Pasadena Sub Rosa

WHY GOVERNMENT CAN'T PRODUCE JOBS

Why Government Doesn't Create Jobs

By Green Lantern - The American Spectator

If you want to know why $800 billion in government stimulus spending has created 9 percent unemployment, all you have to do is look at the windmill in Milwaukee.

The project involves a single wind turbine 154 feet tall (small by today's standard) that is supposed to supply some electricity to the Milwaukee Port Authority. The $500,000 project is being built with $400,000 in federal stimulus money and another $100,000 from the Wisconsin Focus on Energy Program. It's been several years in the making but things finally seemed ready to go last month when the city finally put the project out to bid. The winner, Kettle Renewable Enterprises, had small subcontracts of $2,000 for women-and-minority-owned firms in its $500,000 offer. However, city alderman Robert Bauman decided this wasn't enough. He vetoed the project, saying more woman-and-minority firms should have been included. "If that means losing $500,000, then we'll lose $500,000," Bauman told the press.

In a nutshell, that's why government never gets anything done. It's not the women-and-minorities part. The problem is that with governmenteverybody has to have a say in what gets done. In the Milwaukee case, federal stimulus rules didn't require the minority subcontracting. In fact, Mayor Tom Barrett is arguing that federal rules prohibit such a mandate in this case. But what does it matter? The important thing in government is that everybody gets to have a say. The Milwaukee Board of Harbor Commissioners has to sign off on the project and their stake may involve pushing some ideology or making constituents happy.

Anyone who has ever worked in a large, bureaucratic organization knows the pattern. Getting anything approved requires going through layer upon layer of bureaucracy. Pretty soon you're in a territory where people signing off know nothing about the project but only have their own oblique interests. Days and weeks are spent in meeting after meeting, trying to get everybody on board and reach an agreement. It's a wonder anything ever gets done.

Government is just the same thing only worse because there are now more stakeholders. Now everybody gets a say. Projects collect interest groups like barnacles, most of them with no interest in the main task but hanging on to push some irrelevant agenda. That's why we have K Street and why everybody there is pushing to have more decision-making moved to Washington in order to increase their leverage.

A few years ago, New York City was trying to decide what to do with Governors Island, a beautiful mile-square piece of real estate off the southern tip of Manhattan that was dropped in the city's lap when the Coast Guard abandoned it after 200 years of federal ownership. A ten-minute ferry ride from Wall Street and dotted with century-old buildings, it would make a fantastic research park along the lines of Stanford Research Park or North Carolina's Research Triangle. When the relevant City Council committee held hearings on the master plan, however, all 12 members began by making a statement of what the project meant for their district. The first speaker, from Harlem, used his five minutes to opine that he didn't like the term "master plan" because it made him think of "masters and slaves," which had a negative association for African Americans. Things went downhill from there. Every representative reiterated that theirs was the most important district in New York City and that whatever happened on Governors Island, it better do something for their constituents. Trying to please everyone, the city has done nothing with Governors Island except hold sculpture exhibitions and outdoor composting lessons and encourage people to go out for bike rides.

It's the same at any hearing in Congress. No matter what the subject, each member gets to make a five-minute introductory speech. This is for the benefit of the television cameras back home. (The members jokingly refer to these as "talkings" rather than "hearings.") By the time the real testimony begins -- usually about an hour later -- members are taking off for other appointments. All this may work when you're investigating corruption in the food stamp program or trying to cast blame for the subprime meltdown, but for building things and getting something done -- forget about it.

Every time the federal government undertakes some simple task, it becomes an effort to reinvent the world. Last week it was revealed that a $20 million stimulus program in Seattle to weatherize homes had managed to weatherize three homes and create 14 jobs in its first year. Nothing is ever straightforward. Every city has lots of companies in the business of weatherizing homes. But the government can't just go out and hire them. It has to throw in provisions for taking people off the street for job training with special outreach for Spanish language speakers and so by the time all this is thrown into the pot, nothing gets done.

There is only way out of this bureaucratic trap -- entrepreneurship. People working in established companies say to themselves, "The hell with all this bureaucracy. I'm going to go out and do this on my own." Last month the New York Times ran a story about Gautam Adani, an Indian entrepreneur who is providing the country with significant portions of its electricity simply by working around the government and its restrictions. "He is able to do so well partly because he is very entrepreneurial and has found the right opportunity," lamented an official in the government finance ministry. "[I]t's a symptom of a dysfunctional state. He is able to deliver something more effectively than the state." It's the same everywhere. In The Spirit of Enterprise,his memorable history of Silicon Valley, George Gilder showed that every major company was created by employees of another company who got tired of dealing with upper management and decided to strike out on their own. The process is on-going today -- although Silicon Valley has become been dangerously enmeshed in the government's pursuit of "alternative energy." Businesses start when individuals decide to go outside the bureaucracy -- and it's those small business that still create half the new jobs in the country every year.

