Workplace

The growing dangers of the Sanctimonious Society

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Welcome to the sanctimonious society. Social media has taken this to new levels. Given the superficiality of much of today’s internet posts, memes and rants, what it has done is destroy the need for serious debate over contentious issues. Before discussing the likes of Twitter or Facebook censoring certain bloggers, the discourse is self-evident. How often do you read a credible rebuttal to a topical post? Hardly ever is the answer. Usually the criticism is laced with sanctimony, expletives and ridicule. The aim of trolling is none other than to shut down debate and make fun of the person who makes the statement. The intensity of cyber-bullying is chronic. In some respects it is none too surprising we are dealing with words like snowflake, trigger warnings and safe spaces these days.

Take cyber bullying stats from the Association of Psychological Science in the US. In 2015 more than 16,000 young people were absent from school daily because of bullying. 83% of young people say cyber bullying has a negative impact on their self-esteem. 30% of young people have gone on to self-harm as a result of cyberbullying. 10% of young people have attempted to commit suicide as a result of cyberbullying. People who have been bullied are at greatest risk for health problems in adulthood, over six times more likely to be diagnosed with a serious illness, smoke regularly, or develop a psychiatric disorder compared to those not involved in bullying. In the US alone, suicides per 100,000 head of population since 2000 are up 38% according to WHO.

However the WiFi world is quickly escalating unreasoned stupidity in the real world. The internet is awash with so much ill-considered social media activity that if one chooses to breathe for 10 minutes the story will likely have changed 180 degrees from the initial knee jerk. Take the terrible events of Charlottesville this week. The driver that plowed into the crowd was initially reported as a white supremacist before other media reported he was Antifa. Regardless of his affiliation his actions were repugnant. Anyone with common decency can see that. Trying to justify the legitimacy of masked Antifa (many who were carrying baseball bats) staging a ‘peaceful’ protest was somehow morally superior to alt-right torch bearers or vice versa is almost like trying to say watering your lawn with gasoline is less harmful than diesel to kill off weeds.

While the tragedies of the lost lives and depraved acts of violence from both sides is impossible to ignore, the (social and mainstream) media was awash with one sided views. There was no debate and balanced reasoning was next to non existent. One could argue the media has always been biased and to some extent that is true however in the social media world clickbait means revenue and the more sensational and less accurate the reporting the higher the likely ‘hits’ which only exacerbates the problem. We only need to look at CNN’s admission that the ‘Russiagate’ story has been a fabrication for ratings. Integrity be damned. Sadly that is becoming almost an all too common thread of today’s society. Selfish, narcissistic and insensitive bullying.

The other problem nowadays is that almost everyone carries a video camera. It is as if many think they are behind the safety of their own computer screens, oblivious to what is going on. Only a few months ago, an armed SWAT team boarded a Malaysian Airlines flight to suppress a crazed passenger. Despite the screams to get down, multiple people could be seen standing as tall as possible trying to improve the angle of the altercation on their iPhones. There is a sick surrealism to it. Yet if we take this clickbait of someone’s footage at Charlottesville, disseminated to an audience already prejudiced, it only adds to the hysteria. The instant it hits the mobs’ feed it can lead to incorrect assumptions to what is actually going on, even worse hampering emergency services efficacy in controlling the situation. Yet, 10 minutes later, the unedited version of the same scene or one shot from a different angle can completely undermine that biased view. It might show how the violence really escalated rather than the deliberately cut version showing the evil of the unhinged. If we managed to get all of the collective footage from 1,000s of smartphones and objectively analyzed it all it wouldn’t be surprising to see both sides fueling the violence in different areas. Yet because it fits the picture of the ‘divided’ country narrative no attempts are made to seek balance which only fires up the misinformation.

Did Trump take too long to condemn the KKK, Neo-Nazi and White Supremacists? Perhaps. Was he waiting for a full debrief on what went on? Perhaps. Are all 63 million odd Trump voters that don’t openly condemn these acts of violence guilty of being white-supremacists by association? No. Are all Democrats responsible for what Antifa does? No. Internet trolls seem less intent on getting tacit admissions of guilt from their enemy. Think of the campaign which has identified some of the torch bearers leading several to get fired by their employers. Where was the campaign to identify the baseball bat wielding Antifa thugs? Was it because they were masked? Some might cynically claim they don’t have jobs to be fired from. However this idea that only one side is guilty serves no purpose and risks further division.

