodus over the past 10 years reduced the population of Chicago to a level not seen in nearly a century. The U.S. Census Bureau reported … that during the decade ended in 2010, Chicago's population fell 6.9% … [to] fewer than [was] reported back in 1920…. [T]he recent recession accelerated a migration both to the metropolitan area's farthest suburbs and to the Southern U.S…. The influx of residents to outlying areas could … —particularly minorities—could make those regions more politically diverse. For instance, said University of New Hampshire demographer Kenneth Johnson, "DuPage County could become less Republican."
Chicago’s retiring Mayor Daley, a Democrat and the longest serving mayor in city history, having just surpassed his father in that regard, has been popular not so much because of what his is but rather because of what he is not – a worse alternative. One must not conflate popularity with cost-effectiveness.

Despite the Daley Democrats the steady migration to the suburbs and the South continues. Residents are voting with their feet in search of safer neighborhoods, cheaper and more honest government, better schools, more reliable services, and, of course, better job prospects in areas more friendly to the businesses that maintain and create them.

And to what new lands are these residents fleeing? To towns and states where the policies and values of Republican and conservative voters predominate. But in what should be fodder for a million PhD theses, in a triumph of will over experience, of desire over judgement, many of these refugees from failed Democrat polities don’t miss a beat and continue voting for Democrats from their new homes, against the very Republicans who made their new neighborhoods worth moving for. Validating the principle that you can fool some of the people all of the time, they continue to vote for Democrats who promise them more things with less accountability.

The foundation of a democracy rests on the wisdom of its people, and in the wisdom of such citizens lies the hope of our Republic.

John M Greco

Related post:
Democrat Voters Migrate to Republican Areas For Better Jobs, Safer Neighborhoods, and Better Services, But Then Still Vote For Democrats; Go Figure

Thursday, February 17, 2011

Wisconsin = Ground Zero in the Escalating Struggle Between Hard-Pressed Taxpayers & Coddled Public Workers

Wisconsin has become ground zero in the escalating struggle between private-sector taxpayers and the government workers who live large off their labors.

Study after study in recent years has shown that public sector workers not only have higher job-specific wages than their private counter-parts but have much richer benefit packages as well, including pensions that private sector taxpayers can only dream about.

States and local governments are struggling mightily in the wake of the Great Recession, and some are functionally bankrupt. The largest single driver of this crisis is well known -- wages and benefits to public workers, who are usually represented by a union.

The new Republican governor of Wisconsin, Scott Walker, supported by a Republican majority in both houses of the state legislature, is finally standing up for the people who actually foot the bill for the largesse extended to government employees. He is proposing that benefits for state workers begin to come in line with those of the private workers who pay the bills.

Most private workers, the taxpayers, pay a big piece of their health care insurance costs, while I read that Wisconsin public workers, not unlike their counterparts across the country, pay little to nothing for theirs. Karl Rove states on the Hannity show that in Wisconsin “virtually every state employee pays zero” into his/her retirement plan. Meanwhile, in Illinois, a state with worse finances than Wisconsin, the number of retired public workers with pensions over $100k per year is skyrocketing. This is grossly unfair and unsustainable.

Unionized teachers are now mobbing and agitating in Madison, the state capitol, replete with ugly, violent imagery and revolting disrespect for the environment (Ann Althouse postslink; link; link).

President Obama, now lying (link) in speeches about cuts in his new federal budget plan, is calling this attempt by Wisconsin taxpayers to save their state from destruction “an assault on the unions.” In Illinois, Democrat Gov. Pat Quinn, who made his name posing as a taxpayer advocate (falsely, in retrospect), is proposing, for the state with arguably the worst finances in the country, I kid you not, a budget for the next fiscal year with increased spending and borrowing (link), even after a recent 67% hike in the personal income tax rate. Denial ain’t just a river in Egypt.

This struggle needs to come to a head, and the sooner the better for our country. It can’t go on any longer. Either the taxpayers who foot the bill or the public workers who live off their labors will be in control. With one we recover and go forward, with one we devolve into bankruptcy and chaos.

John M Greco

Related Post:
Wisconsin Public Unions vs Taxpayers -- Dispatches from the Front

Saturday, February 12, 2011

Annals of Government-Run Enterprises: Why Is This Train Late?

