Accounting Gimmickry
New Estimate Shows Public Pension Shortfall Ballooning to $4.4 Trillion
photo credit: emsphotonut41 Joshua Rauh just blogged on “Everything Finance” a new estimate of the current unfunded public pension liability for both state and local governments: Using June 2009 data, Robert Novy-Marx and I measured a $3.1 trillion gap in state and local pension systems, arising from $2.3 trillion in assets and $5.4 trillion in [...]
State Debt Loads are Soaring
We all know that Uncle Sam is drowning in red ink–if you need a humorous reminder check out Remy’s “Raise the Debt Ceiling.” Well, it turns out that states are not in much better shape. According to a new study by Harvard Economist Jeffrey Miron, for the Mercatus Center, states will reach dangerous debt levels [...]
The Real Federal Debt
photo credit: TimothyJ I’m so sick of this debt ceiling debate because it is all a ruse. The federal debt, as defined by the debt sold by the U.S. Treasury, is only a small fraction of all the obligations that the federal government owes. Thankfully, I just found this nifty debt clock (in the sidebar) [...]
Was Quantitative Easing A Plot to Save the Federal Budget?
I’ve never been satisfied with Ben Bernanke’s rationale for Quantitative Easing as a way to save the economy. Did he totally forget the 1970′s where economists had to invent a new term for recessionary inflation now known as stagflation. To me, Quantitative Easing is a recipe for stagflation. Drawing from my GMU/public choice roots, I’ve [...]
Moody’s Penalizes States with Unfunded Pension Liabilities
Here is a news items that you can file under: “what the heck took them so long?” According to the New York Times, Moody’s finally recognizes that unfunded pension liabilities are a threat to the financial well-being of states: Moody’s Investors Service has begun to recalculate the states’ debt burdens in a way that includes [...]
Will America’s Private Sector Continue to Shrink? A Look at Government Compensation
In my previous blog looking at America’s Private Sector for October, 2010, I stated that I thought over the long-term the private sector share of personal income would continue to fall. This post will begin to explore why I think that is the case. Be warned that this journey involves delving into the intricacies of [...]
Jobs . . . Now You See Them, Now You Don’t
Not being involved in the financial markets, I don’t usually pay much mind to new monthly jobs data. I know monthly numbers are extremely noisy and will be significantly revised in the future. However, lots of people do and, consequently, it influences the psychology of the markets. So one would think that such a closely [...]
Explaining How Pension Assumptions are Bogus
Josh Rauh and Robert Novy-Marx have an excellent blog explaining the wrong-headed logic behind how state and local pensions are valued. Under current standards, state and local governments value pension liabilities using the expected return on pension fund assets. Arguing that diversified investment portfolios have an 8% expected return, governments typically use a discount rate [...]
When Will State Pensions Systems Go Broke?
Joshua Rauh recently released a study that made bold predictions about when the asset pool of a state’s pension system would run dry. Illinois topped the list with a “Year Run Out” estimate of 2018–just eight short years away. Really? Well, apparently so. I recently came across this article in Bloomberg BusinessWeek that states: Illinois’s [...]
Wealth Alchemy in Motion
Current Global Public Debt . . . brought to you by The Economist magazine (follow link for interactive graphic). Hat Tip The Big Picture.
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