What we have here is a failure to communicate. Both extremes are so caught up in their own views there is little scope for reasoning much less any desire to consider the alternative argument. This idea that Trump is all of a sudden responsible for unleashing this division is preposterous. Hate doesn’t surface in 6 months. It brews over longer periods of time. If anything Trump is a catalyst to it. His caustic manner is tipping an apple cart of decades of political correctness and walking on eggshells legislation that has sought in many cases to promote victimhood. The President’s actions now threaten many of these altruistic views and socialist ideals. They are upset. This isn’t to debate the rights and wrongs of policy set by previous administrations, rather seek to identify why this scourge is happening. It doesn’t justify any forms of violence but it highlights how tightly sprung things are. Just think of why a p*$$y grabbing vulgarian was able to defy all the odds in the election? Could it be that the underbelly of division has existed in America for so long? It finally reached breaking point and delivered him to the White House? The idea he has created this division is a complete falsehood. One might argue his tweets are stirring this hornet’s nest but the sad fact of the matter is that the problems have been brewing way before his inauguration. Ask yourself why hasn’t the mainstream media worked out the best way to cripple Trump is to ignore him? 18 months on since he won the GOP ticket they have not stopped hyperventilating which gives him more airtime than he deserves and ultimately makes them look foolish.

This bullying behaviour is only likely to get worse. The ever worsening cesspit of social media will only exacerbate the problem. Behind a keyboard, people feel they can afford to be 10 feet tall but seldom do they realize their actions could carry (un)intended negative reactions.

More laws are being created to clamp down on what is called ‘hate speech’ or discriminatory language. However we are witnessing more countries shut down free speech and innocent people are having their lives destroyed for expressing points of view that are completely acceptable and not even the slightest bit racist or bigoted (Australians will know the secret trial held by the AHRC of several QUT students expressing a fact). Seeking prescriptive measures to shut people up will invite exactly the sort of behaviour it seeks to prevent. One can call former EDL leader Tommy Robinson a bigot but he has two best selling books in the UK. Could it be there are more people in the UK that share his views than politicians are willing to admit because political correctness is easier for them to dodge discussing pertinent issues? Whether Tommy is right or wrong in his analysis is beside the point. He obviously represents a larger mindshare of the community. Shutting them up forces the movement underground. Do we ban his book? It doesn’t seek to address the problem which in his case is Islam. In some cases he has a point. The exposure of predominantly Bangladeshi/Pakistani rape gangs who have groomed 100s of innocent women across 18 British cities is an issue. Listening to Newcastle City Mayor Nick Forbes, one of the places impacted by this depravity, spent an entire interview dodging the question of these grooming gangs not wanting to discuss the M word. All it does is alienate more people against an optically biased system.

One can debate till the cows come home about whether the M word is the main factor but if it is not openly debated, it is not hard to see why some will grow prejudiced. It is hardly desirable. It doesn’t mean the thinking is right rather a growing number of people feel ignored. It doesn’t automatically make them racists or bigots. Some feel politicians are hiding from speaking openly of jihadi attacks on home soil, dismissing them as lone wolf attacks or the community’s fault for forcing them to commit such atrocious acts. If indeed the left leaning media is so assured of bigotry by Anglo Saxon Brits why not show the other side of the debate and broadcast hours of footage showing Muslim clerics speaking out against these attacks, everyday Muslims integrating with their non-Muslim communities and how they are actively working with authorities to weed the radicals that are demonizing their faith? No, it’s easier to point fingers at bigoted Brits who see no comfort offered by their elected leaders in what they see happening to their community. Once again bullying people for expressing what they perceive as legitimate concerns doesn’t solve the problem.

To put the shoe on the other foot, Robinson posted a video link of the start of an Oldham (a borough of Manchester) Council meeting. It showed the majority of Anglo-Saxon councillors with their heads bowed as the elected Muslim Mayor requested his imam to say prayers. Of course it easy to see why some might draw conclusions to the decline of centuries of British culture however looking deeper into the matter yielded interesting findings. Voter turnout at the last election in the 25% Muslim borough was around 30%. It was a fairly held election. Democracy. Whether local politics is too petty for some, if the residents of Oldham are so incensed by the idea of an imam saying prayers in Arabic and English after following the Serjeant at Arms carrying a mace bearing a Christian cross it is hard to have sympathy. If one is truly in fear of the cultural upheaval, why not use their democracy to change it? Expressing outrage at something that is controllable seems ridiculous.