Accurate transcription of an automated announcement the other day on a Chicago Metropolitan Rail Authority commuter train on the way to the Loop:

“This train is operating approximately 30 minutes late due to late arrival of equipment due to earlier delays.”

I kid you not.

And some of us want these people run our health care system.

2/13/11 -- Addendum:  Lest anyone thinks this message was a one-off, in fact it is one in the railroad's standard pre-prepared repertory that I have heard many times over the years. 

2/13/11 -- Addendum 2:  From the Associated Press (link):  "Despite plenty of warning that last week's blizzard was on its way, officials of Metra say the Chicago-area commuter train system wasn't prepared to deal with the storm. They also told the Chicago Tribune on Friday that they didn't get the word out about reduced services and long delays."

As Glenn Reynolds of Instapundit would say -- We're in the very best of hands.

John M Greco

Friday, February 11, 2011

Does Obama Support Protestors Against a Repressive Islamic Regime? It Depends

In an authoritarian Muslim country, young anti-government protesters clamor in the streets against a repressive government. Shouts for democracy are heard. Military action is feared. One side is anti-American, the other side is at least a tactical ally.  Which side does Obama support?

Well, in Iran he supported the government against the protesters, and in Egypt he supported the protesters against the government. In Iran the vicious and virulent anti-American group Code Pink supported not the protesters but the hard-line Islamist Iranian regime, and even visited the country recently as guests of the ruling mullahs (who were taking a well-deserved break from their exhausting duties of hanging gays and whipping to death 14 year old rape victims); but for them in Egypt, there too it was different. Hmmm. What could be the theme?

Of course, to anyone sentient the theme is that whichever side hates the West in general and hates America and Israel in specific is the side that gets the support of Obama and Code Pink (the leaders of which have already spent a nice day at the White House visiting with their friend Obama). There’s no other way to reconcile Obama’s lack of support for anti-government protesters in Iran and support for anti-government protesters in Egypt. No other way.

Peter Kohanloo and Sohrab Ahmari comment on this inconsistency at The Weekly Standard (link):
How can self-proclaimed “progressives” support one set of Muslim reformers, while so coldly abandoning another? The contradiction is a symptom of a deeper philosophical quagmire born of a sense of guilt felt by some Westerners for past sins, both real and imagined, committed against the non-Western “other.” Western guilt yields a state of perpetual self-loathing, which in turn leads its victims to celebrate any anti-Western cause as morally worthy. Thus, when Egyptians--rightly--rebel against a pro-American autocracy, their cause is automatically perceived as just. However, if Iranians rise up in pursuit of similar goals against a far worse, anti-American and totalitarian regime--one that murders its own citizens in the name of God--Americans are asked to stay silent. After all, they have “oppressed” Iran in the past.
Obama had a chance, by supporting the anti-government protesters, to help overthrow the vicious, radical anti-American regime in Iran. He took a pass then, but now in Egypt he’s suddenly interested in the rights and safety of the young people in the streets. With Obama it’s easy to predict where he’ll stand – just find the side that’s more in our interest to support and he’ll be somewhere else.

John M Greco

Thursday, February 10, 2011

Republican House Leaders Stun America in Renouncing Their Own Campaign Pledge on Spending Cuts; Say It Ain’t So Paul Ryan

Republican House Leaders John Boehner, Paul Ryan, and Eric Cantor, et alia, have announced their new spending plan that falls way short of the spending cuts they have been pledging for so long and are so needed to deal with the dangerous national debt level.

From Emily Miller at Human Events (link):
[Republican House Budget Committee Chairman Paul] Ryan’s budget falls short of the House Republicans’ promise to cut back to 2008 spending levels. During the midterm elections campaign season, they promised in their Pledge to America to “cut government spending to pre-stimulus, pre-bailout levels, saving at least $100 billion in the first year alone." However, Ryan’s budget sets discretionary spending for FY 2011 at $42 billion higher than FY 2008.
Hugh Hewitt, as outraged as I am, has details and comments here.

How in the world could these guys have the audacity to do this, after all that has happened in the past year, after all the dire warnings about the threat of the exploding debt under Obama and the Democrats, after the Tea Party grass roots revolt against spending, and after their own promises?

Yes, I realize that they will attempt to justify their perfidy with Beltway-speak loaded with insider and technical lingo no one outside of Washington DC understands about how all this really isn’t as bad as it looks.