But the bigger the government becomes, the harder it is to go around it. With so much investment being directed out of Washington and the government controlling so much money, things eventually come to a standstill. Just as Francis Parkinson noted that large institutions usually build their monumental headquarters just as they are passing the peak of their development, so President Obama's new "Department of Jobs" will be probably mark the end of job creation in America. It will be the one last, fatal layer of bureaucracy.

 

WHERE GRAFFITI TAGGERS GET THEIR SPRAY PAINT

Aaron Brothers Graffiti Starter Kit - Read here:

http://blogs.laweekly.com/informer/2011/08/graffiti_starter_kit_aaron_bro.php 

MOST OF UNEMPLOYMENT IN UNDERCLASS

Those with college degrees only have an unemployment rate of 5%. Most of unemployment is in the underclass.  This is why Stimulus programs are not helping. Stimulus programs help those in unions who are skilled.  Wage controls, Davis Bacon Act regulations, and other laws are mostly hurting the poor who can not benefit much from government programs. What is needed is an infrastructure building program that pays $15 per hour without Davis Bacon laws.  Read David Goldman's article below:  

David P. Goldman - The Winner Economy and the Loser Economy

Item: Americans with no college-level education have an unemployment rate of 9.9% and (which is much more revealing) a labor-force participation rate of just 61%. Americans with some college education have an unemployment rate of 8.6% and a participation rate of 70%. And Americans with a bachelor's degree or more have an unemployment rate of 5%, but a participation rate of 76%. Huge numbers of less-educated Americans, that is, don't ''participate'' in the labor force because there is nothing for them to do. But Americans with a college degree (as devalued as those degrees are) have little unemployment and a very high rate of ''participation.'' 

America, as I observed last week (The people's Ponzi scheme, Asia Times Online August 15), imported $6 trillion of the world's savings between 1998 and 2007. That great migration of capital employed an army of construction workers, mortgage bankers, retailers, lawyers and others dragged along by the tide. Real estate tax collections surged along with home prices and local governments grew fat and hired legions of workers. 

And the construction boom kept less-educated Americans (and a great many immigrants) occupied. The construction industry has imploded, local governments have laid off 400,000 workers since August 2008, and countless service firms have disappeared. Nothing will bring them back. 

Given the magnitude of the bubble that had to be popped, the outcome actually is encouraging. Most Americans with a college degree barely can add and subtract and compose a business letter, and most of them rode the bubble in various capacities. Yet despite the collapse of many white-collar professions, the unemployment rate of college-educated Americans remained around 5%. That testifies to the flexibility of the American economy and the resourcefulness of American job-seekers. 

The other encouraging fact is that portions of the US economy that did not participate directly in the bubble - established corporations with a global presence - have done extremely well in a virtually zero-growth environment. Their 19% increase in profits came both from increased sales and better profit margins. A smidgen of the profit growth came from the falling dollar (which magnifies foreign earnings), but not too much. Corporate America managed to show strong profit growth even while the aggregate economy was dead in the water. 

In short, the non-bubble portions of the US economy are doing perfectly well, thank you. The railroads and airlines are carrying more freight, the airlines are carrying more passengers, and exports are up by nearly 20% over a year ago. It is pointless and confusing to speak of overall economic performance, because there are two quite different economies to consider: one that is doing reasonably well in the world market and one that still must be scraped from the ceiling. It is just as meaningless to speak of a double-dip recession as it was to speak of a recovery a year ago. Some parts of the economy remain profoundly depressed and will languish for years if not decades, while other parts are functioning perfectly well. Which outweighs the other in the aggregate numbers is of interest to no-one but the macroeconomists. 

China and India have become a dual economy because a portion of their population has clambered up into prosperity; America has become a dual economy because a portion of their population has tumbled into destitution. But the fact that larger American corporations have had a strong recovery should reassure us that America is capable of a broader recovery. 

The right combination of economic policies could revive the startup engine, albeit slowly and fitfully. Lower taxes on corporations and capital income and less oppressive regulation (especially US President Barack Obama's health care mandates for businesses) would help. So would a rational immigration policy that favored entrepreneurs and highly skilled professionals. 

NEW TERM "REVERSE HATE CRIME" NEEDED

By WAYNE LUSVARDI

The headline in the local newspaper declares “Pasadena to Push Back Against Racist Graffiti” recently found on cars at the Kings Village public housing project and scribbled on mailboxes inside the U.S. Post Office on the corner of Lincoln and Orange Grove Avenues in Pasadena. http://www.pasadenastarnews.com/ci_18704945       

Reportedly, the content of the graffiti was racist, homophobic and anti-Semitic. 