Australia is in the midst of bullying as well. Same sex marriage (SSM) is on the table. A postal plebiscite is set to occur. Many argue that parliamentarians should vote on it and get it over with. Indeed there are far more pressing economic issues to deal with. Yet the Turnbull government lacks any moral authority and is beholden to so many internal factions to be able to pass so called marriage equality.

Still regardless of one’s views on SSM, the bullying is in full effect. Musician Nick Minchin created one of his hallmark curse-ladened parodies of a Peter Allen song called, “I still call Australia homophobic”. Sadly he is part of the problem, not the solution. One doesn’t have to be homophobic to be against SSM. Yet Minchin thinks it is ok to call these people ‘bigoted c*nts’. Such words have all the same traits of ridiculing Trump or Brexit voters in the lead up to the vote. It has the opposite impact at the polling booth.

A Tasmanian archbishop is being hauled before a tribunal for expressing his anti-SSM views on the grounds of spreading hate. Are his views old fashioned or just part of millennia of religion? A hotel was forced to cancel a lawful gathering of anti-SSM campaigners through intimidation. Is this the sort of behaviour (albeit at the fringe) that unites a nation on a subject?

Some argue it is a waste of $122mn to hold a SSM plebiscite for a government in a $750bn hole. Maybe it is but to many out there, they want a democratic vote to take place. Some feel lobby groups that ignore their concerns (however backward, ancient or stiff) on issues they hold dearly are the exact reason why a vote should be held. It doesn’t matter to them whether a Catholic country like Ireland passed gay marriage, these people don’t want to be brow beaten, attacked or pilloried for expressing an alternative view. I am quite certain that should ‘Yes’ get up in the plebiscite people will have had their say. Shouting down the views of others is wrong. Let their voices be heard and allow the marketplace for free speech settle the differences. Sadly this is not the case. Any polling done by Get Up which shows an emphatic victory should be discounted. Indeed if they are so sure of a ‘Yes’ outcome then they should be over the moon to let democracy back its findings. Secretly they think otherwise. What they view as a waste of money won’t be to others.

Some people fear (again we’re not debating the rights and wrongs of it) that should lobby group bullying win the fight for SSM by an act of parliament then what comes next? We only need to look at the Safe Schools Programme in Victoria which is nothing more than a way to enforce gender indoctrination under the guise of anti-bullying. Cross dressing/role playing, whichever bathrooms and other ‘progressive’ programs are not necessary for 6 year olds. Boys playing with Tonka trucks and Matchbox cars or girls playing with Barbie dolls is not something that requires the school system to enforce boys and girls to reverse toy box selections. When I was a baby my mother recalled I had a love for cars. Even from my pram I knew more car names than English words. I’m sure she wasn’t wheeling me around the Warringah Mall car park trying to force me to do male things. By the same token my daughters weren’t chained to the Bratz corner of Toys’R’us in order to force them to be girls. Seeing her mother apply makeup was something she wanted to do.

What this all boils down to is society’s growing intolerance for free and open debate. We do not lack the ability to talk but we’re incapable of listening. That alternative views must be mocked or banned. There are some with such inability to accept alternative views who suggest prison sentences for climate skepticism. Are the arguments for climate change so weak that alarmists believe the only way to force the end game is to legally ban freedom of opinion?

One imagines that if we put an Antifa and a KKK supporter in the same room unbeknownst to them both and asked a standard questions on a variety of topics they probably would agree on more than they would if within their representative groups. These experiments have been conducted before where complete strangers meet and by the end when identities are revealed there is an awakening. It isn’t forced but occurs naturally through cordial conversation.

I make no apology for my conservative views. One friend is an unabashed socialist. We debate intensely on a variety of issues we have polar views on. I recently wrote to him privately to thank him for broadening my understanding of his views. While I might disagree with him I certainly respect his right to debate his points, which he often does insightfully. Some points are indeed valid and on certain issues we see eye to eye. Others less so. However we listen.

