Mish's Global Economic Trend Analysis

State Takeover of Pennsylvania State Capital Harrisburg Likely Coming Up as City Council Rejects Mayor's Fiscal-Recovery Plan
Obama Spent $535 Million on Solyndra Solar Energy Firm in 2010; Firm Went Bankrupt Today; Pricetag $486,363 Per Job Saved for 18 Months
Illinois Loses Most Jobs in Nation Following Tax Hikes
Three in 10 Workers Worry Over Layoffs, Double the Level in August 2008

State Takeover of Pennsylvania State Capital Harrisburg Likely Coming Up as City Council Rejects Mayor's Fiscal-Recovery Plan

Posted: 31 Aug 2011 07:18 PM PDT

State Takeover of Pennsylvania State Capital Harrisburg Likely Coming Up as City Council Rejects Mayor's Fiscal-Recovery Plan

Harrisburg, Pennsylvania is bankrupt and has been for years. Instead of recognizing that simple fact, the mayor and most of the city council have been looking for miracles.

There are no miracles and there will be no miracles. Fortunately, and at long-last, the city council rejected Mayor Linda Thompson's scheme of selling city assets to deal with debt issues.

Harrisburg now faces a state takeover.

Please consider Harrisburg City Council Rejects Fiscal Plan to Rescue Pennsylvania Capital

Harrisburg's City Council rejected a fiscal-recovery plan proposed by Mayor Linda Thompson, putting state aid at risk and leaving Pennsylvania's capital in financial limbo.

By a vote of 4-3, the council turned down the mayor's blueprint, which called for asset sales. The proposal wouldn't provide a guaranteed fix of the city's debt problems and, by selling off assets, raised the possibility of higher taxes later, said Councilman Brad Koplinski.

"It is a plan, yes, but it's an unreliable one," Koplinski said. "It's making sure that Wall Street gets paid and Main Street gets the shaft."

The decision means the city has no procedure to deal with more than $300 million of debt, or five times its general-fund budget. Harrisburg helped finance improvements to a municipal incinerator that hasn't generated enough revenue to pay its costs. The city of about 49,500, where a third live below the poverty level, may skip a $3.3 million payment next month.

The move may hasten a state takeover, Councilwoman Patty Kim said last week.

Inquiring minds note that the Patriot-News Editorial board says Harrisburg should approve flawed Act 47 plan because a state takeover will be even worse

The real question for Harrisburg City Council tonight when it votes to accept or reject Mayor Linda Thompson's fiscal recovery plan is whether local control or a state takeover is better for city residents.

A yes vote on the plan means local officials will lead with help from the state and county. A no vote means that what happens in Harrisburg will be left to either a state-appointed panel or the courts.

There is certainly plenty to dislike in Mayor Linda Thompson's plan. It is horrendously written with many grammatical errors. The mayor also added new initiatives that are not fully vetted or clearly funded, such as the blight program.

Perhaps the biggest concern to most taxpayers is the property tax increase. It is likely to be higher than $50 a year for the average homeowner. That is a best-case scenario if assets are sold, union contracts renegotiated and hundreds of little changes made.

But despite this plan's flaws, what is the alternative?

The city's creditors are pursuing lawsuits that would force Harrisburg to pay immediately.

Bankruptcy is off the table. The state is forbidding it for at least a year, and it's almost certain the Legislature and governor would extend that ban.

The editorial board lacks common sense. Regardless of what anyone says, Harrisburg is bankrupt.

The citizens of Harrisburg certainly do not need higher taxes, and the city needs to get rid of a mayor who cannot type English sentences properly.

There simply is no alternative to bankruptcy and now the courts can and will deal with bondholders who refused to take proper haircuts and also deal with untenable public union contracts as well.

Moreover, one nice bankruptcy will lead to another, and another, exactly the relief cities need. Public unions will get what they have coming to them: slashed benefits and contracts tossed out by the courts.

What can possibly be better than that? Certainly not higher taxes.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Obama Spent $535 Million on Solyndra Solar Energy Firm in 2010; Firm Went Bankrupt Today; Pricetag $486,363 Per Job Saved for 18 Months

Posted: 31 Aug 2011 01:12 PM PDT

The federal government should get out of the business of picking technology and "green" winners. Government backing of alternate energy companies has been nothing short of disastrous.

A solar energy firm touted by the administration in 2010 as a as a "gleaming example of green technology" today announced bankruptcy. 1,100+ employees will be fired.

Please consider Solyndra Filing a Disaster for Obama

President Obama faces political catastrophe in the form of Solyndra -- a San Francisco Bay area solar company that he touted as a gleaming example of green technology. It has announced it will declare Chapter 11 bankruptcy. More than 1,100 people will lose their jobs.

