A Sad Story

LQB

The Living Force
FOTCM Member
A sad story that is likely to be repeated countless times in the near future.

http://www.nytimes.com/2010/12/23/business/23prichard.html?_r=2&pagewanted=1&partner=rss&emc=rss
 
Sad, but true. And I suspect that the collapse will be like the Deacon's One Hoss Shay.
 
Laura said:
Sad, but true. And I suspect that the collapse will be like the Deacon's One Hoss Shay.
The Deacon’s Masterpiece
or, the Wonderful "One-hoss Shay":
A Logical Story

by Oliver Wendell Holmes (1809-1894)

Have you heard of the wonderful one-hoss shay,
That was built in such a logical way
It ran a hundred years to a day,
And then, of a sudden, it — ah, but stay,
I’ll tell you what happened without delay,
Scaring the parson into fits,
Frightening people out of their wits, —
Have you ever heard of that, I say?

Seventeen hundred and fifty-five.
Georgius Secundus was then alive, —
Snuffy old drone from the German hive.
That was the year when Lisbon-town
Saw the earth open and gulp her down,
And Braddock’s army was done so brown,
Left without a scalp to its crown.
It was on the terrible Earthquake-day
That the Deacon finished the one-hoss shay.

Now in building of chaises, I tell you what,
There is always somewhere a weakest spot, —
In hub, tire, felloe, in spring or thill,
In panel, or crossbar, or floor, or sill,
In screw, bolt, thoroughbrace, — lurking still,
Find it somewhere you must and will, —
Above or below, or within or without, —
And that’s the reason, beyond a doubt,
A chaise breaks down, but doesn’t wear out.

But the Deacon swore (as Deacons do,
With an “I dew vum,” or an “I tell yeou”)
He would build one shay to beat the taown
’N’ the keounty ’n’ all the kentry raoun’;
It should be so built that it couldn’ break daown:
“Fur,” said the Deacon, “’tis mighty plain
Thut the weakes’ place mus’ stan’ the strain;
’N’ the way t’ fix it, uz I maintain,
Is only jest
T’ make that place uz strong uz the rest.”

So the Deacon inquired of the village folk
Where he could find the strongest oak,
That couldn’t be split nor bent nor broke, —
That was for spokes and floor and sills;
He sent for lancewood to make the thills;
The crossbars were ash, from the straightest trees,
The panels of white-wood, that cuts like cheese,
But lasts like iron for things like these;
The hubs of logs from the “Settler’s ellum,” —
Last of its timber, — they couldn’t sell ’em,
Never an axe had seen their chips,
And the wedges flew from between their lips,
Their blunt ends frizzled like celery-tips;
Step and prop-iron, bolt and screw,
Spring, tire, axle, and linchpin too,
Steel of the finest, bright and blue;
Thoroughbrace bison-skin, thick and wide;
Boot, top, dasher, from tough old hide
Found in the pit when the tanner died.
That was the way he “put her through.”
“There!” said the Deacon, “naow she’ll dew!”

Do! I tell you, I rather guess
She was a wonder, and nothing less!
Colts grew horses, beards turned gray,
Deacon and deaconess dropped away,
Children and grandchildren — where were they?
But there stood the stout old one-hoss shay
As fresh as on Lisbon-earthquake-day!

EIGHTEEN HUNDRED; — it came and found
The Deacon’s masterpiece strong and sound.
Eighteen hundred increased by ten; —
“Hahnsum kerridge” they called it then.
Eighteen hundred and twenty came; —
Running as usual; much the same.
Thirty and forty at last arrive,
And then come fifty, and FIFTY-FIVE.

Little of all we value here
Wakes on the morn of its hundreth year
Without both feeling and looking queer.
In fact, there’s nothing that keeps its youth,
So far as I know, but a tree and truth.
(This is a moral that runs at large;
Take it. — You’re welcome. — No extra charge.)

FIRST OF NOVEMBER, — the Earthquake-day, —
There are traces of age in the one-hoss shay,
A general flavor of mild decay,
But nothing local, as one may say.
There couldn’t be, — for the Deacon’s art
Had made it so like in every part
That there wasn’t a chance for one to start.
For the wheels were just as strong as the thills,
And the floor was just as strong as the sills,
And the panels just as strong as the floor,
And the whipple-tree neither less nor more,
And the back crossbar as strong as the fore,
And spring and axle and hub encore.
And yet, as a whole, it is past a doubt
In another hour it will be worn out!

First of November, ’Fifty-five!
This morning the parson takes a drive.
Now, small boys, get out of the way!
Here comes the wonderful one-hoss shay,
Drawn by a rat-tailed, ewe-necked bay.
“Huddup!” said the parson. — Off went they.
The parson was working his Sunday’s text, —
Had got to fifthly, and stopped perplexed
At what the — Moses — was coming next.
All at once the horse stood still,
Close by the meet’n’-house on the hill.
First a shiver, and then a thrill,
Then something decidedly like a spill, —
And the parson was sitting upon a rock,
At half past nine by the meet’n-house clock, —
Just the hour of the Earthquake shock!
What do you think the parson found,
When he got up and stared around?
The poor old chaise in a heap or mound,
As if it had been to the mill and ground!
You see, of course, if you’re not a dunce,
How it went to pieces all at once, —
All at once, and nothing first, —
Just as bubbles do when they burst.