No group, gang, or anonymous individual has claimed responsibility for the graffiti nor are the police reporting it has the signature style or wording of a known gang.  It is highly unlikely that some “white” person would venture into Kings Village and risk spray painting cars or going into the lobby of the post office and painting mailboxes where there might be surveillance cameras.  Neither the newspaper nor the police have indicated whether the post office had a surveillance camera and if not, why not?  That seems to be a curious missing part of the newspaper coverage thus far.

There is no indication that this graffiti is anything more than adolescent misbehavior.  But the social context probably tells us more about what this graffiti means.

There is sociological theory called Symbolic Interaction that says that groups often communicate with one another indirectly through symbols.  Symbolic meaning derives from group social interaction.

It is probably not coincidental that Congress is concurrently convening a bi-partisan Supercommittee to determine cuts in the Federal budget to avert an unpredictable debt crisis that could lead to depreciation of the U.S. dollar to the point it might became worthless.  Thus, continued Federal funding for public housing programs like Kings Villages is threatened.

Parents and kids at Kings Villages must see the images on television about the looming cutbacks and perceive that this will affect them.  The kids pick up on their parent’s anxieties and indirectly send a message via graffiti.

But they do this in the way they have been culturally scripted to do: by depicting themselves as victims of “racism, hatred against gays, and anti-Semitism.”  As sociologist James Davison Hunter points out in his book “To Change the World” American culture has a tendency toward victimization.  It follows that those in public housing would likely work hard to gain victim status and thus gain political and legal power to protect themselves against any budget cuts.

If this is the case what is needed is a new term to describe suspected self-inflicted hate crimes: “reverse hate crimes” is a term that comes to mind.

This might explain why a community meeting on these hate crimes was being held at the Pasadena Rose Bowl for widespread media coverage rather than at a local church, the multi-purpose room of the Jackie Robinson Center, or other venues.

In 2004, Claremont College psychology professor Kerri Dunn infamously claimed her car was vandalized and spray-painted with racist messages after she spoke at a forum on racism.  It was later found that it was a hoax perpetrated by the so-called victim. Dunn was later convicted of insurance fraud and filing a false police report and sentenced to one year in jail. http://articles.latimes.com/2004/aug/19/local/me-dunn19

What was at stake in the Kerri Dunn case were racial, gender and ethnic quotas for professors at the Claremont Colleges.  Prof. Dunn was trying to get special job protections for minority teachers by claiming that they were victims of racism. http://www.claremontconservative.com/2010/03/where-kerri-dunn-is-six-years-later-and.html

I sense that most people with social intuition, including those in the Kings Village neighborhood, understand that something like this is the message being sent by the graffiti incidents but want everyone to go along with the social fiction about racist hate crimes. The newspaper press takes the racial hate crime story at face value and asks everyone to go along with the social fiction.

Next will come the outrage for writing that this incident is likely a phony hate crime with a hidden agenda to protect public housing from any contemplated Federal public housing cutbacks.  But the public discussion that needs to be held should not be about a highly suspicious hate crime but about the sustainability of public housing in Pasadena. If this article is able to facilitate such a discussion maybe it is all for the better.

Those in the Democratic Party correctly perceive that what is forthcoming is the end or unraveling of the welfare state in the U.S. for sheer lack of money, not hate.  This is why there is so much psychological projection of animosity on to those in the Tea Party who welfare recipients perceive want to take their benefits away. 

But if the Tea Party were not there the reality would not go away. 

Those in the middle class, such as the Tea Party, had $9 trillion in equity in their homes wiped out in the Mortgage Crisis of 2008 after the ill-fated policy to provide affordable housing to nearly everyone. That is twelve times the cost of the Iraq War up to September 2010.  The unintended consequence of the Community Reinvestment Act, sub-prime loans and securitized housing bonds was the debasing of the value of the U.S. currency triggering a bank panic.

If we’re going to prevent London-style riots and property crimes aimed at the middle class or capitalist businesses and increasing social class polarization we’re going to have to have brutally honest discussions about the viability of the welfare state, not forums about phony hate crimes and projection of hate onto the middle class, business and the Tea Party.  Symbolic extortion will not lead to saving the welfare state when there no longer is any money.

Riots worked in the 1960’s and 1970’s but we should not listen to those activists who provoke class hatred or demean those who happen live in public housing.  London riots, flash mobs, and so-called hate crimes won’t save the welfare state but might lead to a backlash against it. 

Conversely, the claims of conservatives that “flash mobs” and riots are not the problem of too few subsidies but too many must also be questioned even If there is some truth to it. The question should be how much of a welfare state can we continue to afford and/or how can be make programs like public housing self-sustaining? Can the City of Pasadena continue to provide luxury public goods and services such as open space, luxury inclusionary housing in upscale mixed use developments, loans to restaurant incubators, and urgent care centers in a city with private urgent care clinics while leaving public housing in a lurch?  

