Only A 13% Chance Of Getting Full Social Security Benefits

Why Public Sector Union Compensation Matters – Taxpayers, including unionized private sector workers, are becoming increasingly aware of the generous benefits secured by public employees and the way the escalating cost of public employee benefits are compromising business environments across the nation. This political backlash not only threatens the political sustainability of public employees’ compensation schemes, but also risks opening a divide among the labor movement itself as private sector counterparts see the tax implications of public sector largesse as compromising their own employment prospects. Defenders of public employee unions have fought back to combat these perceptions. They make two basic arguments: (1) the problem is not excessive public sector pensions, but rather inadequate retirement benefits for private sector workers; and (2) current strains on state and local budgets are not caused by excessive spending, but rather by a dramatic decline in revenue resulting from the economic crisis caused by Wall Street. These arguments are unpersuasive.

Barclays’ Bob Diamond to Non-Bankers: Drop Dead Yves Smith – Despite its artful packaging, Diamond’s presentation was yet another reminder of the banking industry’s continued extortion game, namely, that they can take outsized, leveraged risks and when they work out, pay themselves handsome rewards, and when they don’t, dump them on the taxpayer. And they’ve only been encouraged to up the ante. Not only did they get to keep their winnings from their last “wreck the economy” exercise, no senior executive was fired, no boards were replaced, and UBS was the only major bank required to give a detailed account of how its screwed up so badly as to need government support. And before you tell me Barclays was never bailed out, tell me exactly how well it would have fared had any other major UK or international bank failed, or had the officialdom not provided extraordinary liquidity support when interbank funding dried up.

MONEY MARKETS-Big investors prefer $1-a-share money funds (Reuters) – Large U.S. investors prefer that money market funds stick to a $1-a-share target, instead of letting their shares float as proposed by a government working group, two surveys released on Tuesday showed. The surveys come several weeks before the Securities and Exchange Commission releases data that some speculate could show the net asset value (NAV) of some money funds fell below $1 per share or "broke the buck." A $1-per-share price has been the cornerstone for the $2.8 trillion money market fund industry. Supporters of the floating NAV concept have said changes in a fund’s share price gauge its riskiness. The SEC will release the NAV of money market funds on a 60-day lagging basis, dubbed "shadow NAV." Analysts said it was unlikely that any fund’s shadow NAV fell below $1 given that fund managers have had ample time to clean up their portfolios. Thirty-nine percent of treasurers and financial professionals said their companies will either pare or pull all cash from money funds because of the possibility of a NAV falling below $1, the Association for Financial Professionals said on Tuesday.

Foreigners Shun Europe’s Bonds, and Debt Piles Up –  Greece. Ireland. And now, it seems, Portugal. While the circumstances that have driven these debt-ridden members of the euro zone to the brink differ, they share one common characteristic: all three countries aggressively tapped their domestic banking systems for more debt long after they had been shut out of international bond markets.  With its 10-year debt trading near the record high of 7 percent reached last week, Portugal will try on Wednesday to sustain what many have come to see as nothing more than a form of bond market charades. It will try to raise up to 1.25 billion euros ($1.62 billion) in long-term financing — debt that is expected to come largely from the country’s already depleted banking system.  For Portugal, as it was for Greece and Ireland before their bailouts, borrowing at such high rates from lower-quality lenders may demonstrate its economic sovereignty. But to an increasingly skeptical marketplace, borrowing on such terms reflects nothing more than the country’s unwillingness to accept the harsh reality of its fiscal condition. .

A Marshall Plan for Nature: How to Protect Endangered Species from Climate Change – If your house were on fire, what would you save? Where would you even start? What if not just your house, but your whole planet was on fire? That is the scenario we face today. Climate change has arrived. No longer clouds gathering in the distance, the firestorm is here now–melting titanic glaciers, drying mighty rivers and setting deserts ablaze. With our new report, It’s Getting Hot Out There: The Top 10 Places to Save for Endangered Species in a Warming World, the Endangered Species Coalition and our member groups attempt to answer the question: To save endangered species from climate change, where do we begin?

China Moves Toward Carbon Emissions Trading to Improve Energy Efficiency and Competitiveness – When professor Chen Hongbo tried to promote carbon trading in China three years ago, he found himself under fire. As developing countries like China aren’t obliged to limit the byproduct of their economic growth, opponents argued vehemently that they saw no need to motivate Chinese industries to either emit less greenhouse gases or pay for their emissions. Today, China is still free of that obligation, but the internal dispute seems to have ended. In its proposed development plan for the next five years, the government has for the first time revealed its interest in building a domestic carbon market.

