unemployment

Illinois State Lawmakers To ‘Fix’ $100 Billion Public Pension Crisis Tuesday?

Tuesday looks to be an important day for the future of Illinois.

State lawmakers may vote on legislation to “fix” a well-publicized $100 billion public pension crisis. Rick Pearson and Bob Secter wrote on the Chicago Tribune website yesterday:

Illinois lawmakers return to Springfield on Tuesday to consider an agreement struck by legislative leaders that aims to fix the state’s massive government worker pension as Senate Democrats have become the focal point for intensive lobbying efforts…

The pension vote is shaping up to be one of the most important votes of lawmakers’ careers, with senators and representatives forced to decide which is better for their political self-interest: Backing up their powerful leaders or siding with the re-election might of public employee unions.

At stake is Illinois’ $100 billion pension shortfall that affects teachers outside Chicago, public university employees and state government workers. The worst-in-the-nation deficit is gobbling up tax money that otherwise could go to education and other programs, and has resulted in Illinois holding the lowest credit rating among the states. Illinois’ pension problem also is being blamed in part for the state’s struggling economy and high unemployment.

The agreement leaders reached the day before Thanksgiving aims at saving the state $160 billon over 30 years to get the pension systems fully funded, largely by limiting annual cost-of-living increases and raising the retirement age while also requiring the state to put its share of money into the system.

Not surprisingly, beneficiaries of the current setup aren’t too happy with these rapidly-unfolding developments. Francine Knowles reported on the Chicago Sun-Times website yesterday:

Details of the pension deal reached by four House and Senate leaders and headed for a vote this week have supporters and critics in full-court press mode.

Union leaders, who are blasting the agreement, say their members will bombard lawmakers Monday, urging them to kill the proposed bill that could ultimately slash $160 billion from the state’s future pension liabilities and improve Illinois’ damaged creditworthiness.

Opponents of the yet-to-be-seen legislation will argue that it’s unconstitutional, among other things. Pearson and Secter added:

Any final package approved by the legislature and governor faces an almost certain legal challenge. Critics will go into court armed with a provision of the 1970 Illinois Constitution that defines pension benefits as “an enforceable contractual relationship” that “shall not be diminished or impaired.”

I’m not sure what to make of all this yet, except that the present course the State is on concerning public sector pensions is unsustainable (costing taxpayers $5 million a day as I noted back on October 21) and that any legislation passed will probably end up being legally contested.

More Wednesday…

Sources:

Pearson, Rick and Secter, Bob. “Senate Democrats under the gun on proposed pension fix.” Chicago Tribune. 30 Nov. 2013. (http://www.chicagotribune.com/news/local/ct-illinois-pension-reform-met-1201-20131201,0,7850446.story). 1 Dec. 2013.

Knowles, Francine. “Pension deal faces pushback from unions; backers pursue votes.” Chicago Sun-Times. 30 Nov. 2013. (http://www.suntimes.com/24073242-761/pension-deal-faces-pushback-from-unions-backers-pursue-votes.html). 1 Dec. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Illinois Public Sector ‘Double-Dipping’ Targeted

“Double-dipping.” When public sector public employees draw a public paycheck while at the same time drawing a public pension.

Back when I as a civil servant, not only did I see this taking place, but suspected the arrangement would come under fire one of these days.

As Main Street’s finances eroded significantly after the economic crisis reared its ugly head five years ago, more grumbling was heard over the practice. I blogged back on April 4, 2011:

An employment arrangement I witnessed during my days as a civil servant is coming under increased fire these days. Bloomberg’s David Mildenberg wrote on March 29:

With U.S. unemployment averaging 8.9 percent, so-called double-dipping by tens of thousands of government workers nationwide is drawing increasing scrutiny.

Lawmakers from coast to coast are taking steps to curb the practice as states face combined deficits projected at $112 billion and unfunded pension liabilities of as much as $3 trillion.

Arkansas banned double-dipping by state workers last month, while bills to curb it are pending before lawmakers in Olympia, Washington, and Trenton, New Jersey.