I am skeptical of any attempts at social resolution on such contentious issues as the ramping down of the welfare state by either "the System" or "the Horde" of rioters and activists. Government cloned non-profit agencies also offer not much hope beyond activism and threats of social unrest that will backfire because it will alienate middle class taxpayers. 

But conflicting groups apparently don’t want direct communication about tough issues and thus prefer symbolic interaction.  I will take symbolic crimes over violence or property crimes any day.  But let’s cut through the social and media fictions and redirect the public rage into something more productive.  The outcome of our city and our civilization may depend on it. 

 

GROWING BLACK ON WHITE HATE CRIMES

Media Conceal True Nature of “Flash Mob” Racial Violence 

Relying on documents made available exclusively through a Freedom of Information Act request, we can add another face to the growing picture of racial “flash mob” violence in America. It is a face that the media have concealed from public view. 

This writer was forced to use the local Freedom of Information Act (FOIA) to ascertain the facts about the racial identity of one of the victims of these attacks. The media concealed the identity of the white victim apparently because of misguided racial sensitivity. 

What makes this even more startling is that it is just one of many examples of racial mob violence occurring around the country, without any comment from national figures such as President Obama or Attorney General Eric Holder. But if whites were attacking blacks in this manner, you can bet it would have already have become a national story worthy of comment from national political figures. 

Consider these incidents: 

* At the Wisconsin State fair, groups of black teens numbering anywhere from 25 to 100 “were targeting anyone who was white or appeared to look white,” and beating them, according to the local police chief. At least 18 people were injured, and 30 have been arrested. 

* In Denver, couples leaving restaurants were being attacked by a group of black men with baseball bats. 

* A young white man named Carter Strange had his skull fractured by a mob in South Carolina. He was attacked at random while jogging. 

* A young white man named Dawid Strucinski was beaten into a coma by a mob in Bayonne, NJ. 

* Anna Taylor, Emily Guendelsberger, and Thomas Fitzgerald were beaten to the ground and stomped in separate Philadelphia flash mobs. 

* “Every weekend in July,” according to local news, “police have battled large, flash-mob beatings and vandalism” in Greensboro, NC. 

* In a mostly-white suburb of Cleveland, witnesses reported large groups of young blacks walking through the streets, “shouting profanities and racial epithets,” and one man was viciously beaten while leaving a restaurant with his wife and friends. 

* A young white lady named Shaina Perry was taunted and beaten by a black mob in Milwaukee who remarked “Oh, white girl bleeds a lot.” 

The similarities among these attacks point to a trend: First of all, these are not run-of-the-mill crimes. They typically involve group attacks against defenseless, random victims who have no means to resist and did nothing to provoke their attackers. These flash mobs often stomp their victims even after they are down, as most of the news reports describe. 

Then there are the racial similarities: The attackers are invariably black. Philadelphia’s mayor conceded as much when he condemned flash mobs, addressing the rioters with the charge, “You damaged your own race.” The victims are usually not black. 

Several qualifications are in order: It is clear that only a small number of black teens take part in these attacks. Blacks are more likely to be victims of violent crime than any other group due to black-on-black crime. Also, interracial crime is a fraction of all crime, and hate crime is an even smaller fraction of that. 

Nonetheless, these flash mobs are a social problem that needs to be addressed. If the races were reversed, we would be witnessing an outpouring of guilt of biblical proportions. Instead, the victims are white and we get an outpouring of ignominious silence. So far, precious few leaders in academia, politics, the legal system, or the media have spoken out directly against this troubling trend. 

Far from being isolated incidents, violent flash mobs are part of an emerging social problem that turns the traditional story of American racism on its head. If opinion makers reported accurately about these flash mobs, most Americans would probably alter their views about racism and conclude that these flash mobs are the worst form of racial violence in our nation today. Not all of the flash mobs meet the strict criteria of a hate crime. However, they do represent a growing wave of racial violence. 

The national media should acknowledge what a serious and potentially widespread social problem they are, but instead the press has concealed the racial aspect of this problem. 

To take one particular example, in Chicago on June 14 of this year, the local media reported on a 15-year-old, without identifying his race, who was attacked and robbed by “a group of seven male teens,” all “black.” In a summer filled with mob violence, this story registered as another small blip in an alarming trend that has emerged across the country. However, the June 14 robbery was more troubling than most of the other flash mob attacks: One of the attackers that day had a gun. 

Following their official policy of self-imposed PC censorship, the local media didn’t mention the race of the victim. Thankfully, the Chicago Police Department replied to my Freedom of Information Act request and provided that information in a redacted version of the incident report. It should not surprise anyone that the victim on June 14 was white. (These FOIA documents are attached to this column). 