Sadly sanctimony is becoming ever more firmly entrenched into our culture and it can have nothing but bad outcomes. Perhaps to end with a Jewish proverb – “slander slays three people: the spoken by, the spoken to and the spoken of”

 

What do we really want from an army?

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It is a serious question. What do we really want from our armed forces? We pay billions in taxes to hopefully arm them to the teeth with the best technology, skills, training and capabilities to win wars should we ever find ourselves in one. Victory is the only choice in war. The ideal scenario is to make the enemy fear you enough such as you won’t end up in battle. However the military should never be a place that is used to test social experiments.

Then why the push for making the military or any other emergency service anything other than the best? Gender balance and diversity are irrelevant. News has resurfaced that the Australian Defence Forces (ADF) are being set gender recruitment targets. It is insanity. Merit should be the only criteria. If 100% of them happen to be women based on merit then so be it but setting gender targets as a slated goal is obtuse. If more women wish to join the armed forces through desire, hunger and passion than men then that is expressing a clear will.

Eligibility standards are being lowered to help hit diversity targets. You can see the standards difference in these two charts posted by the ADF.

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Recruiters at the ADF have been told they must hire women or face relocation if they don’t comply. The recruiters say there are no jobs available for men in the in the infantry as a rifleman or artilleryman. But these positions are marked as ‘recruit immediately’ if a female applies. If a 50kg woman is in the artillery a 43.2kg M-107 shell is over 80% of her weight. An 80kg man would be lifting the same shells at around half of his weight. This is basic physics.

The West Australian newspaper reported one recruiter who said, “This is political correctness gone mad. I don’t care if it is a man or a woman – I just want to get the best person for the job.”

Yet the political correctness is promoted from the top. Defence chief, Air Chief Marshal Mark Binskin, stressed the importance of diversity for the ADF. “A diverse workforce is all about capability. The greater our diversity, the greater the range of ideas and insights to challenge the accepted norm, assess the risks, see them from a different perspective, and develop creative solutions.”

Let us not confuse diversity with skills. In WW2, the US Army employed Native American Indians to work in intelligence. The idea that their native tongue was next to impossible to decode if transmissions were intercepted by the enemy. The US military wasn’t making a diversity play to even out race, gender or religion. It was employing a clear tactical advantage to help win a war. Such intelligence is vital in planning battles and tactics. The enemy wants to know our plans in advance such they can ambush or counter. The Navaho language meant the Japanese intelligence forces were completely flummoxed and suffered huge losses as a result. The merit was the rarity of the Navaho language, a skill no one else had. Think of how hard the British worked at breaking the codes of the German Enigma machines at Bletchley Park. Skill is is the defining factor.

It gets more ridiculous. One senior retired military contact has said that those who are recruited are now allowed to raise a red card in protest if a drill-sergeant is offending their sensitivities. Seriously? Surely an army is as strong as its weakest link and if leaders can’t drill discipline into his or her troops what hope have they in battle? Perhaps they can just disobey orders and avoid a court martial because they deployed a red card on the battlefield. Surely no one joins the army expecting it to be a life of late morning lie-ins, frequent recreation and late nights at the bar.

The military should never be a social experiment. It is off limits. This is not to say women should not have a chance to join it. In fact the desire to serve one’s country is indeed an excellent trait to have but putting in place a system that excludes Victor, a fitness freak with a black belt in martial arts from joining the infantry, for Victoria, a lady with a BMI of 30 makes no sense. If Victoria is the black-belted gym junkie and Victor is a slob then of course it makes sense to recruit her.

At the end of the day with bullets whizzing around and artillery shells exploding around them it is not hard to envisage that every soldier looks to the person to the left or right of them wondering only about their capability to do the job, not celebrating the army’s pro-diversity drive. Anything that potentially damages morale should be avoided at all costs. Dropping standards for both genders is fraught with long term risks and turning the ADF into an organization that puts more emphasis on feeling warm and cuddly versus a gung-ho group of steely-eyed effective combat troops lowers our capability to defend.

We must move on from this politically correct nonsense because in the end it will literally kill us. Then again we are getting our submarines built in Australia, not because they will be better built but because our defence capability took a back seat to buying votes. Don’t think our enemies aren’t always keeping on top of our (growing lack of ) capabilities.