This is simply astounding. I read this evening that many elected national Republicans are in open revolt, and so perhaps they can bring Boehner, Cantor, and Ryan to their senses and rescue them from their own political suicide. Of course, even if honest and reality-based Republican leaders convince them to honor their word, they will remain deeply tarnished by this stunning episode.

John M Greco

Wednesday, February 9, 2011

Profiles in Principled Liberalism

Fealty to principles versus the grasp of power to control and mold the hoi polloi?

Ultraliberal advocacy organization Common Cause in 2005 on the subject of Democrat senators possibly using the filibuster to block Republican Bush’s judicial nominees, via per Jonathan Alter at The Volokh Conspiracy (link) by way of Instapundit:
Common Cause strongly opposes any effort by Senate leaders to outlaw filibusters of judicial nominees to silence a vigorous debate about the qualifications of these nominees, short-circuiting the Senate’s historic role in the nomination approval process.
Ultraliberal advocacy organization Common Cause in late 2010 on the subject of Republican senators possibly using the filibuster to block Democrat Obama’s judicial nominees, via same source as above:
the filibuster of judicial nominees threatens to “cripple our federal judiciary”
You can’t make his stuff up.

For some, truth is not about consistency to principles or even reality but rather about whatever serves to advance the Cause.

John M Greco

Monday, February 7, 2011

Chrysler Boasts that Its Cars Are Made by Detroit Union Workers. Yes, That Detroit, Those Workers.

I’m not making this up. Honest.

In a very slick and undoubtedly very expensive commercial aired during yesterday’s Super Bowl game, car-maker Chrysler boasted that its cars are made in Detroit. The tag line is “Imported from Detroit.” Yes, that Detroit. Made by those very same union workers notorious for their unique world-record-breaking ability to combine extremely high pay with extremely low quality. Made by those same workers who, along with fellow residents of similar mentality, have turned Detroit into a lower-rung third-world city right here in America. Oh yea, those are just the people I want to make the next car I drop $30 grand to buy. Sure.

Chrysler is of course now mostly owned by the unions after it was stolen from its creditors in an ersatz bankruptcy by Obama and given to them in one of the most egregious examples of political thuggery in American history. Then Obama gave Fiat what was left with the directive to work with the unions to try to make something of the corpse, no doubt to be aided with more money from Obama down the road.

The union brain trust thinks the way to induce me to buy one of their cars is to remind me, to emphasize to me, that their cars are manufactured by Detroit union workers. Of course, instead they should be doing everything they can to trick me into believing that Chrysler cars are made by someone else – anyone else. These union owners are either much dimmer than anyone had previously imagined or are certifiably delusional, and are likely both.

John M Greco

Some related posts:
The Obama Chrysler Confiscation – One Year Later
Obama-run General Motors Guilty of “Elasticizing the Reality of Things" about Repaying Its TARP Loan
Obama, the Car Companies, and the Rule of Law
Detroit's Population Crashes as Ignorant Residents Flee the Liberal Paradise

Sunday, February 6, 2011

Remembering Ronald Reagan, at 100

Today we celebrate the 100th anniversary of the birth of one of America’s and Illinois’ greatest sons – Ronald Reagan.

He was born 100 years ago today in Tampico, Illinois, and grew up in various places in the northern part of the state, attending high school in Dixon and finally graduating from Eureka College with a degree in economics and sociology.  After working in radio broadcasting "live" Cubs games from a studio in Iowa, Reagan moved to California to become an actor, becoming perhaps best known for his film portrayal of Notre Dame football player George "the Gipper" Gipp in Knute Rockne, All American.  He was president of the Screen Actors Guild, became a Republican (“I didn’t leave the Democratic party – the Party left me”), served as governor of California for two terms, and was twice defeated for the Republican nomination for president.  Then in 1980 he tried for a third time, and won at last.  He became president of an America humiliated by the Iranian hostage crisis, fearful of aggressive communism, unnerved by rampant inflation, dazed by the Carter Administration, and apprehensive about the future. 

Larry Kudlow, who as a young man worked in the Reagan Administration, recounted the Reagan legacy on his show the other day:
Ronald Reagan saved America. Ronald Reagan saved the world. His economic policies of low tax rates, light regulations, and a king dollar, vanquishing inflation, firing the striking air traffic controllers, and limiting domestic spending – all that basically launched a 25 year economic boom and rescued us from the malaise of stagflation.

