Pension Problem News

The corporate pension problem that I’ve been writing about is starting to reach the mainstream press. Today’s San Jose Mercury News has a story about the problem.

What’s going on is that companies are underfunding their pension plans, and as the article says, this is an “accounting time bomb”. When stocks were rising the holdings of pension funds were sufficient to pay upcoming pensions without the companies contributing from revenue, so the companies were able to report higher profits. Now stocks are down so the will companies have to make up the difference. But they are allowed to estimate a return on their investments as part of calculating whether they have enough saved to pay for future retirees – and they are using unrealistic return estimates like 10%. Can YOU get 10% on your money these days? The companies are saying they can.

And even with those estimates they are going to have to come up with a ton of cash after this year ends, which will mean they will report lower profits, which will further depress the market, which will reduce the holdings of the funds, etc. From today’s story:

Countless investors could be surprised when Fortune 500 companies finally acknowledge problems. “Keep an eye out as we break past the end of the year,” warned Adrien LaBombarde, who helped write Milliman’s pension study. Pension problems “will be 10 times bigger at the end of the year, when the financial statements start showing this.”

What If We’re Wrong?

Lately I’ve been hearing the Republican machine cranking out a rebuttal to the “there is no evidence” argument – as in, “there is no evidence of any imminent threat from Iraq, nothing has changed in years, why now?”

They answer, “What if you’re wrong?” Republican Sen. Inhofe said this today on CNN, responding to Sen. Feinstein.

This is similar to the old anti-Clinton argument, “The lack of any evidence of any wrongdoing is proof of a massive cover-up.”

Do we start attacking countries BECAUSE there is no evidence that there is an imminent threat, because we might be wrong about that? Should even Canada be worried about us?

What They’re Hearing

Check out what the right-wingers are saying.

As I said a few days ago, “Sometimes it is hard for me to figure out what Bush and his crowd are really trying to say. I’ve learned over the years that when the message isn’t clear to you, it can help to find out what the listener – who the message is intended for – is hearing. I think these comments are a good indicator of what Bush’s “base” is hearing.”

Are the Natives Restless?

This story about voters in mid-Michigan is backed up by a message I received from my Aunt here in California:

I attended a Foothill-sponsored current events discussion yesterday and was astonished at the comments – when asked what they were there for, every single participant said things like, “because I’m scared – angry – disillusioned – about what the administration is doing”. A woman with a very heavy French accent said this is going to be an “a – pok -o leepse.” A Japanese American woman who grew up in Japan in the 30’s said she could see the similarities between the US now and Japan then – loss of civil liberties, imperialism. Even a Texan participant was angry. The moderator said he thought we were on the verge of a breakdown of civilization!

This is vox populi – why isn’t anyone in Congress or the administration listening?

A Real Must-Read Today!

Frank Rich in the NY Times just says it all today!

But this administration no longer cooks the books merely on fiscal matters. Disinformation has become ubiquitous, even in the government’s allegedly empirical scientific data on public health. The annual federal report on air pollution trends published this month simply eliminated its usual (and no doubt troubling) section on global warming, much as accountants at Andersen might have cleaned up a balance sheet by hiding an unprofitable division. At the Department of Health and Human Services, The Washington Post reported last week, expert committees are being “retired” before they can present data that might contradict the president’s views on medical matters — much as naysaying Wall Street analysts were sidelined in favor of boosters who could be counted on to flog dogs like WorldCom or Pets.com right until they imploded.

Unemployment

The New York Times has an important article about unemployment.

Once these statistical nonpersons are counted, the labor market of today looks all too similar to those of supposedly bleaker past decades, according to a number of recent studies by economists. Even when the unemployment rate was near a 30-year low in 1999 and 2000, men from the ages of 18 to 54, as a group, spent 11 percent of the year not working, roughly the same as in the late 1970’s and late 80’s, according to one study.

Some of the figures in the article, “Since 1990, the number of people receiving disability pay has nearly doubled, to 5.4 million…” and, “The growth of the prison population — to about 2 million today, up from 1.1 million in 1990 and 500,000 in 1980….

These people don’t show up in the official unemployment rate but they are not bringing in enough money to buy those important consumer goods – bagel toasters, Cheese-Wiz, etc. – that contribute to our economic growth. So while they keep saying prosperity is just around the corner things are actually much worse than the numbers show. For example, because the government doesn’t think unemployment is as bad as it is they haven’t extended unemployment benefits. AND benefit extensions require a certain level of official unemployment – 7% (I think) – before they kick in anyway. Yet this article shows that 5% unemployment today is equivalent to 7% during the last recession – so things have to be much much worse than last time before the government will help out.

To make matters even worse, don’t forget that welfare reform means that option is less available, and runs out after (I think) 2 years. We’ve got the elements in place for a really, really bad situation in this country.

Bush, Water and Fish

Counterspin Central writes about Bush and the Klamath River water controversy. “It pitted a small klatch of farmers against, supposedly, “government regulators.” I was working in Portland, Oregon last year so I was following this story closely. There wasn’t enough water to go around, and the Dept. of Interior wanted to release water from reservoirs so fish can spawn and the fishery won’t be decimated. The farmers said they should get the water instead. The Republican Machine cranked out propaganda about how this was environmentalists trying to hurt farmers. The usual…

Water, logging and fishing illustrate my seeing trees vs. seeing forests metaphor. The Republicans cast it as environmentalists against businesses & farmers. In my metaphor those are just trees and are therefore a waste of your time and energy. You should try to see through it and see the bigger picture (the forest). You can go crazy arguing specifics (trees) with right-wingers – they are typically just lies and diversions.

Here’s what I mean. The Klamath story, as Counterspin Central shows, is really about farming vs. fishing – the water either goes to the farms or it goes to the rivers for fish to spawn and maintain the fisheries. Other times it’s logging industry against fishing industry because clear-cutting forests ruins the streams so the fish can’t spawn. (The history of the logging industry vs environmentalists story goes back to the S&L bailout.

In the Klamath dispute it came down to a better propaganda angle casting it as liberal environmentalists hurting farmers (trees) – when it was really the fishing industry and farming industry both needing the water. And THAT’s really about who is paying the The Republican Crony Club more that week.

Jay Leno put it so well. In the 1996 election, Bob Dole said, “We know it (cigarette smoking) is not good for kids, but a lot of other things aren’t good. Drinking is not good. Some would say milk is not good.” That night Jay Leno said, “I guess the milk industry forgot to put their check in the mail.”