During a visit to the Fremont facility in spring of 2010, the President said the factory "is just a testament to American ingenuity and dynamism and the fact that we continue to have the best universities in the world, the best technology in the world, and most importantly the best workers in the world. "

It's not his statements the administration will regret; it's the loan guarantees. The President was celebrating $535 million in federal promises from the Department of Energy to the solar startup. The administration didn't do its due diligence, says the Government Accountability Office. "There's a consequence if you don't follow a rigorous process that's transparent," Franklin Rusco of GAO told the website iWatch News.

Seen and Unseen

The "seen" math is simple enough. $535 million divided by 1,100 is roughly $486,363 per job saved, now job lost.

That is just the "seen" consequence. The "unseen" consequences are not directly calculable but by giving Solyndra money, other companies that the free market would have preferred have been harmed, perhaps permanently harmed.

Although Obama clearly rushed this pathetic company for a nice photo-op, this is not a simple case of the president failing to do his homework as the GAO implies. The government has no business promoting this kind of crap in the first place.

In this case, it is rather amazing how fast Solyndra wasted over half a billion US taxpayer dollars, so fast I suspect fraud.

In general, if companies cannot survive without government subsidies then they should not survive at all.

Solyndra could not survive even with massive government subsidies. The same happened to many ethanol companies as well. Speaking of which, taxpayers pay though the nose for ethanol subsidies and tariffs both at the pump and in the price of corn, in turn, the price of beef as well.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Illinois Loses Most Jobs in Nation Following Tax Hikes

Posted: 31 Aug 2011 09:35 AM PDT

Thanks to Illinois governor Pat Quinn and the Illinois legislature Illinois Loses Most Jobs in the Nation

In a trend that continues to worsen, more Illinoisans found themselves unemployed in the month of July.

Illinois lost more jobs during the month of July than any other state in the nation, according to the most recent Bureau of Labor Statistics report. After losing 7,200 jobs in June, Illinois lost an additional 24,900 non-farm payroll jobs in July. The report also said Illinois's unemployment rate climbed to 9.5 percent. This marks the third consecutive month of increases in the unemployment rate.

Illinois started to create jobs as the national economy began to recover. But just when Illinois's economy seemed to be turning around, lawmakers passed record tax increases in January of this year. Since then, Illinois's employment numbers have done nothing but decline.

When it comes to putting people back to work, Illinois is going backwards. Since January, Illinois has dropped 89,000 people from its employment rolls.

A combination of high taxes, overspending and red tape do nothing but chase away job creators and leave too many citizens without jobs. Springfield needs to act now and reverse course.

Inquiring minds may also wish to check out the foreclosure pipeline in Illinois, 7th worst in the nation at 128 months (over 10 years).

See First Time Foreclosure Starts Near 3-Year Lows, However Bad News Overwhelms; Foreclosure Pipeline in NY is 693 months and 621 Months in NJ for more details on the mortgage mess everywhere.

Illinois Unemployment Rises from 9.1% to 9.5% after Tax Hike

Please listen to CEO of the Illinois Policy Institute John Tillman on WLS AM on the Fiasco in Illinois. It is an excellent interview that gets much better as it progresses.

A tip of the hat to John Tillman for an excellent, must-hear interview.

I have little to add to this miserable report other than to emphasize Pat Quinn is the worst governor in the nation. He will not be re-elected. Unfortunately, taxpayers will suffer the consequences of his stupidity for the full length of his term.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Three in 10 Workers Worry Over Layoffs, Double the Level in August 2008

Posted: 31 Aug 2011 08:23 AM PDT

If you are looking for the reason Consumer Confidence Plunged to 44.5, Lowest Since April 2009 the answer can be found in a recent Gallup poll regarding fear of being laid off.

Please consider In U.S., Worries About Job Cutbacks Return to Record Highs

American workers' concerns about various job-related cutbacks have returned to the record highs seen in 2009, after improving slightly in 2010. In terms of the most significant employment risk measured, 3 in 10 workers currently say they are worried they could soon be laid off, similar to the 31% seen in August 2009 but double the level recorded in August 2008 and for several years prior.

Separately, 30% of workers say they are worried their hours will soon be cut back, and 33% worry their wages will be reduced. An even larger number, 44%, worry their benefits will be reduced, making this the most prevalent job-related concern.

Workers are least likely to be concerned that their company will move jobs overseas; however, at 13%, this is by one percentage point the highest level of concern since Gallup began measuring it in 2003. Most of the five items tested are at or near record highs this year.

Why Only 13% Worry About Jobs Leaving Overseas?

Some may be wondering why so few worry about jobs leaving for overseas.

The answers are straight-forward.

So many have already lost their jobs overseas so they are no longer worried about it
Those working in government positions have no such fear
Those working at retail stores such as Pizza Hut, Nail Salons, Home Depot, the corner bar, and Walmart have no such fear
Those working in most healthcare positions, especially doctors and nurses have little fear for now even with medical tourism
Those working in education have little fear for now even though online education will someday instill that fear
Some simply do not understand the risks

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Wednesday, August 31, 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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