Death from overwork on the Tokyo Olympic Stadium

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After the first stadium was rejected for its exorbitant cost, the ‘budget’ conscious stadium started 14 months later than anticipated. Due to the delay, work on the new stadium has caused another scandal – excessive overtime. One worker has taken his life after logs showing he had worked over 211hrs of overtime in a month. One shift saw the worker start at 6:30am and finish up 26 hours later. One wonders what will turn it? If Tokyo Governor Yuriko Koike offers a glib apology what hope is there of reform? The punishment for Dentsu (who saw a worker commit suicide) was it wasn’t allowed to apply for any Tokyo government ad contracts for one month.

While the advent of Premium Friday (workers can knock off at 3pm on the last Friday of each month) is a positive step forward and having employees clock on & off makes sense, there is a deep seated cultural problem of not wanting to become an outcast within a company. Although the The Japan Institute of Labour Policy & Training reports that since 2002 bullying and harassment claims to the Labor Tribunal have soared from under 6% to over 20% at the same time total disputes have trebled to over 300,000 annually. One worker from Olympus complained his bosses were being unethical by poaching many of a contractors staff. His punishment was demotion among other humiliation. In order to avoid being unfairly treated, people are using the ‘-hara’ (pawa-hara = power harassment, seku-hara = sexual harassment, mata-hara = maternity harassment) route to their advantage as the following charts show.

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For corporates in Japan, the government is the leader. It took PM Koizumi some 15 years ago to introduce the ‘Cool Biz’ concept (removal of neckties in the middle of sweltering summer during a period of power conservation) because corporations didn’t want to risk being the odd one out.

However there are exceptions. One company in Japan has a very open approach to hiring and paying its staff top rates that are based on performance. Staff are willing to work long hours because inputs have transparent outputs. Instead of getting one or two months pay twice a year like many Japanese corporates offer no matter how ordinary the real performance is this company has employees who think, according to one, “like working in heaven.” Simple – they are paid for their abilities and the trappings of that success are indeed visible.

The Dunkirk diversity police

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The sad thing about the diversity brigade is that victimology must trump historical fact. Dunkirk was a mostly white British, French, Dutch, Polish and Belgian male affair. It just was. Historical movies tend to work better when they reflect authenticity. A story of the brave putting their lives on the line to save other braves from almost certain captivity if not worse fate. To think the entire course of WW2 may have altered were the Allies to lose 330,000 troops. The Allies were mulling a conditional surrender but the success of the rescue was a massive shot in the arm for the plucky Brits and the Allies. The High Command wasn’t mulling over how much diversity was on the shores of Dunkirk, they wanted to save as many lives as possible under harrowing circumstances. The Dunkirk movie got berated for sticking to facts rather than Hollywood’s general taking liberties with them.

So spending time bleating about a lack of diversity when 68,000 Allies troops gave their lives to protect the freedoms they enjoy today misses the mark. It is typical of the ungrateful and selfish mindlessness of those who thrive on victimhood despite most cases being a function of their own actions. Victims of change rather than agents of it.

Perhaps one could argue there were too many African-Americans in the Tuskagee Airmen but common sense would be to acknowledge they were in fact African- Americans who had the enviable record of not losing a single bomber on their watch in WW2? Such was their success, the bomber crews would insist on their escort, not knowing their background. Sadly their colour was contentious at the time. Still the movie cast the correct balance of diversity based on cold hard facts.

Surely they should celebrate the appointment of a female Dr Who after 12 consecutive male time lords. One would imagine the complaint will be that the BBC could have picked an LGBT candidate of colour instead of a heterosexual white blonde.

Some may argue that the recent Hawaii 5-0 salary row was discriminatory and defends the need for hard diversity targets. The two Korean actors who often play a relatively minor role in the show complained they were paid less than the main stars. They chose to refuse the contract. Few of us are privy to the driving economic factors which draws the audiences – presumably the main stars Steve McGarrett & Danno. If the next season of Hawaii 5-0 tanks the ‘white’ producers will be fired for poor judgement. Bill Cosby had the #1 ranked TV comedy for 5 years straight and earned $40,000 per episode, the highest paid actor in television history at the time. At one point, The Cosby Show was even ranked the most profitable television show in history.