BP disaster Commission co-chair Graham: “Drill baby drill” is a selfish and self-defeating energy strategy – Bob Graham, co-chair of the Presidential Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, has a must-read op-ed in the St. Petersburg Times. After months of expert testimony and analysis, the former governor and Senator from Florida has a blunt message for Americans: This is a wakeup call to the American people. Why are we drilling in deeper and inherently more risky offshore locations? The United States is consuming about 22 percent of the world’s daily extraction of petroleum while it sits on top of less than 1.5 percent of the world’s proved reserves. If we “drill baby drill” in an attempt to go totally independent, and if our thirst for petroleum continues at its current level, the United States will drain its remaining proven domestic oil reserves by 2031.

Jeff Masters: Deadly flash flood hits Australia, rainfall in Queensland most ever recorded in 111 years, since records began – Flood-weary Queensland, Australia, suffered a new flooding disaster yesterday when freak rains of six inches fell in just 30 minutes near Toowoomba. The resulting flash flood killed nine people and left 59 missing. The flood waters poured into the Brisbane River, causing it to overflow, and significant flooding of low-lying areas in Brisbane, Australia’s third largest city with some 2 million people, is expected on Thursday. 

As I discussed last week, Australia had its wettest spring (September-November) since records began 111 years ago, with some sections of coastal Queensland receiving over 4 feet (1200 mm) of rain. Rainfall in Queensland and all of eastern Australia in December was the greatest on record, and the year 2010 was the rainiest year on record for Queensland. The ocean waters surrounding Australia were the warmest on record during 2010, and these exceptionally warm waters allowed much higher amounts of water vapor to evaporate into the atmosphere, helping fuel the heavy rains. 


NOAA: Warming Arctic unlikely to return to how it was— New observations this year about snow, ice and temperatures support the conclusion that the Arctic is unlikely to return to the conditions known in the 20th century — and that’s likely to affect the weather in the lower 48 United States. That was this year’s key message in the annual update of the National Oceanic and Atmospheric Administration’s Arctic report card, released Thursday. The key points, a video and links to scientific reports by 69 scientists from eight countries are available from NOAA online.The report card is one way that scientists share information about trends they’re seeing in the Arctic as a result of the region’s warming cycle: Higher air temperatures melt snow and ice, leaving the ocean and land darker, and they then absorb more solar energy, causing more heating and melting.

Satyajit Das: European Death Spiral – End GamesPolitics now increasingly dominates the economics. Commenting about the EU bailout of Ireland, the Irish Times referred to the Easter Rising against British rule asking: “was what the men of 1916 died for a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side”. An Irish radio show played the new Irish national anthem to the tune of the German anthem. In Greece, the severe cutbacks in government spending have resulted in strikes and violent protests on the streets of Athens. Faced with cutbacks in living standards, Europeans are fighting back. In many countries, governments, often unstable coalitions, are struggling to pass legislation, implementing necessary spending cuts or tax increases. In Ireland, the opposition parties have promised to re-negotiate the bailout package if elected at an election due early in 2011. In Germany, the paymaster and strength behind the EU, Europe’s biggest tabloid Bild asked “First the Greeks, then the Irish, then…will we end up having to pay for everyone in Europe?”

What and where is “waste” in health care?  – Health care spending is confusing. Conventional wisdom is that there is an enormous amount of waste in the system, “anywhere from 30 to 50 percent of medical spending […] about $1 trillion annually,” according to David Cutler. Victor Fuchs once wrote, “Although many health services definitely improve health, in other cases even the best known techniques may have no effect.” And that was in 1966. In a recent paper published in The Milbank Quarterly, Robert Kaestner and Jeffrey Silber explain that, Fuchs’s [1966] characterization of the contribution of health services to health would now be referred to as an example of “flat-of-the-curve” medicine. […] The same “flat-of-the-curve” argument was used to characterize medical spending during the 1970s.