And then there’s Illinois, where double-dipping is still permitted in a state saddled with a nearly $100 billion unfunded public pension liability.

Perhaps for not much longer though.

Enter Illinois State Representative Jack D. Franks (D-Woodstock). Representative Franks has introduced Illinois House Bill 3760, the “Retirement Means Retirement Act,” on November 14. Natasha Korecki reported on the Chicago Sun-Times website today:

[Representative Franks] says the legislation would address anyone — from state lawmakers to school superintendents to those in law enforcement who retire from one public job because they’ve maxed out on their pension, then take another public job as they begin to draw pension benefits.

Franks pointed to school superintendents and police chiefs who retire on a Friday only to return the following Monday with a new title, new salary — and drawing a pension— all while staying in the same office.

“I see a lot of people who retire and just end up in another government job shortly thereafter,” Franks told the Sun-Times. “That’s not what this system was designed for, but it’s a major loophole that they’re able to exploit… We’re going after the abusers — and we know who we’re talking about. Some of these guys make more than the president in retirement.”

Supporters of “double-dipping” argue that someone has to be hired to fill the job opening, so it might as well be the best qualified candidate applying for the position- which in many cases is the new retiree.

Reading over the proposed legislation, “double-dipping” looks to be prohibited only going forward. Illinois public sector retirees who are already participating in such an arrangement appear to be safe.

For now, at least.

You can find out more about Illinois House Bill 3670 on the Illinois General Assembly website here.

Source:

Korecki, Natasha. “Public pension and salary ‘double-dippers’ targeted in new bill.” Chicago Sun-Times. 19 Nov. 2013. (http://www.suntimes.com/23845706-761/public-pension-and-salary-double-dippers-targeted-in-new-bill.html). 19 Nov. 2013.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Farewell, Illinois Businesses And Jobs

One topic I particularly “harp on” in Survival And Prosperity is the continued erosion of business-friendly conditions in the state of Illinois.

Whether it be a misguided anti-Constitution, anti-Bill of Rights crusade that drives off gun manufacturers and their workers or a 46 percent corporate income tax hike that was implemented at the beginning of 2011, parochial-minded politicians in control of the state are scaring away prospective and existing businesses and jobs.

Thankfully, it’s not just me that recognizes the nonsense that’s going on. From my Sunday paper this morning:

Scott Stantis
Chicago Tribune
Oct 19, 2013
ANY CHARACTER HERE

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Jim Rogers: ‘Possible That Gold Will Go To Between 900 and 1,000’

On September 18, investor, author, and financial commentator Jim Rogers chatted with host Lauren Lyster of Yahoo! Finance’s The Daily Ticker. Gold was one of the topics they discussed. From their exchange:

LYSTER: What about gold? Because you were dead on. You said gold could go to 1,200, gold could go to 1,100, it’s a 12-year bull market, that’s not normal. It did exactly that. It went to about 1,200. Now it’s above 13. Where do you think it goes though? Because you also said that it really needed to shake out all the faithful diehards. That it can go as low as 900- a 50 percent correction wouldn’t bee abnormal. So do you think gold still has a lot lower to go?
ROGERS: Well, I’m delighted you remember. My goodness. Wow, I’m very impressed. Yes, I have not bought gold- yet. I mean, I bought a little bit when it was at 1,200, in case. But, in my view, it’s likely, it’s probable, it’s even, well let’s say, possible that gold will go to between 900 and 1,000. If it does, if it does, I hope I’m smart enough to buy a lot more.

Lyster went on to say:

A lot of the bearish predictions that had people buying gold haven’t played out and don’t seem to be on the horizon anymore.

Regrettably, it sounds like Lyster has been partaking in the Kool-Aid being doled out by the politicians and central bankers.

Based on a waffling “recovery” marked by a federal funds rate still near zero, years of trillion-dollar federal budget deficits, a $16.7 trillion federal borrowing limit being reached, significant part-time as opposed to full-time national job creation, an unemployment rate falling because Americans are giving up looking for work, and the Fed’s refusal to take away the punch bowl just yet and sustain the massive money printing going on, one could argue that gold’s fundamentals not only remain intact, but keep getting stronger.