I can hear the chorus of complaints asking, “Why does race matter?” That question is usually asked with a tone of consternation, as if the person asking the question has determined that race must not matter and is refusing to consider race. 

‘It’s not about race!’ some will say. People are people, and crime is about bad people doing bad things—or good, poor people whose social conditions drove them to beat people. 

But these mob attacks are most certainly about race, and there is only one specific type of person committing these attacks. In Chicago, and around the country, flash mob attacks have been committed by blacks, apparently without exception. 

Not every interracial crime has racial significance. Sometimes a fight is just a fight, a robbery is just a robbery, a mob is just a mob. But when there is a trend of racial victimization and a stark racial component in the participants of the attacks, then there is racial significance. We are fully justified to be concerned with the racial aspect of flash mobs, given the larger context of the flash mob phenomenon in Chicago—to take only one example—this year. 

The flash mobs in Chicago began with flash mob robberies in January when groups of teens shoplifted at three separate stores along Michigan Avenue. In February, Loyola University warned students and staffers about “flash mob offenders” stealing items from nearby stores. In April 2011, a group of 70 “youths” ransacked a McDonald’s and “created a disturbance” according to a news report. 

Then, on Memorial Day weekend, the cultural enrichment turned ugly. A witness told Chicago’s NBC local affiliate that mobs of “animals,” as the witness described them, “were being rude and abusive and throwing trash around and defecating…” Other witnesses reported that “gangbangers” were pushing people off their bikes. 

In June, the attackers showed up armed. In robberies on June 5, between eight and 15 teens boarded a bus without paying and “began hitting people,” according to the Chicago Tribune. Three of those teens were charged with armed robbery, one with unlawful use of a weapon. 

The most publicized flash mob attacks took place when five non-blacks were attacked in one hour by a pack of 20 teens on the North Side. As of June 13, Mayor Rahm Emanuel said that over 30 people had been arrested in the various mob attacks that month. Then, on June 14, the white 15-year-old was robbed at gunpoint by a group of blacks. 

Not far away, the flash mobs could have reached an awful crescendo in Peoria. On June 24, a mob of at least 50 blacks teens were stopping traffic in the street, and “running wildly through yards and porches” in a quiet suburban neighborhood in what one witness described as a “show of force.” Another witness says that a black teen yelled out, “We’re gonna kill all the white people. This is our neighborhood.” In this context, a reasonable reporter would be acting appropriately to include the race of victims and attackers in group attacks. 

However, when it comes to black-on-white crime, as Chicago Tribune editor Gerald Kern publicly admitted, “We do not reference race unless it is a fact that is central to telling the story.” In other words, the Tribune will not reference race. How will we know if a fact is central to a story unless we have context? We’ll never have context to understand racial violence if the media conceal racial facts. If we’re not told the race of victims and attackers, we can’t observe a pattern of behavior, and we will have no idea whether race is central to a story. The Tribune’s reporting is thus an Orwellian void that leaves us all less informed, and less safe. 

But this is not unique. The Washington Post, New York Times, and L.A. Times join the Tribune in admitting that they have, in effect, a policy of not reporting race. 

Whether or not a fact is “central to a story” is naturally a value judgment that says as much about the ideology of an editor as it does about the facts of a story. Needless to say, when the race of mob violence victims is white, a liberal editor will usually not find that fact “central” to a story. 

White victimization in racial violence is an inconvenient fact for those who are dedicated to social justice, a dogma based on faith in perpetual white guilt. Journalism departments play their part in maintaining the dogma. We’re not going to remain addled with white guilt if we fully acknowledge anti-white crime. So liberals downplay white victims to maintain their traditional belief in monolithic white racism, the one tradition that liberals believe in maintaining. 

If we are truly committed to “social justice,” however, we must acknowledge that concealing the facts about racial violence and other social problems leaves us endangered and intellectually impoverished. Refusing to face facts will inhibit finding a solution to the problem, and virtually guarantee that the problem will only get worse. 

SOURCE 

TIMELINE OF THE MORTGAGE CRISIS AND BANK COLLAPSE

The Bush Admin and Senator McCain warned repeatedly about Fanny Mae and Freddy Mac and what thus became the 2008 financial crisis -- starting in 2002 (and actually even earlier -- in the Clinton and Carter White Houses. Democrats resisted and kept to their party line, extending loans to people who couldn't afford them.

GO TO LINK BELOW TO SEE VIDEO

http://www.angelfire.com/ak2/intelligencerreport/house.html

 

MORTGAGE CRISIS CAUSED BY PROLETARIAT, NOT SOLELY BANKS

Below is a letter from Dr. Peter Dreier to Brian Charles of the Pasadena Star News that asserts that Charles is mistaken as to the causes of the Bank Panic of 2008 and resulting financial meltdown.  Below Dreier’s letter is a recent article by David P. Goldman, former Head of Research for Bear Stearns and Bank of America that, contrary to Dr. Dreier, documents that the “proletariat” caused the mortgage crisis, not necessarily the banks. 

