"The Elephant in the Room"

This week Stockton, a California city of 300,000, will most likely declare bankruptcy. After reducing their budget $90 million the past few years through drastic cuts, the city is still facing a budget deficit for the coming year of $26 million. The situation is hopeless...they are simply out of money. This is after they have eliminated one-fourth of the city's police officers, one-third of the fire staff, and 40 percent of all other employees. And they also cut wages as much as 22%, along with cuts in medical benefits for city workers. The economy, especially the housing crash has had a significant effect, but the major problem is pension and medical commitments for retired workers - in Stockton for every policeman on the beat, there are two receiving large pensions for life.

Stockton is a microcosm of what is happening in the state of California; in many other states; in the USA; and in many countries around the world. This week Spain and the island of Cyprus became the fourth and fifth countries to ask for a bailout from the Euro zone and many believe Italy may be next and then France.  If that happens the European Union will collapse because there simply will not be enough money for bailouts and there will be no buyers for these country's bonds.   

Political leaders around the world blame this massive debt on the economy, which is only partially true.  The "elephant in the room" throughout this debt carnage is the massive entitlements promised by politicians - promises to get votes, but promises that cannot be kept. Incredibly, the new socialist Prime Minister of France was elected because he promised MORE entitlements including reducing the retirement age to 60.

It is frustrating that most people, here and around the world pay little attention to the national debts. They don't understand it, and as long as they get their "entitlement" they simply believe government is an endless supply of money.

Stockton, during their bankruptcy, can void some of their pension and other union contracts and possibly work their way through the problem. But with the USA facing a $16 trillion debt which is rising at a rate of a trillion dollars a year, it may not matter which party is in control. The time is coming when the debt may be in control because "USA bankruptcy" will not be an option.

"The Harbinger"

har·bin·ger :  A person or thing that announces or signals the approach of another event.

 All this week we have heard from the liberal media that the Wisconsin recall election was "to close to call".  But it was not. It was a blowout for the governor who took on the union bosses and it looks like he won big. He was polled to be ahead by 3% (within the margin of error) yet he won by close to 10%. Wisconsin spent almost 20 million dollars on this ridiculous recall election and it wasn't even close. Bill "Bubba" Clinton came in at the last minute to try and help pull out a win and Obama even added his support with a "Tweet" supporting the democratic challenger...what a guy.

But the important message here is that the American people are fed up with unions and their ridiculous pensions and benefits breaking the back of state and local budgets.  Keep in mind that after Governor Walker eliminated collective bargaining and gave state employees the choice of union membership, more than 50% dropped out of their union with their "mandated" dues.

This is more than a state election; it is a harbinger of things to come.  I believe Americans both Republican, Independents, and moderate Democrats are fed up with debt and union protected government employees getting preferential pension and benefit treatment compared to private employees; pensions and benefits that are breaking the back of local, state, and federal budgets.

The Obama administration will tell us in the next few days that this was a "local" election and has no national significance. But I bet they are circling the wagons tonight and wondering WTF happened.

"Revenge of the Nerds"

"Revenge of the Nerds" - a silly movie, but in a way it is being played out in real life.

I was an engineering major in college, and anyone who majored in science will tell you it is a lot of work.  In my case, I was also working full time and trying to raise a family, but even full time engineering students will tell you there is little time for partying, especially if trying to get through in four years. Most engineering students were probably "nerds" in high school; bullied by the sports jocks, and shunned by the popular girls.

Today it seems like a lots of kids go to school for the fun, majoring in subjects that are not difficult and having fun (with mom and dad or student loans paying the bill in many cases). But things change when you get into the real world. Unemployment of recent college graduates is at an all time high...except for the "nerds".

There is such a shortage of engineering and science majors graduating, that they are the new "stars" on campus. Not only being offered high salaries, but like sports stars they are being offered signing bonuses, living stipends, meals, and even equity positions in their prospective companies. Some companies are even approaching the brightest students and encouraging them to leave college and join their companies.  "After all, Steve Jobs, Michael dell, and Bill Gates all left college to go into the business world"

Karma...