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Michael Schroeder writes in the Wall Street Journal:
As the government wrestles with strategies to deal with failed pension plans sponsored by troubled companies such as UAL Corp.'s United Airlines, big problems in many multiemployer plans have been largely overlooked.Lawmakers say they recognized only recently that Congress also must address financial turmoil in this separate segment of government-backed pension plans, which covers about 10 million workers in several industries.
The plans, which allow unionized workers who switch employers in the same industry to keep a single pension plan, were underfunded by $150 billion in 2004, up 50% from the year before.
Schroeder, again:
While the PBGC is on the hook to pay about $45,000 to retirees from single-employer plans it takes over, the agency is obligated to contribute about $12,000 per worker for multiemployer plans that fail.If a multiemployer plan becomes insolvent both the surviving companies and PBGC share in the financial burden of paying benefits that in many cases would be cut by 66%. "Everyone gets hurt," says Michael Mathis, Teamsters' director of government affairs in Washington.
Posted by dan at 04:40 PM
When I suggested in Slate a few weeks ago that high—and rising-interest rates might actually be encouraging people to reduce their credit card borrowing, the reaction was a little skeptical. It couldn't mean that consumers were pulling in the horns, because they were just substituting cheaper home equity loans for more expensive credit card debt.
Nellie Mae (it’s a company, not a rapper) has some interesting new information about a group of credit card borrowers who don’t have any homes to leverage: college students. Apparently, they’re paying down their credit card debt, too.
Posted by dan at 03:38 PM
Who knew Greg Mankiw, former head of the Bush Council of Economic Advisers had such a wry sense of humor? From a lengthy interview in Fortune:
Q. The recession’s over. The economy’s growing. What about the issue of making the tax cuts permanent, which would make the deficit worse?A: Fundamentally, the issue of the tax cuts is whether you believe in larger or smaller government. There are three kinds of people in Washington when they look at this budget situation. There are conservatives—honest conservatives—who think we need to reduce the size of government. There are honest liberals who want to raise taxes to make government bigger. And then there are people who are putting their heads in the sand who do not want to do either. It’s very clear that this administration is filled with conservatives who believe in smaller government, leaner government, and the tax cuts go hand in hand with that.
Posted by dan at 08:35 PM
Apparently, the Treasury Department has abandoned its traditional line that the market should determine the relative value of the Chinese renminbi and the U.S. dollar.
The FT reports:
"The US Treasury has told the Chinese authorities that they must revalue their currency by at least 10 per cent against the dollar to prevent protectionist legislation in the US congress."And, yikes, look who John Snow sent to deliver the message.
“Henry Kissinger, former US secretary of state, is one of a number of unofficial envoys who have impressed upon China the urgent need for action on the 10 per cent target, and on the seriousness of the threat from Congress, people with familiar with the administration's efforts said.”
If China doesn’t let its currency float, maybe we’ll start bombing Cambodia again.
Posted by dan at 05:30 PM
One sentence from Amity Shlaes' FT column neatly captures the Republicans' dilemma. It also is a perfect example of why so many right-wing econo-pundits have a tough time coming to grips with the failure of private accounts to catch on:
You cannot topple or even renovate a New Deal edifice such as Social Security without Democratic support. The danger is that Republicans will so antagonise Democrats in the contests over the appellate judges that such support will not be forthcoming.
Leaving aside the question as to why Democrats would want to topple Social Security or any other New Deal edifice, it seems a little too late to be worrying about antagonism.
And for future reference, the approved word choice is as follows:
Strengthen, not topple.
Personal, not private.
Index, not cut.
The rich, not people making more $30,000 per year.
Posted by dan at 05:32 PM
The FT reports today that Hollywood's strategies to profit from China's burgeoning middle class may face an obstacle. Piracy:
"Star War Episode III: Revenge of the Sith opened across China at midnight on Thursday, aboutt he same tiem it premiered elsewhere in the world, in an attempt to beat the pirates.But pirated disks were available everywhere by SUnday.
"These just came in this morning. The quality is very good; they're not like those pirated copies that are filmed in the cinema," a Beijing vendor said as he fished a pirated DVD from behind a bush and offered to sell it for Rmb7 ($.85)."
Posted by dan at 05:06 PM
Friday, Federal Reserve Chairman acknowledged that there's some froth in certain housing markets.
Today, Abby Goodnough reports from the middle of industrial-strength cappucino maker that is Miami. Writing about launch parties for unbuilt condos, she writes:
"Everyone needs to one-up each other more and more with these things," said Jorge Luis Garcia, a real estate agent attending a party for Vitri, an unbuilt project in South Beach where prices start above $600,000. "The food's got to be better, the lighting's got to be better, the D.J.'s got to be really good. The new norm is the quarter-million-dollar party."
No expense is spared because the stakes are high: about 70,000 condo units are planned, under construction or newly finished in Miami proper, home to fewer than 400,000 people. Builders need early deposits to get construction loans, so they work hard to entice the buyers they covet - image-conscious people, many from Latin America and Europe, with money to burn on a second home, a speculative investment or a status symbol.
The bait includes small initial down payments, slick marketing - and parties. Usually held just before a project begins selling units, the events are meant to create buzz among brokers, who make up the bulk of invitees and bring clients and hip, attractive friends. Live with us, the parties say, and ooze wealth, sex, fitness and mystery.
Posted by dan at 08:27 AM
Get it while it's still free. My column in yesterday's New York Times on savings and changing asset prices.
Bonus: Cram Down Nation in Slate.
Posted by dan at 08:18 AM
Ah, now the Alternative Minimum Tax is a real problem. Sen. Chuck Grassley had to pay an extra $75.
Posted by dan at 08:16 AM