Letter to Brian Charles, Pasadena Star News from Dr. Peter Dreier

Brian:

Your column comparing the mortgage crisis and Pasadena’s pension problem is like comparing apples and oranges. They aren’t the same.

The mortgage crisis is about greedy bankers, private mortgage companies, investment banks, and rating agencies all engaging in risky and sometimes illegal behavior to make a profit, often at the expense of unwitting consumers. It is also about the finance industry using its political clout – campaign contributions, lobbyists, the revolving door between Congress and K Street – to get Congress to deregulate the industry so they can engage in these irresponsible practices.  The result, as you point out, is hedge fund managers, top executives (with Mozillo being a good examples), and others making exorbitant salaries and bonuses at the expense of their institutions and the consumers – and, ultimately, the entire economy.  See the Oscar-winning film “Inside Job,” or read Michael Lewis’ “The Big Short,” for the ugly details.  I’ve written about this in many journal articles and columns, including these:

http://prospect.org/cs/articles?article=the_conservative_origins_of_the_subprime_mortgage_crisis

http://departments.oxy.edu/uepi/publications/Foreclosing%20on%20the%20Free%20Market.pdf

 http://www.huffingtonpost.com/peter-dreier/how-to-fix-the-mortgage-m_b_130481.html

The pension situation is about the shortage of tax revenue to fulfill obligations to retired government employees. You point out that the 275 Pasadena government retirees are owed about $4,400/month. That’s $52,800/year. That is a middle class income, not an exorbitant sum.  That’s enough to live on but hardly cushy.  Compared with retirement pensions in other countries, including Canada and Europe, it is quite modest.  It is certainly not on the same order of magnitude of the bankers, etc ripping off the system to pay themselves millions.  Our pension system may be broken, but it isn’t because retired government employees are too greedy.   It is absurd that each city, including tiny cities and poor cities (think Compton or Maywood), have to pay pensions out of their revenues.  For the same reason that states now account for most of education spending, or that the federal government pays for Social Security out of payroll taxes, it is ridiculous to have a crazy-quilt system where retired employees of one city get a bigger or small pension that their counterparts (with the same jobs and skills) in other cities.  Creating a state system like CALPERS was supposed to make the system more rational, but the state has its own fiscal crisis to deal with.  Why? The reason so many cities and states have unfunded pension liabilities is because (a) corporations and the wealthy don’t pay their fair share of taxes, and (b) economic free-fall, caused by Wall Street (described above) has created fiscal chaos and instability in states and cities.  Retired cops, firefighters and others deserve a decent pension. They are not, like Mozillo, the hedge fund managers, and the Wall Street bankers, ripping off the system to make millions at others’ expense.  At some point we may want to raise the retirement age, or increase the payroll tax so that millionaires pay more, or some other fixes, but let’s not blame hardworking firefighters, cops, EMTs, teachers, social workers, secretaries, and other public employees for the fiscal crisis and the pension quagmire. That doesn’t make it easier for our City Council and city manager to fix the problem, but let’s not blame-the-victim either.

That is why your comparison of the Wall Street mess and the pension problem is off base.

RESPONSE to Dr. Dreier:

The people's Ponzi scheme

By Spengler 8/16/11 - Asia Times

David P. Goldman - former head of research or Bear Stearns and Bank of America who left banking over conflicts with his employers that led to the Bank Panic of 2008.  

"What happened to Obama?," asks a psychology professor in an August 6 op-ed in the New York Times. Our brains, he avers, require stories to make sense of things, and in 2009, "Americans needed their president to tell them a story that made sense of what they had just been through, what caused it, and how it was going to end."

The story the country awaited from Barack Obama, according to Professor Drew Westen, went like this: "This was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated with your lives and futures. It was made by conservative extremists who told us that if we just eliminated regulations and rewarded greed and recklessness, it would all work out."

The trouble is that "Wall Street gamblers" didn't do the speculating. The American public did. This was a Ponzi scheme by the people, of the people and for the people, the most democratic crony-capitalist scam in the history of humankind. Households made more money than the bankers during every year of the bubble, and ended up better off than they were before the bubble, while the bankers got wiped.

Take two gauges of wealth: real estate assets owned by American households, against the value of bank stocks (using the KBW index of American bank equities). The price of bank stocks measures the value of institutions as well as the net worth of the highest-paid bankers, who take most of their bonuses in equity.