“Bearish predictions… haven’t played out and don’t seem to be on the horizon anymore.” Hogwash. The threats to our economy and larger financial system that made themselves known during the “Panic of ’08 still linger on 5 years later and have never been resolved- only papered-over for the time being.


“Gold Rallies on Fed’s Taper Delay: Jim Rogers Forecasts a Drop to $900 Ahead”
Yahoo! Finance Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Chicago-Area Unemployment Rate Rises To 9.7 Percent In July

There was good and bad news yesterday for the Chicago metro area concerning employment. First, the good. From a Thursday news release on the Illinois Department of Employment Security website concerning jobs and payrolls in July 2013:

Jobs increased in four metros and declined in eight. Largest increases: Champaign-Urbana (+2.4 percent, +2,400), Chicago-Joliet-Naperville (+1.9 percent, +69,800), and Kankakee-Bradley (+0.5 percent, +200). Industry sectors increasing in the most metros: Leisure and Hospitality (eight of 12) and Educational and Health Services (seven of 12).

69,000 more jobs in July for the Chicago area compared to a year ago. Good to hear.

And the bad? Also from that release:

July local unemployment rates fell in seven of 12 metro areas, according to preliminary data released today by the Illinois Department of Employment Security (IDES). Not seasonally adjusted data compares July 2013 to July 2012. Largest decreases: Metro East ( 1.0 point to 8.6 percent), Lake County (-0.4 to 8.4 percent) and Rockford ( 0.3 to 11.4 percent). Largest increases: Decatur (+1.9 points to 13.2 percent), Peoria (+1.4 to 9.4 percent), Danville (+1.2 to 11.8 percent) and Chicago-Joliet-Naperville (+0.3 to 9.7 percent).

The Chicagoland unemployment rate increased .3 percent last month to 9.7 percent when compared to July 2012. Not so good.

And even though local unemployment rates fell in a number of metro areas across the “Land of Lincoln” last month, when Illinois was matched up against the other 50 states, it had the second highest unemployment rate in the country- 9.2 percent- after Nevada (9.5 percent).

According to the U.S. Department of Labor, Bureau of Labor Statistics website, 8 states had an unemployment rate under 5 percent last month – Iowa (4.8 percent), Utah, Vermont, Wyoming (all 4.6 percent), Hawaii (4.5 percent), Nebraska (4.2 percent), South Dakota (3.9 percent), and North Dakota (3.0 percent)

Neighbors Wisconsin and Indiana came in at numbers 20 (6.8 percent) and 39 (8.4 percent), respectively.

You can read the entire IDES new release on their website here.

You can view the July 2012 unemployment rates for all 50 states on the BLS website here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Friday, August 23rd, 2013 Employment No Comments

Chicago Mayor Rahm Emanuel ‘Has The Toughest Job In America’

If you haven’t noticed, I find myself blogging about a lot of depressing crap. That’s not my intention- it just goes with the territory of talking about the subject material I do in this day and age. People who know me know that I look forward to when I can blog about brighter days. They’re out there- but there’s an unavoidable storm to be had first. Especially in the city of my birth and former residence- Chicago. And when I talk of the woes the Midwestern metropolis faces, I’m not making this stuff up. As I blogged back on July 24:

There should be no doubt that I predict tough times ahead for the city. But it’s not just me who harbors such suspicion. Even the Chicago FOX affiliate, Channel 32 News, is running a series called “Chicago at a Tipping Point” these days.

When putting together that post, I told myself I’d have to explore this “Tipping Point” series. The FOX 32 website has more information about it, and this is what it says on the sidebar of its designated web page:

The Problems

Chicago Mayor Rahm Emanuel has the toughest job in America—rescuing one of the country’s most attractive and largest cities from disaster. Among its problems:

Money: Potentially catastrophic tax increases loom due to hundreds of billions of dollars in unfunded public employee pension liabilities. Public employee union leaders have launched increasingly desperate counter-attacks on once-friendly Democratic Party politicians. Those politicians are moving to reduce public employee retirement benefits and other costs because taxpayers cannot afford them.

