Rumblings of the Big One

Today I hear a rumble. I see everything starting to shift. I think there is an earthquake coming.

Words that should scare you…

As of July 2009, California’s budget shortfall was 49.3% of its general funds. States have considered drastic options to fill such gaps.

“I looked as hard as I could at how states could declare bankruptcy,” said Michael Genest, director of the California Department of Finance who is stepping down at the end of the year. “I literally looked at the federal constitution to see if there was a way for states to return to territory status.”

From later on in the same article….

Mr. Genest estimated that, eventually, 40% of the state’s budget would go to the state Medicaid program, 40% to education, 10% to debt service and 6% to retiree medical services and pension—leaving little left for anything else, such as the state’s corrections system.

In other words, California is going to choose hand outs over maintaining public order. The lowering of crime rates over the last twenty years was achieved by throwing lots and lots of people in jail. We are going to see violent crime rates climb as states decided that they can not afford to keep people in jails.

But it is not just California…..

The real talking was done Monday, when Mr. Paterson was at his articulate, compelling best, explaining the budget crisis in terms even someone otherwise oblivious to deadlines and consequences and seemingly any pressure to confront them might still understand.

“Unless immediate action is taken, we will have challenges to our state’s finances and to our cash flow in four and a half weeks,” the governor said.

Translation: New York State is not going to have enough money to pay all of its bills in a month.

Not a surprise when you consider this…..

New York spends $2,283 per capita on Medicaid, far more than any other state and twice the national average, according to statistics compiled by the state budget division. Second is Rhode Island, which spends $1,659. The state also spends $14,884 per pupil on school aid, more than any other state and well above the national average of $9,138.

But of course, it is not just America that is facing these kinds of problems….

Chang argues that inconsistencies in Chinese official statistics — like the surging numbers for car sales but flat statistics for gasoline consumption — indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.

Another data point cited by the bears: overcapacity. For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.

This, Chanos and others argue, is happening in sector after sector in the Chinese economy. And that means the Chinese are in danger of producing huge quantities of goods and products that they will be unable to sell.

Bits of Hilarity

Today the news was just full of jokes. My sick sense of humor has been getting a real work out this evening.

Here is a joke that you might not have heard. Here is another one that you probably did hear.

But if you have as sick a sense of humor as I do, the fun is just getting started. Try saying the quote that leads off this post out loud and see if you can keep from laughing. If at first you don’t find it funny, try thinking about the implications of such a statement. Here is some more background info.

While we are on a role, it should be noted that Brant Hansen is always good for a laugh. The only problem with today’s post is that he pulls his punches and goes all PC at the end.

This one from a while back was a lot better. I did not realize at first that he was talking about a real service on offer.

A slightly more obscure source of fun comes from this letter. Hard as it may be to believe, Hertz was actually dumb enough to sue those people in open court. A better way of convincing the world that they are about to go bankrupt could not be found. Especially when their whole argument boils down to saying “6 months ago we were even more likely to go bankrupt then we are now.”

Believe it or not, I did not stay home today to collect all these bits of hilarity. Instead, I went to work even though I still don’t have my voice back and I still am coughing and hacking like a fool. But nobody threw rocks at me so all is well.

Expect for the fact that I am feeling a little crazy.

Links for Today

How Late Blight came to be such a disaster and other things you might want to know.

A good explanation of how the unemployment rate can fall while at the same time the number of people with out jobs rises.

Relatively harmless right now. But wait until the cost of health really starts to bring down the government. Then this foot in the door will be expanded.

For all the typeface geeks.

Links For Today

Old News. But don’t miss the part on the end about raising fuel taxes. No tax like a regressive tax.

Not just the Chinese. It is also one of the reasons that banks are not lending to other people.

Most of you already saw this on Bit’er Pitter. But those that did not should not miss it.

Some sad news. At least for the nerds amongst us, there was no better source of hard data and, for that, almost any opinion he had could be tolerated.

Links For Today

It’s an epidemic.

Can the man do nothing right? You would think it would be in his own best interest to get this one right.

Who would have ever thunk that it would get this cheap? Granted it is only low earth orbit. Still, it seems too good to be true.

Just a reminder.

If a computer game is featured in the NY Times, you know it is bad. You could almost fool oneself into thinking that it would be fun to play the game until you get to the end of the review.