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Current trends: broken families, pensions, red tape

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August 13, 2011 – Comments (7)

 

I had dinner with my sister-in-law last night and I always enjoy our discussions as she gives me a view of what's happening through her politician eyes.  

She was saying that the unemployment rate was probably 50% higher than reported as people have just stopped looking or they've fallen off the list of what qualifies to be counted.  In rural communities it is higher, reported at 19% but in reality is maybe 30%, and people can't sell their homes so the men have been leaving to find work while the women stay behind and look after the family.  The natural gas fracking industry has jobs so lots of men are leaving home to go work.  She said it was very grim, depressing and lots of people having a very hard time.  

Meanwhile levels of government services keep going down and down and down as every year there is a bigger chunk of the budget being directed to pensions.  She said the increased pension costs were coming straight out of services, but it is compounded by the federal government's budget woes in that what they get in federal funding is also being cut yet they are still being left to manage and abide by federal laws that simply make things more costly to manage.  Federal red tape needs to be cut as it is costly and the federal government simply isn't paying for it anymore and what the federal government wants isn't a priority at the local level and is seen as a hindrance to business development.  Additionally, pensions are more protected by law, so expect more service cuts.

She also talked about how retirees are moving to maximize the spending power in their pensions.  I guess once you retire you aren't tied to where you live by the job anymore so there is a lot more freedom to move around, so pensioners are looking for states with better cost of living, cheaper housing and lower taxes, but she said it tends to be the pensioners with tighter incomes that are moving.  

So, I picked up a few things to think about.  What will happen to federal laws as the federal government tries to down load them to the state level?  I always knew pensioners were cashing out of more expensive places and moving to cheaper places, but I didn't see it as the pensioners with tighter incomes as she sees it and maybe she is seeing this because where she is the cost of living is lower and taxes are more favourable.  And then it is pretty sad how the recession is causing families to be broken up.  

My reading has included predictions of a lot more hardship coming as municipal and state governments across the country make cuts and increase layoffs and certainly the with the lack of choices due to increasing pension costs that can't be cut, this isn't a maybe but is already happening and is going to get worse.

So, I guess my last post I talked about being in year 1 of this demographic jump in pensioners, but what I didn't see is how it is completely tied and coupled with government jobs, each jump in these pensioners results in a cut in government workers, so that's a potenitally double hit to the markets as I tend to think the government works have more money for investments as government jobs tend to be better paying.  I can see cuts going across many businesses as well as their pension obligations increase.

The black box called government certainly isn't working any magic. 

7 Comments – Post Your Own

#1) On August 13, 2011 at 12:12 PM, Momentum21 (96.33) wrote:

That is pretty depressing dinner conversation dwot. Don't expect Bravo channel to come looking to produce a "Real Houswives..." segment up in your neck of the woods. : )

Do you ever NOT think about how bad things are going to be for the world? 

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#2) On August 13, 2011 at 12:31 PM, wolfman225 (70.76) wrote:

^Better to be aware than to be blindsided later.

Dwot,  did your sister the politician make any mention of the possibility of states and municipalities simply refusing to follow unfunded Federal mandates?  That would seem to be, to me, the most logical route to take.  We already  have some states returning grants meant to fund the creation of "Health Insurance Exchanges" as part of their repudiation of the Obamacare mandate.  If enough states and cities across America started to demand that Washington "cease and desist" it's unfunded demands, maybe they'd be free to allocate scarce local resources more effectively.

Maybe, someday, we could even get to the point where the Federal government is properly back within it's Constitutional limits.  The states could then use the money they've been sending to Washington far more efficiently and effectively.

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#3) On August 13, 2011 at 12:47 PM, alstry (35.03) wrote:

The Industrial System of functioning is breaking down as technology eliminates the need for people to work.

In a system the depends on humans working to operate...only fraud and illegal behavior permits the system to continue despite the underlying decay.

Until eventually enough fail and the system implodes.....

The system applies to politics, law, economics, sociology, psychology, religion, and much more......

Humans have tried to stop human advancement for many centuries...this time is no different....the key issue is in the past we often resolved the confustion with war.....in some cases, really big wars as it gave people something to do....

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#4) On August 13, 2011 at 12:56 PM, dwot (97.03) wrote:

Momentum21,

I suppose I do blog a lot about debt, unsustainable pensions, declining lifestyle and such.  I think these things are going to play out big time in the markets and I think people need to plan for more independence.

Wolfman225,

Exactly, awareness is so important.

In the past we've had discussions about education and health care.  Managing federal land came up more last night.  She said something about how there is a federal transfer that is supposed to do with property taxes, but it seems this land is being tied up federally, the feds are down to about 10% of what they used pay on it and it is huge for how it is hitting budgets.

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#5) On August 14, 2011 at 12:34 AM, wolfman225 (70.76) wrote:

^They can't seem to understand that their lust for control is working contrary to their thirst for revenue.  Every publicly owned acre and every plot of land they take out of private hands for "conservation" shrinks the tax base further.  It's the classic "wanting to have their cake and eat it too".

I wonder what they'll do if they eventually gain control of the majority of open land and discover that by doing so property tax revenues "unexpectedly" fall below estimates.

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#6) On August 15, 2011 at 2:19 PM, rfaramir (29.57) wrote:

wolfman225,

When "tax revenues 'unexpectedly' fall" they'll do what they always do: raise taxes or confiscate more property. Government intervention always produces more government intervention to 'fix' it. "Always" meaning until the system collapses under its own weight or the people rebel.

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#7) On August 15, 2011 at 5:07 PM, ByrneShill (75.61) wrote:

LOL, you guys are funny.

The thruth is that the US govt could double its income taxe overnight and still be the lowest of the G7 countries.

Then what are you gonna do? Overturn the best equipped army in human history with hunting rifles? And even if you manage to overthrow the power in Washington, what would you do with it? Sell reservation lands to build condos (cause we really more of those, overbuilding sure as heck wasn't the root problem of the housing downturn...)? Stop funding medicare/medicaid (hey, let's make SURE that poor people will die in the streets)? Disband the army? Close every public schools?

A gazillionnaire like buffet paid 6 Milions in taxes last year. None of the big banks paid a dime. A lot of people with revenues over half a million paid the AMT (around 2500$). The problem in US isn't too much taxes, it's who's paying it. But since the rich peoples have managed to convince the poor people that it's their own fault if they're poor, then the poor and the middle class will keep on dying in Afghanistan while paying more than their shares of the taxes while the mega-riches won't even be bothered by the IRA.

Not everything a goverment does is perfect, obviously, but the higher standard of living enjoyed by poorer countries with much higher taxes than the US expose the fact that wealth distribution is a more important factor than the amount of wealth itself for the well being of a population. But hey, don't let facts get in the way of a good story.

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