End of the wonderful one-hoss shay.
Logic is logic. That’s all I say.


Me too.

In fact, there’s nothing that keeps its youth,
So far as I know, but a tree and truth.
 
Hi LQB,

Would it be possible to post the article here or a summary of it? I wasn't able to get into the Times website.

Thanks.
 
This represents a growing dilemma in the states, counties, and cities that is and has generated tremendous amounts Debt. This due to the mortgage crisis, in which so many retirement systems (or pension funds) had held these derivatives in there portfolio's. It was a global conditioning, as many are now aware of. With the one i belong too losing $25 billion, as to the Netherlands losing 25 billion euro. Europe as whole, ( France Germany, Ireland, UK, Netherlands's) losing a staggering 450 billion euro, with 60 billion of that loss that had been effected (or infected) by U.S. investment funds. Gone, vanished, or stolen might be a better word.

This has come to bear a tremendous amount of weight and controversy, as to whom will fit the bill for those in retirement. As the returns of these systems during the downturn of the current economic picture is crumbling due to cut backs of hiring of people to fill the ranks of those whom have retired. Those that are newly hired and employed, make the continuing contribution's, to the system, as to those that have retied, like pyramid, or ponzi scheme. Also there are those that spiked the system to get better than 110% of there yearly salary, by claiming medical deferments related to on the job injuries, (as well as other lucrative incentives) which can make for a tax free monthly income.

This adds to the strain as well as to the impact of the (bottom feeders) who's unions had little clout to lobby (corruption) to orchestrate the packages that were beyond belief, as some did. What's also interesting is that the a union official elected in the union i belong too was a Mason 33* degree as well as the top administrator of the department whom worked as the liaison between city, the union, and department.

It was a catastrophe waiting to happen in many states, down to the city and up to a federal level, by greedy, psychopathic types, as well neurotic, narcissistic types, who were put in charge by an even a more dangerous bunch of thugs with the same mental and soulless profile. City service's were severely cut as the result and with effect leaving morale hitting an all time low. With the truly mental ones, disintegrating because of the loss of overtime and the pay scale that they had convinced themselves and become accustomed too, (convinced by others, of power and influence) that it would never end. But in reality it was not maintainable, as everything cycles or ebbs and flows as history has proven.

The greed and negligence of both city and negotiating parties involved, representing city, and department bargaining factions played a very important role making sure this did not fall apart ( negotiation's for contracts) at the height of the market, rather they realised or not, as they got there's and it was adios. I had always thought how interesting to see it all crumble as so many put there faith in others as to themselves as to real consequences that eventually played out.

It was as if, once again, all by design.

Dutch and UK pension funds ravaged by losses now seeking class action to recover investments.

http://www.investmentinternational.com/index..php?option=com_content&task=view&id=4159&Itemid=27
 
c.a. said:
It was as if, once again, all by design.

Indeed, and inevitable. Some municipal bonds are beginning to default. I think we are experiencing the beginnings of massive default and chaos.
 
LQB said:
c.a. said:
It was as if, once again, all by design.

Indeed, and inevitable. Some municipal bonds are beginning to default. I think we are experiencing the beginnings of massive default and chaos.
In California, the same may happen. I have heard credible stories that the managers of the retirement system have been stealing the money and stashing it in offshore accounts for themselves. The corruption is soooo bad, it is incredible. The problem is, the foxes have been in charge of the henhouse for so long, there are very few hens left. And of course, the fox will be long gone when the collapse comes.
 
Here's more on the munis: http://latimesblogs.latimes.com/money_co/2010/12/muni-bonds-meredith-whitney-60-minutes-defaults-mysak-larkin.html


Muni bond market throwdown: How bad could defaults get?
December 23, 2010 | 7:08 am

Star banking analyst Meredith Whitney has been saying for months that the next phase of the housing meltdown would be a local-government financial crisis. Last weekend she put a number on it, asserting that "hundreds of billions of dollars" of municipal bond debt would end up in default.

Whitney, appearing on CBS' "60 Minutes," was interviewed on correspondent Steve Kroft's segment on the "day of reckoning" for municipal finances.

Whitney Given the pounding that the tax-free muni market has taken since late October, driving bond prices down and yields up, Whitney's comments were a bond salesman's worst nightmare. The segment aired just after the muni market seemed to be stabilizing late last week.

So far this week the market has remained relatively calm, although a report Wednesday from the mutual fund industry's trade group showed that muni fund redemptions jumped in the seven days ended Dec. 15 as more investors opted to cash out.