As one who has hired Jamaicans, Kiwis, Koreans, Chinese, Japanese, Americans, Canadians, Brits, Thais among countless other nations including members of the LGBT community there were three thing that were relevant – ability, hunger and passion. Nothing else really mattered. It wasn’t their diversity in background. It was the diversity in thought. Perhaps the diversity brigade should learn these lessons before crying foul at every opportunity. Some claims may have legitimacy but the dig at Dunkirk’s cast has absolutely none.

Thank you Reebok

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Thank you Reebok. Where would we be without your lessons in telling us what is appropriate in the PC world? While many view that infamous line as one of a dinosaur (in hindsight it is a dramatic improvement over other locker room talk) I’m sure many of you have encountered women (and men) who warmly welcome comments about a new haircut, attire or shoes. Many of you haven’t seen those people march right into the HR department to lodge a formal complaint. One would imagine if Brad Pitt or George Clooney had said it then the press would spin it another way. Where was Reebok when Hillary Clinton joked about wanting to watch a replay of Lenny Kravitz’s wardrobe malfunction that exposed his Prince Albert? Surely an opportunity to protest against the brazen sexism against men.

However what is it with corporates that feel they have a need to enforce views on same-sex marriage, LGBT, sexism, climate abatement or religion? I don’t fly Qantas because it’s CEO pushes the agenda on passengers and staff, I don’t drink Starbucks because of its religious beliefs and I don’t need Unilever to preach it’s diversity. All I’m after is the product that serves the need. Not wrapped in political point scoring

In Reebok’s case the Institute for Global Labor & Human Rights made allegations in the past that the sportswear company was exploiting workers (80% female) in El Salvador. The company has denied the allegations after a thorough investigation.

In any event, should Reebok make huge profits on the back of these remarks to the French First Lady will the product planners  secretly pray for the next “gaffe” to help the brand’s performance? In a round about way Reebok is exploiting a supposed defence of women’s rights to boost its bottom line. Perhaps it should donate every cent earned from the campaign on awareness? Or maybe upping the pay of its factory workers? Then people could remark about its corporate responsibility  was “in such good shape” That would be beautiful.

Illinois Police Pension can’t protect or serve – it is going bust

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Sadly the Illinois Police Pension is rapidly approaching the point of being unable to service its pension members and a taxpayer bailout looks unlikely given the State of Illinois’ mulling bankruptcy. Local Government Information Services (LGIS) writes, “At the end of 2020, LGIS estimates that the Policemen’s Annuity and Benefit Fund of Chicago will have less than $150 million in assets to pay $928 million promised to 14,133 retirees the following year…Fund assets will fall from $3.2 billion at the end of 2015 to $1.4 billion at the end of 2018, $751 million at the end of 2019, and $143 million at the end of 2020, according to LGIS…LGIS analyzed 12 years of the fund’s mandated financial filings with the Illinois Department of Insurance (DOI), which regulates public pension funds. It found that– without taxpayer subsidies and the ability to use active employee contributions to pay current retirees, a practice that is illegal in the private sector– the fund would have already run completely dry, in 2015…The Chicago police pension fund held $3.2 billion in assets in 2003. It shelled out $3.8 billion more in benefits to retired police officers than it generated in investment returns between 2003 and 2015…Over that span, the fund paid out $6.9 billion and earned $3.0 billion, paying an additional $134 million in fees to investment managers.”

The public pension black hole in America is an alarming issue.  In the piece, “The Public Pension Black Hole” it was plain to see the problems of unfunded state pensions is rife across America. Take California- “The US Federal Reserve (Fed) reported in 2013 that the State of California had an official unfunded pension liability status equivalent to 43% of state revenue. However, if marked-to- market with realistic discount rates we estimate that it is equivalent to 300% of state revenue or 7x greater. Going back to 2000, California had an unfunded liability less than 11% of tax collections. As a percent of GDP it has grown from 2% to 9.7% based on official figures. If our estimate is correct, the mark-to market reality is that California’s unfunded state pension (i.e. for public servants only) is around 18% of state GDP!”

