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You're really disconnected from reality of you think California and New York, the two most dynamic and wealthiest states that actually fund directly and indirec

by dnomad 8y ago

You're really disconnected from reality of you think California and New York, the two most dynamic and wealthiest states that actually fund directly and indirectly most of the other states, are on the verge of bankruptcy. Try coming back to the real world and examining the facts. There's a very good reason why certain states are high tax and high growth while others are welfare operations that unfortunately can leverage their two senators into a kind of ransom business model.

tptacek 8y ago
California and Illinois have two of the worst fiscal conditions in the country, ranked #43 and #49 (by GMU) among states respectively, based on cash on hand vs. immediate obligations, debt to income, and liabilities to assets. California's unfunded guaranteed pension obligations alone add up to almost half its personal income. Don't even ask about Illinois. New York isn't much better. It's #39. New Jersey, home to a huge percentage of the NYC workforce, is #50!
- dnomad 8y ago
  California is the 5th fastest growing state economy. This is despite already being the largest state economy by far. That is simply remarkable and to call such a state of affairs "verge of bankruptcy" is just stupid. Further the noise around pension obligations is mostly meaningless alarmism from people who don't know any better. If California is on the verge of bankruptcy why is California's bond rating at AA-? Why is New York's bond rating is AA+? Why are investors all over the world, particularly sovereign wealth funds, in fact standing in line to loan money to these high-tax, high-growth US states? Ex-real estate and ex-China, these economies are in fact the engines of growth for pretty much the Western hemisphere. We'll see how long it lasts though. The thesis here is that when you combine the nonsense alarmism around debt and the cherished American belief that governments can do no right you get a recipe for enormous underinvestment and malinvestment. And Americans are so disconnected from reality that they probably will vote for any idiot who starts crying about "fiscal responsibility" and cuts public investment in these economies.
  - tptacek 8y ago
    Those bond ratings are a measure of short-term solvency (if it heads off another unproductive exchange: the ratings agencies work with a very different of "long term" than GMU does). California does reasonably well (11th nationally) on that axis. We're talking about long-term structural solvency. I don't understand what California's bond rating has to do with the impact of its unfunded pension obligations.
    - komali2 8y ago
      If we really are talking long term structural solvency, I think it's bad faith to start arguing any given state is "objectively worse" than any others - obviously we don't know, because we can't even predict the recessions that keep happening every ten years. (we being the majority of the population and law makers - obviously some people are screaming their heads off about it, fruitlessly)
      - tptacek 8y ago
        I didn't start arguing that. The Mercatus Center at GMU did. Mercatus has an ideological bias (and not one I share), but they're serious people with real reputations. It's also a little weird to suggest that the fiscal outlooks of different states aren't comparable. Some states have pension obligations that consume an outsized fraction of their projected income, and others don't. What's complicated about that?
    - dnomad 8y ago
      The idea that bond investors only care about "short-term solvency" and therefore ignore unfunded pension obligations doesn't make any sense at all. I don't even... Also this idea that California, the 5th largest economy in the world, is ranked "11th nationally" in terms of debt ratings doesn't make any sense. Nobody actually compares an economy like California (GDP 2.5T) with Arizona (GDP 2.5B). There's so much wrong here -- from the pure ideological nonsense that California is "on the verge of bankruptcy" to the idea that bond investors only think 6-10 years into the future -- that it's really not worth continuing this conversation. (It's also quite clear that the legion of downvoters, hard pressed to actually defend their ideological nonsense, can always just suppress the facts. So much for free speech uber alles.)

by dnomad 8y ago

tptacek 8y ago

California and Illinois have two of the worst fiscal conditions in the country, ranked #43 and #49 (by GMU) among states respectively, based on cash on hand vs. immediate obligations, debt to income, and liabilities to assets. California's unfunded guaranteed pension obligations alone add up to almost half its personal income. Don't even ask about Illinois. New York isn't much better. It's #39. New Jersey, home to a huge percentage of the NYC workforce, is #50!

dnomad 8y ago
California is the 5th fastest growing state economy. This is despite already being the largest state economy by far. That is simply remarkable and to call such a state of affairs "verge of bankruptcy" is just stupid. Further the noise around pension obligations is mostly meaningless alarmism from people who don't know any better. If California is on the verge of bankruptcy why is California's bond rating at AA-? Why is New York's bond rating is AA+? Why are investors all over the world, particularly sovereign wealth funds, in fact standing in line to loan money to these high-tax, high-growth US states? Ex-real estate and ex-China, these economies are in fact the engines of growth for pretty much the Western hemisphere. We'll see how long it lasts though. The thesis here is that when you combine the nonsense alarmism around debt and the cherished American belief that governments can do no right you get a recipe for enormous underinvestment and malinvestment. And Americans are so disconnected from reality that they probably will vote for any idiot who starts crying about "fiscal responsibility" and cuts public investment in these economies.
- tptacek 8y ago
  Those bond ratings are a measure of short-term solvency (if it heads off another unproductive exchange: the ratings agencies work with a very different of "long term" than GMU does). California does reasonably well (11th nationally) on that axis. We're talking about long-term structural solvency. I don't understand what California's bond rating has to do with the impact of its unfunded pension obligations.
  - komali2 8y ago
    If we really are talking long term structural solvency, I think it's bad faith to start arguing any given state is "objectively worse" than any others - obviously we don't know, because we can't even predict the recessions that keep happening every ten years. (we being the majority of the population and law makers - obviously some people are screaming their heads off about it, fruitlessly)
    - tptacek 8y ago
      I didn't start arguing that. The Mercatus Center at GMU did. Mercatus has an ideological bias (and not one I share), but they're serious people with real reputations. It's also a little weird to suggest that the fiscal outlooks of different states aren't comparable. Some states have pension obligations that consume an outsized fraction of their projected income, and others don't. What's complicated about that?
  - dnomad 8y ago
    The idea that bond investors only care about "short-term solvency" and therefore ignore unfunded pension obligations doesn't make any sense at all. I don't even... Also this idea that California, the 5th largest economy in the world, is ranked "11th nationally" in terms of debt ratings doesn't make any sense. Nobody actually compares an economy like California (GDP 2.5T) with Arizona (GDP 2.5B). There's so much wrong here -- from the pure ideological nonsense that California is "on the verge of bankruptcy" to the idea that bond investors only think 6-10 years into the future -- that it's really not worth continuing this conversation. (It's also quite clear that the legion of downvoters, hard pressed to actually defend their ideological nonsense, can always just suppress the facts. So much for free speech uber alles.)