Schools: One consequence: facing an estimated $1 billion budget shortfall, the Board of Education just voted to close 49 under-performing schools. The vast majority lie within the gang/drug zone that families and business are fleeing as fast as they can. The president of the Chicago Teachers Union routinely denounces the school closings by accusing Mayor Emanuel of being a “racist” and a “murderer.” It might be laughable were it not so disgusting and potentially destabilizing.

Crime: Police claim 80% of the Chicago’s murders are driven by drug-dealing street gangs with billions of dollars in annual revenue and an estimated 100,000 members or sympathizers. Until that contagion is cleansed, those neighborhoods will see little if any private sector investment or job growth and continued residential flight. The street gang population plays into the concerns over crime as well as the closing of schools in gang infested neighborhoods. To many, it appears Chicago Police do not have control over these neighborhoods.

Jobs: Metro Chicago’s dismal 9.5% unemployment rate ranks 315th in the US, just barely ahead of #327 metro Detroit. Factory jobs that remain are increasingly automated and intellect-intensive. Ford Motor Co’s South Side Assembly plant at 126th & Torrence prefers to hire workers with at least two years of college. High school dropouts can’t even find work in a factory any more. It is Chicago’s shame that so few in these dying neighborhoods have sufficient skills to enable them to move Downtown.

Dismal stuff. By the way, on that last point about jobs, the Chicago area unemployment rate has climbed up to 10.3 percent according to the Illinois Department of Employment Security.

Like I said, I don’t make this up.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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4 Out Of 5 U.S. Adults Suffer ‘Economic Insecurity’ During Their Lives

Quite a few financial news websites I dropped by this weekend were buzzing about a just-released Associated Press article that said 4 out of 5 American adults wrestle with “economic insecurity” during their lives. From the CBS News website yesterday:

Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.

Survey data exclusive to The Associated Press points to an increasingly globalized U.S. economy, the widening gap between rich and poor, and the loss of good-paying manufacturing jobs as reasons for the trend.

According to the AP piece, economic insecurity is defined as “a year or more of periodic joblessness, reliance on government aid such as food stamps or income below 150 percent of the poverty line.” The risk is currently at 79 percent, but the current widening income inequality gap suggests that by 2030, close to 85 percent of working-age adults will experience such hardship.

In addition, the AP article talked about poverty America today. According to the Associated Press:

Nationwide, the count of America’s poor remains stuck at a record number: 46.2 million, or 15 percent of the population, due in part to lingering high unemployment following the recession.

Seeing as that this article comes on the heels of Barack Obama’s “A Better Bargain for the Middle Class” speech on middle-class America’s woes last week, instead of it being an indictment of the President’s economic policies as some have claimed, perhaps its real purpose is to provide more ammunition to the White House for a renewed push on economic initiatives they’ve been championing for a while, such as wealth redistribution.

An interesting article, which you can read here on the CBS News website.


“When you spread the wealth around, it’s good for everybody” (1:47)
“‘Joe the Plumber’” Becomes Focus of Debate”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Chicago-Area Unemployment Rate Rises To 10.3%

The Illinois Department of Employment Security released employment data for the “Land of Lincoln” yesterday.

Despite 60,700 jobs new being added in June 2013 from a year ago, the unemployment rate in the Chicago-Joliet-Naperville Metropolitan Division also increased .7 percent to 10.3 percent from June 2012.

From the IDES news release:

June local unemployment rates fell in eight of 12 metro areas, according to preliminary data released today by the Illinois Department of Employment Security (IDES). Not seasonally adjusted data compares June 2013 to June 2012. Largest decreases: Metro East ( 0.8 point to 8.2 percent), Lake County (-0.5 to 8.2 percent), Rockford ( 0.5 to 11 percent), and Champaign-Urbana (-0.4 to 8.7 percent). Largest increases: Decatur (+1.6 points to 12.5 percent), Danville (+1.1 to 11.1 percent), Peoria (+0.9 to 8.8 percent), and Chicago-Joliet-Naperville Metropolitan Division (+0.7 to 10.3 percent).

