The Beat Goes On
December 2nd, 2008 by 
reality
The iTraxx Europe Crossover blew out to 936.62 yesterday, a new high according to my records, indicating a continuing deterioration in credit conditions.
In other news, Governor Schwarzenegger declared a fiscal emergency.
With time and money running out for California, Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called legislators into a new special session that won’t end until they agree on a way to trim the state’s $11.2 billion budget deficit.
The solution will doubtless be to reach deeper into the taxpayers’ pockets, one way or another. Trouble is, there’s nothing there. The taxpayer is tapped out. The lavish compensation of state (and city) employees at the expense of the rest of us has to be cut back. The UK has the same issue, where compensation of government employees has risen to excessive levels when compared to the private sector. There was a recent fuss about this, and the government raised the defense that the civil servants needed to be paid more because they lacked the opportunities for great wealth that the private sector offered. I’m sure that argument will sit well with the family camped on the street with their possessions, outside their foreclosed house.
Posted in Debt, Fixed Income, Government, Rogues and Rascals | 
December 2nd, 2008 at 8:28 am
I don’t know reality, I don’t know.
Most people I talk to are not aware of what is going on, do not understand its severity, take the approach that we cannot do anything about it, and (horror of horrors) think that the government is on their side. Their standard response is “we can’t do anything about it so why worry”.
I think people will simply pay the higher taxes and grumble some. Maybe they will vote Arny out of the office. Most will not connect the deficit to lavish public sector compensation. Nobody I know has a pension, yet not a single one has ever mentioned anything against government pension plans.
Democracies do not work when people do not participate. And unfortunately, our people act as if they live in a monarchy, where the government has absolute power over them instead of being accountable to them.
December 2nd, 2008 at 8:32 am
Well it is actually an oligarchy, not a monarchy. From Wikipedia:
Oligarchy (Greek Oligarkhía) is a form of government where political power effectively rests with a small elite segment of society distinguished by royalty, wealth, family, military powers or occult spiritual hegemony. The word oligarchy is from the Greek words for “few” (olígos) and “rule” ( arkh). Such states are often controlled by politically powerful families whose children were heavily conditioned and mentored to be heirs of the power of the oligarchy. This type of power by its very nature may not be exercised openly; the oligarchs preferring to remain “the power behind the throne”, exerting control through economic means. Oligarchies have been tyrannical throughout history, being completely reliant on public servitude to exist. Although Aristotle pioneered the use of the term as a synonym for rule by the rich, for which the exact term is plutocracy, oligarchy is not always a rule by wealth, as oligarchs can simply be a privileged group.