Generation of Sociopaths (2): Debt and Deficits

From chapter 9 of the book:

As a legal matter, the optimists can fairly exclude entitlement obligations, because retirees have no legal entitlement to Social Security, i.e., the government doesn’t actually owe anyone any Social Security payments, so if it fails to pay, there would be no legal default, and on that basis, there is no debt per se. (page 162)

The government also essentially owns these companies [Fannie Mae and Freddie Mac], collecting all their profits and holding options for the 79.9 percent of their equity (since 80 percent wold require the GSE’s consolidation on federal balance sheets). (page 164 footnote)

Selling these would be shortsighted – the privatization of certain infrastructure like parking meters and roads in Chicago and elsewhere proved a fiasco – and tempting as it might be to auction off the Jersey Shore to pay down the national debt, gains from the sale of sovereign assets wold be more than offset by the signals of desperation sent by those sales. (pages 164-5 footnote)

Consider the field of financial improvidence that constituted the 2016 primary contenders. Donald Trump, the only person to make Silvio Berlusconi seem Churchillian, manages to be personally wealthy while presiding over a ramshackle real estate empire whose only products are architectural vulgarity and serial bankruptcies. Marco Rubio presented as a moral crusader (against debt) while tossing away money on speedboats, saving essentially nothing, and appears to have held a long-term credit card balance whose burdens were occasionally relieved by improper use of the GOP house card. Scott Walker, the governor of Wisconsin and a fleeting favorite, had a net worth that ranged from barely positive to outright negative, depending on assumptions. Bernie Sanders had considerable credit card debt, while his family’s modest net worth resided entirely and rather questionably in his wife’s name; he’s said he’s paid it off and his spokesman pooh-poohed the whole thing as “normal,” but as of 2014, he carried at least four times the national average, though he was also better paid than the average worker. The Clintons, of course, have had their financial ups and downs and long been attached to questionable get-rich quick schemes like Whitewater and some murkiness around the Clinton Foundation. Ted Cruz received a poorly disguised and highly questionable loan from Goldman Sachs, his wife’s former employer. John Kasich, the Ohio governor and, per the New York Times editorial board, the only “plausible” Republican candidate (primary voters did not agree), had a previous life as a Lehman Brothers executive from 2001 to 2008, and knew “close to zero” about investment banking when he started, a state of enlightenment apparently paralleled by the bank as a whole given its 2008 collapse. A huge chunk of candidates in recent years have flirted with or had long-term relationships with debt and impropriety. And yet, those now constitute our options, a sea of red ink and imprudence that leaves the American political brow untroubled. (pages 173-4)

Nevertheless, medical bankruptcies have their own sociopathic aspects, given the Boomers’ lackadaisical attitudes toward their own physical and financial health, and their failure to enact comprehensive insurance reform. (page 174)

38 responses to this post.

  1. Posted by geo8rge on September 9, 2019 at 7:04 pm

    “tempting as it might be to auction off the Jersey Shore to pay down the national debt”

    How about selling the Jersey Shore to pay NJ pensions?

    There is already a summit to discuss extending the Butch Lewis act to all Multi Employer or Taft Hartley plans:

    The Multiemployer Pension Plan Crisis: The Taft-Hartley Benefits Summit To Examine Potential Solutions

    http://laborpress.org/the-multiemployer-pension-plan-crisis-the-taft-hartley-benefits-summit-to-examine-potential-solutions/

    Reply

  2. Posted by Tough Love on September 9, 2019 at 7:50 pm

    As things get more and more difficult finding the money to feed the Public Sector pension/benefit monster, many Cities (and some States) have resorted to selling (or long-term leasing) gov’t assets to raise the cash to do so.

    Such assets (parks, highways, parking garages, sewer systems, utilities, etc.) belong to ALL of the Gov’t Taxpayers, NOT just the relatively small % that consists of their Public Sector workers, and that being the case, and knowing the the purchaser (or lessee) will assuredly raise prices for the service previously provided, it is particularly unfair and abusive to Taxpayers to take this path.

    If Public Sector pensions/benefits were EQUAL in generosity to those typically granted Private Sector workers, and were negotiated/granted by Elected Officials NOT influenced by Public Sector Union campaign contribution it would be different. But we know FOR SURE that they are multiples greater in value upon retirement than those of comparably situated Private Sector workers and were anything BUT negotiated/granted in arms-length transactions wherein the Taxpayers best interests were properly represented at the bargaining table.