Jobs increased in five metros and declined in seven. Largest increases: Champaign-Urbana (+1.8 percent, +1,800), Chicago-Joliet-Naperville (+1.6 percent, +60,700), and Rockford (+0.7 percent, +1,100). Industry sectors increasing in the most metros: Educational and Health Services (nine of 12), Financial Activities (eight of 12), and Leisure and Hospitality (seven of 12).

I know I’ve mentioned this before, but seeing as I believe the “real” financial crash I started warning about 6 years ago is still on the horizon, Survival And Prosperity readers in Chicago and elsewhere across the country might want to think about taking advantage of an improved job market in their area if it exists- before it’s too late.

You can read the entire IDES news release on their website here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Friday, July 26th, 2013 Employment No Comments

Illinois Had 57,800 More Unemployed Individuals Than Jobs Created Last Quarter

The latest employment data is out for the state of Illinois. From an Illinois Department of Employment Security news release yesterday:

The March unemployment rate was 9.5 percent, unchanged from February, according to preliminary data released today by the U.S. Bureau of Labor Statistics (BLS) and the Illinois Department of Employment Security (IDES). As expected, Illinois recorded -17,800 fewer jobs compared to February even as it added +36,600 over March 2012. The data is seasonally adjusted.

“Illinois employers were expected to report fewer positions in March. Economic uncertainty nationally and abroad dampened our country’s job growth. When that happens, Illinois’ share tends to be a negative number,” IDES Director Jay Rowell said. “Monthly snapshots capture a moment in time. When those moments are evaluated together, we see progress away from a global recession and through a stubborn economic growth cycle marked by volatile swings in monthly data here and across our country.”

The three-month moving average of job growth, a data point that smoothes monthly volatility and unpredictable or one time events, shows +1,100 jobs added each month so far this year.

When I crunch IDES employment numbers for all of 2013, a less rosy picture emerges. Using data from their news releases:

January 2013
Employers added 7,100 jobs
Number of unemployed individuals increased 22,900 (+4.0 percent) to 594,800

February 2013
Employers added 12,400 jobs
Number of unemployed individuals increased 34,900 (+5.9 percent) to 629,400

March 2013
Employers shed 17,800 jobs
Number of unemployed individuals increased 1,700 (+0.3 percent) to 629,200

(Editor’s note: Is it just me or do some of the above numbers not jive? Oh well, that’s IDES’s deal. I’m just crunching the numbers they provided.)

In the first quarter of 2013, Illinois employers added a total of 1,700 jobs.

At the same time, the number of unemployed individuals increased 59,500.

Which, if my math is correct, leaves the state with 57,800 more unemployed individuals than there were jobs created in the first quarter of this year.

If you’re looking for a job/looking to change jobs here in the “Land of Lincoln,” you might want to ramp up your efforts if you aren’t doing so already.

The IDES news releases I used are located here, here, and here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Friday, April 19th, 2013 Employment No Comments

Illinois Unemployment Rate Climbs To 9.5 Percent In February

According to preliminary data released Thursday by the U.S. Bureau of Labor Statistics and the Illinois Department of Employment Security (IDES), the February unemployment rate in the state of Illinois climbed to 9.5 percent from the previous month. A news release on the IDES website stated:

In February 2013, the number of unemployed individuals increased +34,900 (+5.9 percent) to 629,400.

In January, the unemployment rate in the “Land of Lincoln” was 9.0 percent. That number stood at 8.9 percent back in February 2012.

Nationally, the “official” unemployment rate was 7.7 percent last month.

You can read the entire IDES news release on their website here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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Saturday, March 23rd, 2013 Employment 1 Comment

Illinois Governor’s Spokesperson: ‘We’re Facing The Worst Recession Since The Great Depression’

Reading the Chicago Tribune website last night I saw that Governor Pat Quinn will be proposing a $30 billion-plus budget this week for the State of Illinois.