The problem for Illinois is that a taxpayer funded bailout is all but impossible. The State of Illinois ranked worst in the Fed study on unfunded liabilities.  The unfunded pension liability is around 24% of state GDP. In 2000 the unfunded gap to state revenue was 30% and in 2013 was 124% in 2013. Chicago City Wire adds that the police fund isn’t the only one in trouble.

“Chicago’s Teachers Union Pension Fund is $10.1 billion in debt. Its two municipal worker funds owe $11.2 billion and its fire department fund owes $3.5 billion…All will require taxpayer bailouts if they are going to pay retirees going into the next decade…Put in perspective, the City of Chicago’s property tax levy was $1.36 billion in 2017…Paying for retirees “as we go,” which will prove the only option once funds run dry, will require almost quadrupling city property tax bills…Last year, it would have required more than $4 billion in revenue– including $1 billion for City of Chicago workers, $1.5 billion for teachers, and $1.5 billion for retired police officers and fire fighters.”

This problem is going to get catastrophically worse with the state of bloated asset markets with puny returns. Looking at how it has been handled in the past Detroit, Michigan gives some flavor. It declared bankruptcy around this time three years ago. Its pension and healthcare obligations total north of US$10bn or 4x its annual budget. Accumulated deficits are 7x larger than collections. Dr. Wayne Winegarden of George Mason University wrote that in 2011 half of those occupying the city’s 305,000 properties didn’t pay tax. Almost 80,000 were unoccupied meaning no revenue in the door. Over the three years post the GFC Detroit’s population plunged from 1.8mn to 700,000 putting even more pressure on the shrinking tax base.

In order for states and local municipalities to overcome such gaps, they must reorganise the terms. It could be a simple task of telling retiree John Smith that his $75,000 annuity promised decades ago is now $25,000 as the alternative could be even worse if the terms are not accepted. Think of all the consumption knock on effects of this. I doubt many Americans will accept that hands down, leading to class actions and even more turmoil.

 

Repossession by remote

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A growing number of car loans in the US are being pushed further down the repayment line as much as 84 months. In the new car market the percentage of 73-84-month loans is 33.8%, triple the level of 2009. Even 10% of 2010 model year bangers are being bought on 84 month term loans. The US ended 2016 with c.$1.2 trillion in outstanding auto loan debt, up 9%YoY and 13% above the pre-crisis peak in 2005.

Why is this happening? Mortgage regulations tightened after 2008 to prevent financial lenders from writing predatory loans, especially sub prime. Auto lending attracts far less scrutiny. Hence the following table looks like it does with respect to outstanding accounts on loans

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Sub Prime auto loans, at all time records, make up 25% of the total. Devices installed in cars let collection agencies repossess vehicles by remote when the borrower falls behind on repayment. This lowers risk and allows these long dated loan products to thrive. Average subprime auto loans carry 10% p.a. interest rates. More than 6 million American consumers are at least 90 days late on their car loan repayments, according to the Federal Reserve Bank of New York.

While it is true that $1.2 trillion auto loan book pales into insignificance versus the $10 trillion in mortgage debt at the time of the GFC, a slowdown in auto sales (happening now) isn’t helpful. The auto industry directly and indirectly employs c. 10% of the workforce and slowing new and used car sales will just put more pressure on prices further lifting the risk of repossessions

It is worth reminding ourselves the following.

Last month the Fed published its 2016 update on household financial wellbeing. To sum up:

“44%. This is actually an improvement on the 2015 survey that said 47% of Americans can’t raise $400 in an emergency without selling something. The consistency is the frightening part. The survey in 2013 showed 50% were under the $400 pressure line. Of the group that could not raise the cash, 45% said they would go further in debt and use a credit card to pay It off over time. while 25% would borrow from friends or family, 27% would forgo the emergency while the balance would turn to selling items or using a payday loan to get by. The report also noted just under a quarter of adults are not able to pay all of their current month’s bills in full while 25% reported skipping medical treatments due to the high cost in the prior year. Additionally, 28% of adults who haven’t retired yet reported to being largely unprepared, indicating no retirement savings or pension whatsoever. Welcome to a gigantic problem ahead. Not to mention the massive unfunded liabilities in the public pension system which in certain cases has seen staff retire early so they can get a lump sum before it folds.”

If only this perpetual debt cycle could be stopped via remote. Someone else’s problem one would suggest.