Household real estate assets rose nearly two-and-a-half times from around $9 trillion in 1998 to $23 trillion at the peak of the bubble in 2006. Bank stocks had a smaller bounce, from around 80 on the KBW index to a 2006 peak of 117, a gain of less than 50%.

That's not surprising, for households could buy a house with 5% or 10% down, and deduct the mortgage interest from their taxable income. A homeowner who bought a US$100,000 home with a $5,000 down payment doubled his original stake every year as home prices rose 10% per annum. Return on equity of 100% to 200% was common for homeowners; Goldman Sachs' return on equity never made it above the mid-30% range.

The contrast is clearer if we index 1998 to 100 in order to put the two gauges on the same scale Household real estate wealth remains 70% higher than it was in 1998, even after the crash in home prices. Bank stocks, by contrast, are worth half of what they were in 1998. Many of the big banks are much worse off. Bank of America is trading at less than a third of its 1998 price, and Citigroup is at barely a tenth of its 1998 level.

By no means do I excuse the banks. Until 2005, I headed fixed-income research for Bank of America, and resigned for what the bank and I agreed to call "philosophical differences". On leaving, I sold every share I owned. Years before (1993-1996) I worked for Bear Stearns, and stayed in touch with such old colleagues as Ralph Cioffi. He ran the firm's mortgage head fund. The July 2007 failure signaled the crisis to come. The federal government charged Ralph with malfeasance in the hedge fund's demise, but a jury rightly acquitted him; from what I could tell, he was guilty of nothing more than being wrong about the market.

In July 2007, I warned Larry Kudlow's national audience on CNBC about a "trillion-dollar AAA asset bubble". Even though I left the financial industry because I disagreed with its direction, and alerted the public early on, one admits such past affiliations with trepidation. Before the likes of Professor Westen, an ex-banker feels like Charles Darnay explaining his pedigree to Madame Desfarges.

In general, Wall Street remained stolidly sanguine about the bubble until it was too late. There were exceptions - Goldman Sachs and the John Paulson hedge fund, among others - who took short positions on subprime. But there had to be a long position on the other side, and the destruction of institutional and personal wealth among the top tier of bankers exceeded the balance-sheet damage to American households.

Wall Street was the enabler, but Main Street was the addict. Americans stopped saving as long as home prices rose; when home prices started to fall, they started saving again.

That is why the national narrative that Westen proposes is ill-informed, innumerate, vituperous, malicious and false. American households levered a $6 trillion net inflow of foreign savings during the decade 1998 through 2007 into a bubble that benefited them far more than it did Wall Street. The impact of the bubble on the household balance sheet exceeds the growth in real-estate assets, moreover, because most small business expansion followed the housing bubble.

Americans, as I argued on August 2 (The collapse of America's middle class Asia Times Online, August 2) must adapted to a technology-driven global economy, after a decade and a half of riding the crest of the savings tsunami that flooded American markets during the bubble years. Whatever they do, it will not be easy. The bankers got no more than they deserved, to be sure, but there is not much left to beat up in the exsanguinated financial industry. To propose a national witch-hunt against "Wall Street gamblers" is a stupid and wicked thing to do.

 

PUFFED UP SCHOOL DISTRICT (PUSD) TEST SCORES UP 0%

Here is what the press release from the Pasadena Unified School District (PUSD) claims regarding the release of test scores by the state’s assessment system:

“Student achievement continued to rise in the PUSD, with John Muir High School registering growth, according to the 2011 Standardized Testing and Reporting (STAR) system.”  (“PUSD Test Results Released – Four Years After Restructuring Muir High School Makes Gains”). http://pasadenausd.org/modules/cms/pages.phtml?pageid=241195&sessionid=81f139b19117bbcdac349955954e2024

But here is what the percentage of increase is as reported in the PUSD’s own data:

 

Test	District Wide One-Year Change 2010-11	District Wide Five-Year Change 2007-2011
Percent of students at or above proficiency English Language Arts (ELA) including California Standards Test (CST)	0%	11%
Rank student at or above proficiency ELA, CST and California Math Achievement (CMA)	0%	11%
Percent of students at or above proficiency ELA, CST, CMA by 1-Yesr Change	0%	11%
Percent of students at or above proficiency ELA, CST, CMA by 5-Yesr Change	0%	11%
Percent of students at or above proficiency CMA, CST - MATH	1%	10%
Math Summary Percent students proficient	1%	10%
Math Summary Percent student proficient MATH 1-Year Change	1%	10%
Math Summary Percent student proficient MATH 5-Year Change	1%	10%

Source:

http://pasadenausd.org/modules/groups/homepagefiles/cms/917180/File/PrintColor-1-5YearProficiencyChart.pdf?sessionid=e99549d00ffe31f79cc938d82b4173d9

No doubt teachers, students, and school administrators have worked hard at PUSD to raise test scores.  Over the last five years district wide test scores have risen 10% to 11%.  But the past year test scores are up 0% to 1%.  In other words, test scores have flat-lined.  But that’s not what the above-referenced press release reports.