Whitney is right that many states and municipalities face deep-rooted budget woes, of course. But could that really lead to "hundreds of billions of dollars" in muni defaults in a market worth $2.8 trillion in all?

Joe Mysak, Bloomberg News' resident muni columnist, was mystified by Whitney's prediction. He wrote on Wednesday:

Hundreds of billions of dollars? The one-year record, set in 2008, is $8.2 billion. You can see how an estimate of “hundreds of billions” would get people’s attention.

There are a lot of reasons to be doubtful about the health of the municipal market right now. . . . Tax revenue is down, public pension and health-care liabilities are up, the federal government’s bailout money to the states is running out and the chances that those funds will be replenished are remote.

And yet -- hundreds of billions of dollars in default? The number is in the realm of the fabulous. If pressed, I would say that we might see between 100 and 200 municipal defaults next year, maybe totaling in the $5 billion or $10 billion range.

Mysak noted that Whitney doesn't believe that any of the 50 states will default (there is no allowance under U.S. law for states to file for bankruptcy). That means her expected default total would have to comprise large numbers of cities, counties and other municipalities. In fact, she said she expected "50 to 100 sizeable defaults," without naming names.

What Whitney describes sounds like a contagion -- a surge in the number of municipalities deciding on the nuclear option of giving up on their current financial plight and trying to start over.

But municipal bankruptcy under Chapter 9 of the federal bankruptcy code is no simple affair, as Michael Corkery writes in the Wall Street Journal. He noted that 21 states don't even allow their municipalities to use Chapter 9.

And as Mysak noted, just walking away from bond debt wouldn't save many municipalities much money in the scheme of things; their greatest liabilities are pension and health-care benefits for employees, not debt service.

Still, holders of government bonds everywhere may increasingly feel as if they've got targets on their backs. That is certainly true in Europe: The European Union last month decided that any further EU bailouts of member countries after 2013 could require bondholders to take haircuts.

But "hundreds of billions of dollars" in U.S. muni defaults, and soon?

Dick Larkin, a veteran muni analyst at Herbert J. Sims & Co., went on Fox Business Network on Wednesday to call Whitney's prediction "ludicrous" and "irresponsible."

“There will be more defaults. But nothing coming close to hundreds of billions of dollars," Larkin said. "I am putting my career on the line by saying that ain't going to happen. If she’s right she will be a hero and I will be out of business. . . . I’ll put my career on it.”

-- Tom Petruno

Photo: Meredith Whitney. Credit: Louis Lanzano / Bloomberg News
 
CBS News 60 Minutes did a story on the 46 bankrupt states last weekend. State Budgets: The Day of Reckoning. The video is on this page:
_http://www.cbsnews.com/stories/2010/12/19/60minutes/main7166220.shtml?tag=currentVideoInfo;segmentTitle

Gov. Christie of NJ basically said he's going to go ahead and take money from funds such as pensions, and that he has no other choice. He said, "The day of reckoning has arrived. That's it. And it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's comin'."

The piece made clear that although this same problem existed a year ago, there were federal bailout funds -- and this year, there will not be.

Where did I read it recently, but I heard a wise-sounding phrase, "In times of financial crisis, the government will always be first concerned with itself," so you can simply expect them to do such things such as stealing, commandeering assets, etc., all for the good of the public, of course. If they're so much as talking about whether to touch national social security, I'm betting that it's long gone already. I know a lot of people already saying they believe this -- that they'll have to work until they die.
 
PopHistorian said:
CBS News 60 Minutes did a story on the 46 bankrupt states last weekend. State Budgets: The Day of Reckoning. The video is on this page:
_http://www.cbsnews.com/stories/2010/12/19/60minutes/main7166220.shtml?tag=currentVideoInfo;segmentTitle

Gov. Christie of NJ basically said he's going to go ahead and take money from funds such as pensions, and that he has no other choice. He said, "The day of reckoning has arrived. That's it. And it's gonna arrive everywhere. Timing will vary a little bit, depending upon which state you're in, but it's comin'."

The piece made clear that although this same problem existed a year ago, there were federal bailout funds -- and this year, there will not be.

Where did I read it recently, but I heard a wise-sounding phrase, "In times of financial crisis, the government will always be first concerned with itself," so you can simply expect them to do such things such as stealing, commandeering assets, etc., all for the good of the public, of course. If they're so much as talking about whether to touch national social security, I'm betting that it's long gone already. I know a lot of people already saying they believe this -- that they'll have to work until they die.

Yes, same with IRAs/401ks. Catherine Fitts has been sounding the watch for Gov "annuitization" (theft) of the $7 Trillion in these retirement vehicles. She claims that the figure is simply too large for the Gov to ignore, and hearings have been held to discuss it. Some say that the Gov would never do that since it would crash Wall St. I think the Gov may be funding much of the traffic there now. I'm bracing for high criminality to yet reach its peak.
 

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