What and where is “waste” in health care? (Continued)  – I want to follow up on my earlier post on waste in the health care system. That post questioned the notion (definition) of waste. Though it is likely that the same degree of health could be achieved with less expenditure (one view of waste), that does not mean that the additional spending is without value of another sort. It could very well be that we value that additional spending because it is necessary to fund the wacky health system we’ve chosen (that is, that we apparently, collectively, like) and makes services that provide hope, without actual  health, possible. Even if this is the case, there are still good reasons to be concerned about the level and trend in health spending. One set of reasons has to do with externalities. Your health spending can affect my premiums. If you use more, my premiums are higher than they otherwise would be, regardless of whether what you use is good for your health. The same is true in reverse: my utilization affects your premiums. Naturally, I think my health spending is justified and a whole bunch of yours is wasteful. Stop it!

And now for the inevitable: finance ministers to discuss raising of EFSF ceiling – Ecofin/eurogroup to discuss the future of the EFSF next week; Olli Rehn is calling for an increase in the funding ceiling of the EFSF and other backstops; European Commission may propose a pooling of sovereign debt issues; sovereign bond spreads eased ahead of today’s Portuguese bond auction; Michel Barnier is proposing a new round of bank stress tests; Nouriel Roubini says it is absurd for the EU to focus on 2013; Otmar Issing warns against political union through the backdoor of a monetary union; King Albert II of Belgium asked the political mediator to launch a new attempt at banging heads together; the French Socialists have a agreed a schedule for their primaries, as all eyes are on DSK; the Bank of Portugal expects the economy to shrink by 1.3% this year; Germany plans to raise the ceiling of its bank levy; Wolfgang Munchau says the eurozone crisis will not end until debt is restructured; FT Deutschland’s Das Kapital, meanwhile, says the eurozone crisis may be bad, but the US debt crisis is worse. [more]

SEC Enforcement Chief Khuzami Under Scrutiny Over Citi Settlement  – Yves Smith – We were very critical of the SEC settlement with Citigroup, negotiated by its head of enforcement Robert Khuzami, over Citi’s failure to report losses on subprime holdings as the market for those holding tanked. In our post “The Wages of Sin: Former Citi Execs Pay Token Fines for Lying to Investors,” we remarked: A news story today provides further confirmation of the rule by the banking classes in the US, with only token gestures to the rule of law. It looks like we aren’t the only people to have found the settlement appallingly light. Per Bloomberg: The U.S. Securities and Exchange Commission’s internal watchdog is reviewing an allegation that Robert Khuzami, the agency’s top enforcement official, gave preferential treatment to Citigroup Inc. executives in the agency’s $75 million settlement with the firm in July.

Goldman Bankers, Ascendant Again – In the pecking order at Goldman Sachs Group Inc., traders trounced investment bankers for most of the past decade. Now, the Wall Street firm’s army of investment bankers is making a comeback. The 63-page internal report released by the New York company on Tuesday showed how Goldman is trying to reassert the traditional primacy of deal making while playing down the firm’s recent reliance on trading. One of the biggest reasons why: Trading caused most of the turmoil, suspicion and reputational damage suffered by Goldman since the financial crisis erupted. Goldman officials say forthcoming changes detailed in the report aren’t punishment for traders. But an overhaul in how the company discloses financial results, starting with fourth-quarter figures due Jan. 19, will wind up slicing how much what the firm defines as trading contributes to Goldman’s overall revenue. In a securities filing Tuesday, Goldman detailed its plan to report trading revenue generated on behalf of clients separately from revenue that comes from trades and investments made by the firm.

Chinese Bank Launches Yuan Service in New York. A state-owned Chinese bank says its New York City branch has begun offering accounts denominated in China’s tightly controlled yuan in a new move to expand the currency’s global reach. Bank of China’s announcement comes ahead of Chinese President Hu Jintao’s visit to Washington next week. The White House says President Barack Obama will press U.S. complaints about China’s currency controls that critics say keep the yuan undervalued and swell its multibillion-dollar trade surplus. In a statement on its website, the bank said account holders can exchange up to the yuan equivalent of $4,000 per day, with a limit of $20,000 per year, while the limits are half those levels for non-account customers.

New Move to Make Yuan Global Currency – China has launched trading in its currency in the U.S. for the first time, an explicit endorsement by Beijing of the fast-growing market in the yuan and a significant step in the country’s plan to foster global trading in its currency. The state-controlled Bank of China Ltd. is allowing customers to trade the yuan, also known as the renminbi, in the U.S., expanding the nascent offshore market for the currency which began last year in Hong Kong. The decision is the latest move by China to allow the yuan, whose value is still tightly controlled by the government, to become an international currency that can be used for trade and investment.  "We’re preparing for the day when renminbi becomes fully convertible,"

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