    Better to RENEGE on the 50+% share of such Public Sector pension/benefit “promises” that assuredly would NOT have been granted in the absence of such Union/Elected-Official COLLUSION, RACKETEERING, and underhanded deal-making than selling/leasing assets that belong to ALL of the Gov’t entity’s Taxpayers and NOT just Public Sector workers..

    Reply

    • Posted by Rex the Wonder Dog! on September 9, 2019 at 8:03 pm

      “As things get more and more difficult finding the money to feed the Public Sector pension/benefit monster, many Cities (and some States) have resorted to selling (or long-term leasing) gov’t assets to raise the cash to do so…Such assets (parks, highways, parking garages, sewer systems, utilities, etc.) belong to ALL of the Gov’t Taxpayers, NOT just the relatively small % that consists of their Public Sector workers…”
      About 25 years ago my City was gifted a WINDFALL of $150 million from the tobacco class action lawsuits, paid out over 25 years. Basically an annuity…What did the Brainiacs at City Hall do with it? Immediately sold the annuity for a lump sum cash payment of 20 cents on the dollar (can you say JG Wentworth! 🙂 ) and put it ALL into the broke busted upside down City pension system. What should have benefited EVERYONE in the City went right into the back pocket of the muni employees. It was disgusting, and very troubling.Not one penny went to the “City”.

      Reply

      • Rex, I believe the same thing happened in NJ under Christie where they received the tobacco settlement monies but I have no idea how it was pissed uh sorry how it was used to help the state

        Anybody know off hand?

        Reply

    • Posted by Marine1 on September 9, 2019 at 8:50 pm

  3. Posted by Marine1 on September 9, 2019 at 8:49 pm

    • Posted by Tough Love on September 9, 2019 at 9:24 pm

      lol ………. assuredly no “smaller” than your intellect and manhood.

      Reply

      • Posted by Marine1 on September 10, 2019 at 7:32 am

        TL- My manhood ? I’ll have you know I have pleasured ladies in three countries and only had to pay for it twice ! LOL.

        Reply

        • Posted by Tough Love on September 10, 2019 at 7:58 am

          Ah, so your name is ……….. “John”.

          Reply

          • Posted by Marine1 on September 10, 2019 at 8:57 am

            TL- nice

          • You asked for that one TL…..lol.

          • Btw, u complain about selling assets to private companies to pay pension debt.
            But but but…wouldn’t those private entities in fact be able to lower prices not raise them because they are so much more efficient, and would run those parks, highways and utilities far better than “moochers” would? I would think that you would be ALL for less things being run by government. Kinda like our dopey nonsense guy from the last 2 weeks.

          • Posted by Tough Love on September 10, 2019 at 7:04 pm

            Quoting El gaupo,

            Putting aside (for the moment) efficiency gains, the costs charged would assuredly increase because the asset buyer (or lessee) would need to get a return on their investment.

            But then ……….

            Unlike in Private Sector deals, such deals in the Public Sector usually encumber the buyer with too many and too highly paid workers BECUASE the Gov’t agency selling or leasing the asset usually includes provision that protect the employees from termination or wage reductions. Sound familiar ?

            Soooooooooooo ……….. the buyer either (a) lower what he will pay for the asset to account for those unwanted/unneeded expenses and/or increases the future cost of the service (an example being the cost of gararge parking or the toll on a highway).

          • Posted by Tough Love on September 10, 2019 at 7:05 pm

            ooophs ….. in my above comment I forgot to include the quote from El gaupo. Here is is:

            “But but but…wouldn’t those private entities in fact be able to lower prices not raise them because they are so much more efficient, and would run those parks, highways and utilities far better than “moochers” would? “

          • Oophs….how did Parsons work out when they privatized what was then the DMV? Private prisons? Some things are better left run by govt. police are one of them.
            How about highways and bridges? When u throw profit into the mix isn’t it plausible that the owner might cut some corners? That’s why there are so many regulations. When I’m one of my many road jobs collecting $110 an hour, there is always a county engineer on hand to make sure the private companies do the right thing, such as putting down enough inches of asphalt and making sure the superelevation (like you know what that means w/o having to look it up) is what it is supposed to be. Without that safeguard, many fly by night contractors would cut corners and be in the wind a few years down the road (no pun) when something went wrong.
            and BTW, like Marine1, I’ve NEVER had my manhood questioned. Lol. Have you? Oophs. Just kidding.