With his massive military buildup, his missile defense system, his tough diplomacy, and his evil empire battle cry, Reagan defeated Soviet communism forever without even firing a shot.

He was a tough minded optimist who believed in American exceptionalism and freedom. He saved our future.

Let me repeat my favorite of the Gipper’s many great lines: the best is yet to come.
John M Greco

Friday, February 4, 2011

Investing Solo – Bill Gross’s PTY and Its Sister Closed End Funds PFN, PFL, and PCN

When will interest rates really start to rise? How much inflation do we really have? Read the WSJ or watch the Kudlow show and see the experts’ answers range from soup to nuts. I pay, however, particular attention to Bill Gross of Pimco, who, in the annual Barron’s roundtable interviews (link) published last month and in a recent post for Pimco investors (link), opines that the Fed will keep interest rates low for a good while longer, however injurious such rates are to savers and pensioners, in the interest of propping up assets, particularly stocks and real estate, for the benefit of banks and financiers. He advises us mere mortals to adjust to the interest rate realities and adapt our fixed income strategies. Gross: “Once [quantitative easing] disappears, how long will the federal-funds rate stay at 25 basis points?…. For a long, long time, I think. Short-term rates will stay there for at least two years and maybe three, because of high unemployment, excess capacity and, at the moment, an inherently low inflation rate. There would be no rationale for the Fed to raise interest rates other than to counter an attack on the dollar.”

To that end, in Barron’s he once again recommended one of the Pimco diversified taxable debt closed end funds (CEFs) – PTY. Gross’s argument: “[I]f you don't want to own assets [like treasuries or money market funds] yielding negative real rates [interest rates net of inflation], why don't you borrow at such rates, or find companies that do?” I own two sister funds to this one – PFN and PFL, the former of which in the June 2010 Barron’s Gross called a “look-alike” to PTY. Not unexpectedly, the price of PTY shares jumped high, while the unmentioned PFN and PFL only hopped up a bit, despite only modest to moderate differences among them and the fourth sister of the quartet, PCN. I don’t know why Gross mentions only one of them at a time in these interviews rather than discussing the quartet as a whole. In fact, the average durations of the PFN and PFL portfolios are shorter than PTY and PCN, giving them a little more safety should interest rates rise a lot from here. For me, when I first bought into PFN and PFL I liked their valuation metrics a bit better than those of PTY and PCN, and especially given the run up in share prices recently that still seems the case to me now.

All of these funds to my eyes have exceptional metrics among debt CEFs – particularly for me net investment earnings well in excess of monthly distributions, a substantial cushion of undistributed net investment income, and insignificant amounts of the subjectively valued “level 3” securities. The portfolios are mostly corporate bonds, both investment grade and high-yield, and mortgage-backed securities. All these funds are managed by Gross himself (he’s also a large personal shareholder) and have great track records, employing leverage to achieve regular distributions of well over 7% annually plus a history of special one-time year end payouts on top of that.

Of concern is the particular risk seemingly on everyone’s mind right now -- future interest rates, but again, Gross thinks they’ll stay low for quite a while longer. Also, this quartet of CEFs now trade at a premium to net asset value, but I suspect that’s because of Gross’s great track record as a fund manager and because the annualized rate of monthly distributions does not take into account special year-end distributions.

I have been taking a hard look at my fixed-rate funds not expressly intermediate-term in focus that I have left after my reallocation over the past year almost completely out of long-term funds. I look at PFN and PFL as essentially intermediate-term funds with great fundamentals, yields, and management, but with a fixed rate portfolio. After re-assessing the rewards versus risk, I’ve decided to hold firm with them despite the recent run-up in price to mild premiums over net asset value and the inherent interest rate risk.

I’m an individual investor with no background in finance or securities, writing things down to help organize and clarify my thinking. Of course, nothing I say constitutes investment advice of any kind – merely an account of my personal observations and decisions. My core portfolio is a conservative and diversified mix of equity and debt mutual funds, ETFs, and some closed-end funds (CEFs) across investment styles, management firms, and accounts, and I invest a relatively small amount (about 10%) somewhat more aggressively in the perhaps ultimately futile pursuit of alpha.

Mike Parenti

PTY profile at Nuveen’s CEF Connect web site

Related Posts:
Investing Solo – Floating-Rate Debt - GFY
Investing Solo – Floating-Rate Debt
Investing Solo in Floating-Rate Preferred Stocks