Chart of the Day: International Manufacturing Compensation Costs Compared

Great data from the BLS comparing hourly compensation for manufacturing. The second chart looks at the benefits component of the hourly cost

Welcome to Amazon Town

The Wall Street Journal’s Stu Woo reports on how Amazon ramps up for the Christmas selling season in a much-read write-up for the paper with a focus on the thoughts of holiday season workers like 75-year old Ray Williams and his wife Sarann. Is this what retirement looks like in the

Italian minister breaks down in tears over austerity budget

Italy’s government has come forward with an aggressive 30 billion euro austerity package to prevent the country’s bankrupcty and pave the way for the fiscal integration that Angela Merkel is pushing as the key to solving the European debt crisis. In the video below, Elsa Fornero, the Italian welfare minister, broke down in explaining the provisions. The package also increases taxes on housing, luxury items and via a 23 percent VAT, a measure Ireland is also taking. Approval is expected before Christmas

Ignore Egan-Jones at Your Peril

If you are still inclined to give Greece the benefit of the doubt, I suggest you study the works of Egan-Jones, a credit rating company located in Haverford, Pennsylvania. Contrary to most other rating companies, Egan-Jones does not receive any compensation from bond issuers (a huge conflict of interest in the world of credit rating agencies) and, unlike most of its competitors who haven’t exactly covered themselves in glory in recent years, Egan-Jones has a formidable track record (see it here).

Sean Egan, co-head of Egan-Jones, predicts the eventual haircut on Greece to be close to 90%. He has done his homework and believes that Greece can support no more than €40 billion of debt through tax revenues. That amounts to only 10-15% of outstanding Greek sovereign debt. Sean put his case forward brilliantly in an interview in Barron’s earlier this year

Berlusconi Cuts Deal: Et Tu Brute

Controversial Italian Prime Minister Berlusconi appears to have finally capitulated to international and domestic pressure. Press reports indicate that he has agreed to step down by January. This in turn will bring forward elections, probably to March 2012, a year earlier than Berlusconi had previously insisted

Federal Notice to ALL Working Citizens

A friend sent this to me. It’s a note making the rounds by e-mail. If I get a source, I will link to it

On State and Local Governments

The bottom line is this: Forget about Meredith Whitney. State and municipal governments are carrying a load in operating and pension costs that cannot be sustained through downturns in a secular bear market as the US population ages. These downturns will not be ordinary recessions. They will increase automatic stabiliser spending, decrease tax revenue and crystallise shortfalls in pension programs in a way that is existential for these governments. And that means a spate of defaults will occur

Franklin Roosevelt on Social Security

Below are two messages from Franklin Roosevelt, proposing the Social Security program and signing it into law. The main points to note in the text deal with the purpose and funding of Social Security and unemployment insurance i.e. the why and the how

Pension and Ponzi Schemes

In the US, there is a heated debate about America’s government pension scheme Social Security. The Republican frontrunner for President Rick Perry has called it a ‘Ponzi scheme’, for which he was derided by the previous Republican frontrunner Mitt Romney. Here’s the question: is Rick Perry right. Is social security a Ponzi scheme?

Here’s my take

Jobs and deficit crisis will lead to double dip and more downgrades

Former Fed nominee and Nobel Laureate Peter Diamond spoke to Bloomberg News about how he sees the economic difficulties the United States faces. His view is that America faces a jobs crisis in the here and now and that deficit reduction is a longer-term problem

Central Falls Leads the Municipal Field

Central Falls, Rhode Island faces a plight that should be studied for its application elsewhere. It is nearly out of money. This is common news today, whether in Greece or California. The various parties are assumed to possess a means to carry on. This is assumed because it is generally so. Despite the band aids, the trend towards insolvency continues. Central Falls has reached a dead end

How I think about the debt ceiling issue

I do not take the position that other writers on this blog do that Social Security and Medicare must be protected at all costs. In fact, as you can see above, I outlined very clearly two years ago what is happening politically right now. Let me give a more nuanced approach to this subject though