Desertscope

Musings from Southern New Mexico

Category: economics (Page 2 of 2)

An Ignored Study

November 30, 2012 /

Today, I saw a article on a report of research into the “Fix the Debt” campaign with the ponderous title A Pension Deficit Disorder: The Massive CEO Retirement Funds and Underfunded Worker Pensions at Firms Pushing Social Security Cuts. It had some interesting (but, unfortunately, by no means surprising) findings:

  1. The 71 Fix the Debt CEOs who lead publicly held companies have amassed an average of $9 million in their company retirement funds. A dozen have more than $20 million in their accounts. If each of them converted their assets to an annuity when they turned 65, they would receive a monthly check for at least $110,000 for life.
  2. The Fix the Debt CEO with the largest pension fund is Honeywell’s David Cote, a long-time advocate of Social Security cuts. His $78 million nest egg is enough to provide a $428,000 check every month after he turns 65.
  3. Forty-one of the 71 companies offer employee pension funds. Of these, only two have sufficient assets in their funds to meet expected obligations. The rest have combined deficits of $103 billion, or about $2.5 billion on average. General Electric has the largest deficit in its worker pension fund, with $22 billion.

Those are some interesting key findings. Of course, this sort of commie “research,” based only on “facts” is not worth printing. Instead, let us focus on shallow analysis by constantly wrong ignorant talking heads and the dysfunctional relationships of inexplicably well-known idiots…

The Bain Capital Management Model

November 28, 2012 /

I wanted to wait until after the election to say what a truly vile organization Bain Capital is. I broke down their model into its basic steps:

  1. Borrow a large amount of money using a small amount of money as collateral
  2. Use that money to buy a 51% stake in a farm
  3. Use your controlling stake to approve paying yourself exorbitant “consulting fees” in the form of all the seed corn
  4. Have the farm expand hiring and spending as if it were undergoing unprecedented growth
  5. Wait for market price to rise
  6. Sell stake in farm for huge profit
  7. Farm fails for lack of seed corn
  8. Blame post-sale management
  9. Profit!

If you are now or ever have been an executive in Bain Capital, you are a truly bad person.

Catalonia

November 26, 2012 /

I noticed a little something in an AP piece titled Independence drive falters for Spain’s Catalonia:

Catalonia is responsible for around a fifth of Spain’s economic output and many residents complain that the central government in Madrid takes in more tax money from the region than it gives back. But now Catalonia is the most indebted region in Spain and has had to seek a €5.4 billion bailout from Madrid.

So by this logic, California should be teeming with separatists.

The fact is that separatists are usually in the thrall of power-seekers wanting to take advantage of nationalistic or cultural issues (e.g. the Nazis exploited Slovak separatists to weaken Czechoslovakia prior to invasion or the Southern aristocracy exploited racism of Southern peasants in order to garner support for a rebellion).

One thing is certain. When a country is broken up, the power of each part is disproportionately reduced. The combined influence of the Czech Republic and Slovakia is less than that of pre-split Czechoslovakia. As well, a rebellious province introduces something else that is often overlooked: a border shared with an enemy state. Suppose the Confederacy had prevailed in the American Civil War. The most important facet of the CSA was its so-called “peculiar institution.” In continuing the Monroe Doctrine, would not the two North American powers find themselves on opposite sides of colonialism? Wouldn’t the CSA be compelled to prop up dictators lest their own “lesser race” get too uppity?

I would posit that the most likely outcomes of a CSA victory would be either a permanent state of antagonism (taking opposite sides in wars such as WWII), or the South would fall into a collection of warring states with the inherent lawlessness spilling into USA territory. The latter seems more likely, given that the precedent would have been made that any union may be dissolved on a whim of any state. The logical consequence of this would be smaller and smaller political entities could seek an “independence,” such that the fractal nation would quickly collapse into anarchy.

Libertarians

October 30, 2012 /

A true libertarian:

… wants to cast aside the government regulation that makes places like Sweden unlivable hellholes in favor of the laissez-faire approach to governing that can be found flourishing in such capitalistic paradises as the Congo.

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