          • Posted by Tough Love on September 10, 2019 at 9:27 pm

            This discussion wasn’t about privatizing services, but about selling assets ………. that are rightfully owned by ALL of NJ’s resident (NOT just Public Sector workers) b……… to help fund the Ludicrously excessive pension/benefits granted Public Sector workers.

            A ridiculous and unfair proposal and just ANOTHER financial rape of the Taxpayers.

          • Listen…as you like to say, I can comment on anything I like. The discussion was…
            Lol.
            God you’re a fool. You have stated on here many times how much better things are run by the private sector and how there is less waste etc the whole bit. Then you state on here that you want to keep assets out of the hands of the private sector because costs will go up!!!! Can’t have it both ways. What if the sale was simply to lower our taxes and provide a better service to the taxpayer(which the private sector is so much better at anyway)? What could go wrong? What—you think the “Toyota” island beach state park would give you less bang for your buck? Remember we are talking private ownership. Not just some stupid naming rights still allowing the ugh..public sector to run things. Think of all the sales tax revenue brought in from the future Pepsi botanical gardens in Ringwood.
            Cmon TL. Isn’t private ownership of almost all land except for a police/dept and tiny boro hall our goal here? Government SUCKS!!!!!
            You’re a hypocrite. Private sector better but you claim the price will go up. Hahahahah. You’re a classic contrarian.

          • And not for nothing, it doesn’t really bother me at all. Trust me. I’ve heard much worse. But true question here…..do you think you can come up with a different metaphor than “financial” rape?
            As disgusting as you think the pension benifits I get are…I would hardly even In jest, or tongue in cheek, include the metaphor of a sexual assault in my discussion of the situation.
            Beneath you.
            Theft, con job, collusion, unfair, all good.
            But I would hardly classify the extra $40 or so a year in taxes you pay because Your local PD has pensions as a “financial” rape. You are one of the few females who post here and the only one who does so on a regular basis,

          • Posted by stanley on September 11, 2019 at 9:19 am

            Constable: ” Isn’t private ownership of almost all land except for a police/dept and tiny boro hall our goal here?”

            You’re quite right. Privatize everything but the police, courts and military. And especially education.

          • Stanley. While I would love to see the pension debt paid off, I agree with TL that we need things like parks and schools and yes even bridges and roads(in addition to police and fire) to be set aside for public use. The beautiful Adirondack Park preservation was done by Roosevelt. He was ahead of his time. The majority of the forest was cut down when he preserved it. Beaches. Etc.
            I love the outdoors. I fish, hike, etc.
            as you know I am a right leaning moderate. And the moderation falls on the environment. I fall in line with immigration, law and order and most firearm rights. I also am for marijuana legalization, and sports gambling legalization.
            While you may be well read on history and some correct events, i do believe you are out of touch on some issues. I was being sarcastic with her and was pointing out her hypocrisy. She is a little more left for my tastes, but outside of our huge disagreements on pensions, I find myself agreeing with her on quite a few issues.

          • Posted by Tough Love on September 11, 2019 at 10:24 am

            Quoting El gaupo …………

            “. You have stated on here many times how much better things are run by the private sector and how there is less waste etc the whole bit. Then you state on here that you want to keep assets out of the hands of the private sector because costs will go up!!!! ”

            Talk about diversion !

            No I don’t want NJ to sell any “assets” that (at least theoretically) belong to ALL of NJ’s Taxpayers (NOT just Public Sector workers/retirees) just for ONE purpose ………… to help fund the ludicrously excess pensions & benefits that Public Sector workers BOUGHT from our Elected Officials with BRIBES disgusted as campaign contributions.

            MUCH more just and appropriate to renege on the 50+% of those pension & benefit “promises” that assuredly would NOT have been granted in the absence of the Public Sector union/Elected-Official COLLUSION

          • Nah. Path to progress will be sufficient. And you can then keep your botanical gardens. Which I like btw.
            And again. The sarcasm seems to elude you.
            Keep paying!!!
            Don’t hate the player, hate the game. I’m not giving up anything so you can save $10 a year. Lol. You must be a broke joke to worry about this all the time. Nobody else except Rex gives a damn. I’d watch out., I think Rex wants to hump your leg. Well beggars can’t be choosy…..(boom) mic drop. Then again, there is always that goofball Stanley. 😄😄😄😄😄😄😄😄😄😄
            To the lions

          • Posted by Tough Love on September 11, 2019 at 11:40 am

            Quoting El gaupo …………….