The Tribune’s Ray Long provided some of the latest figures showing just how precarious the state’s financial situation really is these days:

• $96.8 billion in unfunded debt to five state pension systems
• $9.7 billion in unpaid bills
• 8.7 percent unemployment in December, almost a percentage point higher than the national unemployment rate
• $6.1 billion annual pension payment in the next budget year- $900 million more than in the current one

One word comes to mind. Fugly.

Then there’s this from Long’s piece:

“When you’re the chief executive, you face challenges from the outside that are not of your making,” said Quinn spokeswoman Brooke Anderson. “The governor’s job is to control the things he can and manage the elements that are outside his control. But I’d say that we’ve been in a perfect storm since the moment Gov. Quinn got here. We’re facing the worst recession since the Great Depression, decades of financial mismanagement that has been culminating in the pension crisis and unpaid bills. And you have to deal with that.”

“We’re facing the worst recession since the Great Depression”

What about that economic recovery Governor Quinn said was taking place here in the “Land of Lincoln?” From a February 6 article on the Tribune website:

“Do we want, in the years to come, a prosperous Illinois where working people continue to have good jobs, where businesses thrive, and where all our children have a world-class education?” Quinn told the House and Senate. “Or do we want to stop the progress and watch our economic recovery stall?

(Editor’s note: Italics added for emphasis)

Let me guess. That bit about the recession is only the opinion of Quinn’s “mouthpiece.” And she’s trying to shield her boss from some blame.

Fair enough. But the thing is, Ms. Anderson- either knowingly or unknowingly- is on to something. We may not technically be in a recession these days, but for many Illinois residents it probably doesn’t feel like much of a recovery either.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Long, Ray. “Gov. Pat Quinn to unveil $30 billion-plus Illinois budget.” Chicago Tribune. 3 Mar. 2013. (http://www.chicagotribune.com/news/local/ct-met-quinn-budget-20130304,0,7431041,full.story). 3 Mar. 2013.

Garcia, Monique, Long, Ray, and Guerrero, Rafael. “Quinn wants minimum wage hike, assault weapons ban.” Chicago Tribune. 6 Feb. 2013. (http://articles.chicagotribune.com/2013-02-06/news/chi-quinn-to-call-for-minimum-wage-increase-to-10-an-hour-20130206_1_assault-weapons-minimum-wage-pat-quinn-today). 3 Mar. 2013.

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Illinois Governor Pat Quinn Proposes Highest Minimum Wage In The U.S.

Fall 1986. I was hanging out with my older sister in her bedroom when I came across a binder for some basic economics/personal finance class that she was enrolled in at the local public high school. As I leafed through it, I thought, “This is some pretty cool stuff- I hope I get the chance to take a class like this when I’m in high school next year.” I didn’t. Not in my freshmen year or any other year. I ended up at an all-boys Roman Catholic college preparatory high school, where such material just wasn’t taught.

Latin, yes. Economics/personal finance, no.

Ita sit (so be it).

In fact, Illinois Governor Pat Quinn also attended the same school. Both of us might have been able to benefit greatly from such instruction early on.

Perhaps one more than the other, based on a new minimum wage hike the Chicago Democrat proposed yesterday in his “State of the State” address. From Paul Merrion on the Crain’s Chicago Business website yesterday:

Gov. Pat Quinn’s call for a $10 minimum wage has created yet another firestorm for the state’s business community.

While economists question whether higher minimum wages hurt jobs and make some states less competitive than others, Illinois business leaders view the governor’s proposal as one more blow to the state’s battered business climate.

Illinois already has the fourth-highest minimum wage at $8.25 an hour, and raising it more than 21 percent over four years would put it far above Indiana or other neighboring states eager to attract Illinois companies to relocate.

According to Merrion, a minimum wage of $10 would be the highest in the country.

Supporters of Quinn’s minimum wage hike are calling it “pro-worker.”

Whether or not “higher minimum wages hurt jobs” directly, a higher wage, in conjunction with the state’s huge fiscal mess and recent (January 2011) corporate income tax rate hike of 46 percent, might be the last straw for Illinois companies contemplating leaving the state and kill the formation of new businesses here. By itself, the effects of the hike may not be significant. But taking everything else into consideration, the growing belief that Illinois is “anti-business” will probably be magnified by its implementation, and jobs could be impacted as a result.