Muir High School Language Arts scores have reportedly increased 4% last year and 8% in the last five years, but only 31% of Muir students are language proficient and 69% are not proficient.  By focusing on the percent of increase in test scores (8% -5 years) instead of the total percent proficient (31%) we see the tree but miss seeing the forest.  Despite everyone’s hard work, there are no large gains at Muir and the rate of increase in scores is declining. 

Averages, however, can be misleading if the statistical variance is not also reported as would be ethically required by an impartial statistician. The percentage of test scores may indeed increase but if, say, 5,000 students left the school district not by graduation, it may be that the increase just reflects that those who scored lower on tests left the district.  A number of other explanations could explain test scores increasing other than by better performance.  So test scores at PUSD went up 10% to 11% over 5-years doesn’t tell us very much. 

The same could be said for PUSD’s claim that John Muir High School test scores “registered growth.”  According to PUSD language arts scores rose 8% and math scores 7% over the past 5-years, or 2% per year. But test scores increased only 1% last year indicating a 50% drop in the rate of increase.  With a typical statistical error rate of 5%, the 1% gain would wash out to zero. 

As a good friend of mine put it when I asked him what he thought about PUSD's test scores he said "If you have a penny and I give you another penny, the rate of increase is 100%.  But you still have two pennies.  That is why PUSD's reporting of school test scores is not worth two cents. 

I’m sure there are many individual stories of success at PUSD.  But here is what should have been reported: 50% of students are not language proficient and 54% are not math proficient. 

It is one thing to boast about gains in math and science in the classroom. But when it comes to reporting public school test score data statistical standards are abandoned. Standards and ethics are only for government to impose on the commercial sector and not to be imposed on government. 

PUSD’s advocates will no doubt say that this writer has no moral credibility in reporting that in reality there have been no gains in test scores district wide unless I have volunteered as a tutor or provided hundreds of hours of volunteer service to the school district.  This is a dodge from the reality at hand.  This writer takes no delight in reporting that PUSD’s test scores are what they are – flat for the last year and modest over 5 years – and adjusted for a standard error of 5%, may indicate no gains at all.   

American culture likes to report success whether one is a businessman, religious evangelist or school administrator.  But reality is much harder and much more intractable.  Without ethical standards for reporting school test scores, we can’t put much credibility in them.   Is PUSD lying about test scores?  No.  They are just putting a positive spin on them.

 

 

 

 

 

 

PASADENA IS BEDFORD FALLS - IT ISN'T A WONDERFUL LIFE

If there is anything I have learned over the past ten-plus years that I have lived in Southern California, it is that stalking tips often come from the most unlikely of places.  Take for instance this past weekend.  The Grim Cheaper’s father has long been a collector of model trains, so last Sunday afternoon the GC headed over to the Whistle Stop train store in Pasadena to do some Christmas shopping for his dad.  While there he stumbled upon some vintage locomotive photographs taken by photographer Stan Kistler.  Amazingly enough, one of those photographs happened to be a May 1946 image of the former Santa Fe Lamanda Park Train Station in Pasadena which at the time was dressed to appear as the Bedford Falls Train Station for the filming of It’s A Wonderful Life!  And while the GC did not actually purchase the photograph for me (he didn’t earn that nickname for nothin’!), when he got home he immediately told me about it and, let me tell you, I almost fell out of my chair!  I could not believe that one of the most famous Christmas movies of all time had been filmed right in my own backyard and that I had not previously known about it!  Because the GC had failed to write down – or remember – exactly which station had been used in the filming (men!), I immediately ran right over to the Whistle Stop to find out.  I also purchased the photograph (which is pictured above), not for myself, but for fellow stalker David in Seattle, as It’s A Wonderful Life is one of his all time favorite movies. 

 

DISCERNING SOCIAL SIGNALS OF LOOMING PASADENA VIOLENCE?

from Ms. Anon-y-moose, Pasadena - by email

Maybe it's a bizarre line of thought, but I'm just asking.
Are these three items connected?

1) Peter Dreier & Co.'s sympathy for foment of civil unrest: 
http://pasadenasubrosa.typepad.com/pasadena_sub_rosa/2011/02/more-on-dr-peter-dreier-support-for-violence.html    

2) A seemingly irrelevant screening last weekend of an anti-white-supremacist film --"Erasing Hate" -- at All Saints Church:
http://www.pasadenaweekly.com/cms/story/detail/?id=10386    

3) Racist and "homophobic" graffiti of possibly suspicious origin scrawled this past week inside Kings Village in NW Pasadena:
http://www.pasadenastarnews.com/ci_18648763  (updated article)