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Mark's Market Blog

12-18-10: States in Crisis

By Mark Lawrence

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Short blog this week. I'm on vacation in Thailand. I'm using a tiny little netbook, and I don't have my mailing list with me, so this blog gets posted but not emailed. Sorry.

Thailand is a very different culture from the one where I was raised. Everyone here rides scooters. Everyone. Thousands of them. When girls are passengers, it's about 50-50 they ride side- saddle. No one has a windshield. No one. Lots of people ride 3-up: dad drives, mom on back, kid standing up between dad's legs. I've seen 4-up a couple times. This is on bikes much smaller than anything you can even buy in the US. Almost no motorcycles, I see maybe like 4 a day, always ridden by a European or American. A bunch of little cars like civics, a bunch of little pickup trucks. I saw a truck with like 20 people in the bed. Really, like 20. They drive the trucks and cars like they're on scooters. They drive on the left side of the road. Mostly about 30-50 kph, about 15-30mph. I did get up to 90 once (55mph). The basic rules are: 1) if there's a space, you can ride in it; and 2) if no cop sees it, it was legal. People cross the double-yellow all the time to pass. All the time. I can drive reasonably safely and competently on a scooter, but there's absolutely no way I would get behind the wheel of a car here.

The girls are all cute. All. Every single one. Everyone is very friendly and everyone smiles all the time. I'm staying with friends, getting home cooking - fantastic coconut soup (best I've ever had), excellent curries, lots of fresh vegetables. They have to cut back on the spices rather seriously for me, and by US standards I can handle quite spicy food. Every girlfriend I've ever had in the US, I had to teach how to cook. Here it's built-in, standard, not optional.

This is a culture where the women do most of the work and take on most of the responsibility for kids, parents. There are men at the very top, but the average Thai guy is under-employed and unreliable to his family. Sort of like what the US is rushing to build, what with our current "mancession" and indifference to educating our boys. Western men who come here get a live-in Thai girlfriend almost instantly, one 'way too young and cute for them. The reason is simple and obvious: we treat women far better on average than Thai men, and even a $1500 / month social security check is a big step up in standard of living for the woman. The average Thai makes about $200 / month, roughly $1.25 ./ hour. Everyone has two jobs, and is also trying to sell something, like a house they heard about.

The markets have gone up for 4 straight weeks now, and on 12-20 the S&P set a new high for the last two years. Time for a breather, I think. I expect the markets to have a short pullback, but with Bernanke committed to throwing $7 billion to $9 billion out the window of his helicopter every business day for the next several months, any reversal will most likely be shallow and narrow.

S&P 500 July 5 2010 to December 17 2010

China, an economy about three times as big as California, announced that they would help resolve the European debt crisis, Europe's economy being about 25% bigger than the US. The Euro promptly shot upwards. Maybe I'll announce that I'm going to help with the US $14 trillion debt and see if that drives interest rates down.

157 bank closures nationwide so far this year tops the 140 shuttered in all of 2009 and is the most in a year since the savings-and-loan crisis two decades ago.

Washington Governor Chris Gregoire wants to dump certain pension benefits for public employees as a way to save more than $11 billion over 25 years. Gregoire proposed Monday to eliminate yearly pay increases for government workers and teachers, and do away with early-retirement provisions in open pension programs, requiring new hires to work until 65 to collect a pension. "I can't pay for programs, I can't pay for their positions, their salaries, their health care. I can't pay for any of that, so I've had to go after those things that I think deservedly need to change," she said at a news conference Monday.

Gregoire also proposed closing a loophole that allows state employees who retire to return to work in state colleges or universities while still receiving a monthly pension. In June, a Seattle Times investigation found that at least 40 university or community-college employees retired and were rehired within weeks, often returning to the same job without the position being advertised. That has allowed them to double dip by collecting both a salary and a pension.

In another money-saving proposal, Gregoire said she wants to limit increases in the state's health-care costs to no more than 5 percent a year by 2014. Washington provides health insurance to more than 335,000 public employees, retirees and their family members, as well as to more than 1 million low-income children and adults. Overall, state costs have increased to more than $5 billion a year, officials said. California's Jerry "Moonbeam" Brown, following Arnold's lead, is announcing his own budget emergency. He said "I'm going to try to get the budget agreements done within about 60 days. I don't think we have a lot of time to waste... It will be a very tough budget, but it will be transparent... We've been living in fantasy land. It is much worse than I thought. I'm shocked." When Governor Moonbeam says we've been living in a fantasy land, you know we're talking red queens and jabberwokies. California's employment has been hit hard in this recession, and shows no signs of improving.

California Employment 2000 - 2010

I have frequently quoted Meredith Whitney in this blog. She appeared in an excellent 60 minutes segment on state finances. If you haven't already seen it, I recommend you watch it on-line. 60 Minutes

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