Pro-worker? What good’s a minimum wage hike if jobs leave the state and new ones aren’t created?

Economics 101, my man. Economics 101.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Source:

Merrion, Paul. “Quinn’s call for $10 minimum wage riles business.” Crain’s Chicago Business. 6 Feb 2013. (http://www.chicagobusiness.com/article/20130206/NEWS02/130209864/quinns-call-for-10-minimum-wage-riles-business). 7 Feb. 2013.

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Peter Schiff: Stock Market Rally ‘An Illusion’

Marc Faber. Jim Rogers. Peter Schiff.

Three “crash prophets” who correctly predicted the 2008 financial crisis in the United States.

I’ve already blogged today about what Faber and Rogers think of rising U.S. stock prices- and what they suspect is behind it.

How about Schiff, the CEO/Chief Global Strategist of Euro Pacific Capital and CEO of Euro Pacific Precious Metals, LLC?

From his February 1 entry on the The Schiff Report YouTube video blog:

Well the Dow Jones closed above 14,000 today. That’s something it hasn’t done since November 2007. Of course, the media is going to make a big deal about Dow 14,000, the economy is coming back, the markets are coming back.

But, of course, all of this is an illusion created by inflation.

When you debase your currency- when you have inflated dollars that you use to measure stock prices- of course stock prices are going to go up. The price of everything is going up. The government denies there’s inflation. But prices prove it. As if we even need that. The money supply going up is the sheer definition of inflation. And we’re creating a lot of money. And prices are responding by rising, and stock prices are no exception.

But remember, the last time the Dow Jones was at 14,000 back in ’07, gold was about $700 an ounce. Today, gold’s about $1,600 an ounce. So the Dow would have to double from here, and it still wouldn’t be where it was in terms of real money five-and-a-half years ago.

So this rally is an illusion.

But the people on Wall Street don’t even want to acknowledge that.

And going forward? Schiff pointed out:

We’re already at 0 percent interest rates, we’re already at 8 percent unemployment- 14 percent if you use the U-6 number. And that’s as good as it gets during a recovery. And now we’re already trending down.

And I think if the Federal Reserve wants to slow down the rise in interest rates- which we know it does- it’s going to have to accelerate the QE. I don’t think $85 billion of money printing is enough to keep interest rates from rising. And so they’re going to have to print even more. That means the dollar is going lower. Commodity prices going higher. Looks what’s happened to oil prices- they’re almost at $98 a barrel. Look at Brent- Brent Crude is really up. It’s almost at a $20 premium now over North Sea. Gold prices have been stable, but I think gold’s about to take off. I think on Wall Street they’re rationalizing. They’re selling gold and selling gold stocks because they claim that the crisis is over, there’s nothing to worry about anymore, Europe isn’t falling apart, the U.S. economy is getting better, so there’s no reason to own gold. And so you sell gold and you sell your gold stocks. But they don’t understand. People weren’t buying gold because of the European crisis or because of even the U.S. financial crisis. They were buying gold long before those crises began. Look at how gold was doing from 2000 to 2007, 2008. It did better before the crisis than it did during the crisis because the real crisis that worries the gold buyer is a currency crisis. People aren’t buying gold because they’re worried about political uncertainty. They’re buying gold because the politicians are printing too much money. Well, the cheap money policies that were in place prior to the 2008 financial crisis are still here, only, it’s worse. It’s more excessive. The monetary policy is easier. Rates are lower. Central banks are printing money even faster. So, instead of there being no more reasons to buy gold, the reasons have never been better. There have never been more reasons to buy gold, it’s just that Wall Street doesn’t understand this yet. But they will.


“Dow 14,000, GDP, Jobs, Fed, inflation, treasuries, & gold.”
YouTube Video

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Labor Minister: France ‘Is A Totally Bankrupt State’

Speaking of France, how is the Socialist-led European state faring these days?

Not so great, it seems.

In fact, a pretty reliable source claims they’re bankrupt.

Graham Ruddick reported on The Telegraph (UK) website Monday:

Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage.

