Lying, incompetent or what?
A few years ago following a number of major hurricanes, the public relations staff of the property casualty insurance company I was employed by at the time managed to get a placement in the New York Times which suggested that the company was pulling back from what had been an unusually unprofitable coastal exposure. Regulators of the homeowners’ insurance product were quick to summon the state officers of the company to find out why this approach seemed to be the opposite of what they had been hearing from the state management team. One of the state officers in a southern coastal state was asked bluntly: “Have you been lying to me, or are you simply incompetent?”
Consider several recent developments in the public sphere. The California Public Employees’ Retirement System, the largest public pension system in the nation, recently reported that its projected rate of return for 2012 is about 1%. Around the same time that the system was making this calculation (to be precise, on March 12 of this year) CalPERS voted to lower its expected return from 7.75% to 7.5%, even though their chief actuary was saying that nothing north of 7.25% could be supported by any numbers available to the system.
Since bonds form the backbone investments of the pension systems, and the current 10-year Treasury offers a 1.48% rate, one wonders how the several hundred billion dollar difference in the interest rate projections, even over a ten-year period, will be made up. Actually, looking at the real world, one can just as easily make the case for negative returns as for a 7.5% compounded gain.
Sunday’s papers quote European Central Bank President Mario Draghi as saying: “We see analysts imagining the scenario of a Eurozone blow-up. They don’t recognize the political capital that our leaders have invested in this union and Europeans’ support. The euro is irreversible.” Not recognizing the difference between political capital and financial capital is a common mistake of government managers, and one made frequently by our own president.
Spaniards, for example, were promised that their country would lead all nations in green technology, which was reportedly subsidized nearly 500% in some cases. They lead the industrialized world instead in direct and indirect taxes, unemployment (particularly among youth, where it hovers at about 50%) and now, in health-care rationing, where the striking Catalonian doctors are refusing to do knee replacements and cataract surgeries and 40 primary clinics have closed. Spain is an economic basket case, and appears to be in a downward spiral that is crushing the economy and the middle class. So far this week, six of eleven of the autonomous regions in Spain have applied to the bankrupt federal government for bailouts. They are being told to cut 427,000 more government employees from the payroll, and Spain’s finance minister, Cristóbal Montoro Romero, has proposed a 56% tax on short-term financial transactions.
In Columbus, Ohio, — where I live — the school district has recently come under fire for deleting more than 2.8 million student absence days from the number reported to the state every year to qualify for state funds. Last year, there were more absences deleted from the record than absences actually reported to the state. Apparently, there is a fellow on our payroll whose job it is to keep attendance up in the city schools, and he has concluded that the easiest way to do this is to fudge the absences. Oh, he is apparently getting a lot of help from school officials around the district, who have “political capital” invested in the numbers.
Lies or incompetence – what’s the difference and why does it matter? Well, only 23% of American companies surveyed by the National Association for Business Economics in June plan to add staff in the next six months. Incredibly, this is down from 39% reported in the April survey. Can you blame them? Even if they could trust what is being told to them by Washington, they can’t find out what the impact of the federal health care law will be, or even what the next steps are, except for its constitutionality being upheld.
The Dodd-Frank congressional response to Wall Street firms creating more debt than there is money in the world contains 221 rulemaking deadlines that have now passed. Only 81 have resulted in finalized rules. The administration is so intent on making the subsidies for alternative energy work that they are doing everything they can to impede traditional energy sources. All the businesses that need to grow to get the economy functioning again are dependent on energy prices.
Candidate Barack Obama said, “I promise 100% transparency in my administration.” His administration is today the subject of 84 separate lawsuits for failure to comply with open records requests from Judicial Watch alone. The repeated failure of his attorney general to comply with information requests of the Congress was the main subject of the U.S. news earlier this month, when he was cited for contempt of Congress by the U.S. House.
The federal Affordable Care Act contained a mandate for all federal agencies paying out health care benefits to perform an improper payments audit this year, but not one has yet complied.
At a time when Americans and people of all industrialized nations really do need to find some workable solutions to pressing problems, there is apparently more reason than ever to distrust even basic information that could provide a blueprint for action, or even to be able to find out what you have to know to comply with a virtual flood of legislative attempts to “fix” things.