            “Nah. Path to progress will be sufficient. ”

            Nope, not even close, because it ONLY changes the pensions for those with less than 5 years of service. Those with more service will continue (some for 25+ years !) to accrue pension benefits under a formula & provisions that anyone with any financial acumen knows is excessive, unnecessary, and unaffordable.

            The changes SHOULD BE and NEED TO BE applicable to the FUTURE Service of ALL of NJ’s Public Sector workers.

          • Posted by Anonymous on September 11, 2019 at 12:36 pm

            “Those with more service will continue (some for 25+ years !) to accrue pension benefits under a formula…”

            Very few. Only about twenty percent will be full career employees. The average tenure for state workers in general is only about eight years.

          • Yea but you know you’re not going to get that. You’ll have to settle for path to progress. You’re lucky to get that much. Lol. As long as current politicians are in the pension fund there will be NO freezing of benifits. None. Like I said, just wait 6 more years(tops) and you can freeze all you want. 😉
            Sucks to be you huh…..lol. The thought of my $125k pension makes my pupils dilate with excitement. 🙄🙄

          • Posted by stanley on September 11, 2019 at 4:55 pm

            Constable: ” The thought of my $125k pension makes my pupils dilate with excitement.”

            Constable, you’re as naive as a new born babe. You might still be getting your $125K per year in 2050, but just what do you think you’ll be able to buy with it? By then, the minimum wage will probably be about $100K per year and that’s if we are still spending greenbacks! We might be on bluebacks by then or beyond to yellowbacks, who knows? No, I am not envious of your pension benefit. It looks OK now, but a giant wave of inflation can clobber the daylights out of it. Reduce it to so much litter. Plan on some serious shrinkage, buddy!

          • Are you really that clueless Stanley? I do plan. It’s called maxing out on 457 plan contributions. 2 Roth IRA. Max every year, backdoor it if I have too. Payoff mortgage in 2027, college will be over. I’ll be working a new job, wife will be working and she will get SS at 67. What the hell else can I do? Lol. I’m gonna live within my means, but damn I’m not gonna be like you and shit down on the bunker. My God. You’re waaaaaaay to conservative with your dough my friend.

          • Posted by stanley on September 12, 2019 at 7:49 am

            “You’re waaaaaaay to conservative with your dough my friend.”

            I try to have a good balance between saving and spending, and I don’t neglect the necessity of having a good supply of long lived consumer goods. The threat of tariffs and value added taxes are something to take seriously.

            I don’t believe that your comment is something that anyone can know before the fact considering the almost universal unsound finance that pervades the world.

            I spent 20 years working in a highly cyclical sector. I had a couple of layoffs and worked under the threat of layoff for most of 20 years. It’s a little like farming. It makes you conscious that everything is subject to change.

            Your situation is better than many and more stable than most. But, there have been many cases where people “have it made” and everything turns to dross.

        • Posted by Rex the Wonder Dog! on September 10, 2019 at 11:10 am

          I’ll have you know I have pleasured ladies in three countries …! LOL.
          SMH, sure you did Johnny 🙂

          Reply

      • TL…totally uncalled for comment

        Reply

      • TL, totally uncalled for comment

        Reply

  4. Posted by geo8rge on September 10, 2019 at 1:27 am

    Total U.S. debt including all forms of government, state, local, financial and entitlement liabilities comes close to 2,000% of GDP, according to AB Bernstein.

    https://www.cnbc.com/2019/09/09/real-us-debt-levels-could-be-a-shocking-2000percent-of-gdp-report-suggests.html

    I could not find the investment report mentioned on the net. AB Bernstein probably refers to AllianceBernstein.com .

    Reply

  5. Didn’t Corzine propose a similar scheme to sell the or lease the Parkway?? Didn’t go over very well from what I recall or is a different scheme?

    Reply

    • Might have been a lease. Although I’d have to research it. Asset monetization or something.
      To be fair though, Christie did the same thing. Hiked tolls thru the roof. He even orchestrated a scam by having the PA ask for more than it needed, so he and Coumo could ride in on their white horses and save the day. That was proven that he did that. All to make him look good. His boys David Samson (a former AG and author of the chairman’s flight) and his high school sidekick David Wildstien. That he created a $200,000 position for at the port. But claimed that he even tho they both went to Livingston High School, that they didn’t really know each other. You know, the infamous Wally Edge. Long story short, after a couple of traffic studies 🙄 we now pay $15 to get into Manhattan.

      Reply

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