“There is a state but it is a totally bankrupt state,” Mr Sapin said. “That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.”

The comments came as President Hollande attempts to improve the image of the French economy after pledging to reduce the country’s deficit by cutting spending by €60bn (£51.5bn) over the next five years and increasing taxes by €20bn.

(Editor’s note: Italics added for emphasis)

As I mentioned earlier tonight, some claim President Obama desires French-style Socialism for the United States.

If France’s economy truly is in shambles, and the U.S. President really wants to emulate them, well- here’s a glimpse of what Americans could expect. From an Investor’s Business Daily editorial yesterday:

Fresh after May 2012’s election, President Francois Hollande wasted no time raising government spending, hiking tax rates to 75% on those above $1.3 million in income, hiring 60,000 bureaucrats, cutting the retirement age for public pensions to 60 and undoing fiscal reforms by his predecessor, Nicolas Sarkozy. During his campaign, Hollande declared himself “the enemy of finance.” France today proves it…

Public debt has soared from 68% of GDP in 2008 to 90% in 2012, joblessness has hit 11%, and GDP growth of its $2.8 trillion economy is projected in 2013 at zero.

Tax hikes have driven the richest taxpayers from the country, making the $43 billion budget hole unlikely to be plugged by Hollande’s $26 billion tax hike. Meanwhile, a squeeze on business creates rising numbers of unemployed, who in turn demand state services.

Time will tell how this will all work out for the Socialists in France. But if history rhymes once again, keep in mind something former British Prime Minister Margaret Thatcher said in a 1976 interview:

Socialist governments traditionally do make a financial mess. They always run out of other people’s money. It’s quite a characteristic of them. They then start to nationalise everything, and people just do not like more and more nationalisation, and they’re now trying to control everything by other means. They’re progressively reducing the choice available to ordinary people.

Any of this sound familiar?

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Ruddick, Graham. “France ‘totally bankrupt’, says labour minister Michel Sapin.” The Telegraph. 28 Jan. 2013. (http://www.telegraph.co.uk/finance/financialcrisis/9832845/France-totally-bankrupt-says-labour-minister-Michel-Sapin.html). 30 Jan. 2013.

“Like The Bourbons, France’s Socialists Have Learned Nothing, Forgotten Nothing.” Investor’s Business Daily. 29 Jan. 2013. (http://news.investors.com/ibd-editorials/012913-642388-france-socialist-model-is-same-old-recipe-for-bankruptcy.htm). 30 Jan. 2013.

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Seen On The Streets, Part 6

Panhandlers.

Being from Chicago, I should be used to them. In fact, a couple of years ago, I was getting off the Stevenson Expressway on the exit ramp to Cicero Avenue on the South Side when my car was swarmed by a number of them.

Although these weren’t your typical panhandlers. It was the Squeegee Army.

The incident went down a lot like this (ends at 55:04).

And yes, I did drive away singing “I can dig it, he can dig it, she can dig it, we can dig it, they can dig it, you can dig it, oh let’s dig it, can you dig it baby” like Isaac Hayes.

Anyway, the panhandlers I’m seeing these days aren’t the ones I’ve typically encountered over the years.

They’re young (late teens/twenties). They don’t appear at first glance to have any physical handicap that would prevent them from working. And they’re panhandling at intersections where they didn’t used to before.

First, it was the young girl at Cumberland and Higgins on the Northwest Side by Park Ridge. Then, it was the dude at the corner of Northwest Highway and Devon in the Edison Park neighborhood on the Northwest Side. I only saw him once, and I kind of suspect a Chicago police officer (who probably resides in the area with his family) gave him a mouthful, kindly encouraging him to move his ass along.

And just this Tuesday, at the intersection of North and Harlem on the West Side by Elmwood Park, Oak Park, and River Forest, some young man was walking through traffic begging for money. He was also wearing desert camo pants. Maybe he was trying to get the message across to motorists that he was a vet?

Anyway, the numbers of panhandlers seem to be growing these days around the Chicagoland area. Not exactly the picture of a strengthening, sustainable economic recovery the American public is being sold on.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

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