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“Shared Work”: It has some advantages

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So this morning I made it to a ninety-minute presentation on Shared Work, the Unemployment Service’s plan to provide a modicum of compensation for people who are being furloughed instead of flat laid off. In a nutshell, if your employer cooperates you can get unemployment compensation for those days that you’re not paid on your job. Within limits. The scheme has some nice advantages over regular full unemployment compensation, but it retains a few of the old program’s drawbacks.

Plusses are significant:

You do not have to reapply for every week in which you have a furlough day. Your employer takes responsibility for informing the bureaucracy of the days your pay is docked. That cuts an enormous amount of red tape and hassle.

You are allowed to earn income from a second job or from freelance gigs without losing the Shared Work benefit. This is a sharp contrast to regular unemployment insurance, which boots you off the system if you get so much as a day of back vacation pay.

If you manage not to be laid off and if you earn enough to get by on your reduced salary, you could in theory collect the ten or twelve weeks’ worth of payments and stash them, plumping your savings account a bit or using the money to pay down debt.

Cons are also significant:

These payments bite into your regular unemployment compensation, in the event that you do get laid off. If you collect, say, $400 from Shared Work, your unemployment entitlement will be cut by $400. This means that if you’re in the financial position that too many state employees find themselves in—below or right at the poverty line—and you have to use the Shared Work payments to make ends meet, you will suffer when you’re laid off.

The payments are piddling. The max payment would be something like $48 a day, barely enough to buy a bag of groceries—given that you will take off one day every two weeks.

To be eligible, you must be furloughed for at least 10% but not more than 40% of a given week. This means that if you take as many as 20 hours of furlough time in a week, you don’t collect a penny. In other words, you can’t bunch several or all of the furlough days together to give yourself a little unpaid vacation. Take off 16 hours or more, and you lose the compensation.

The default mode of payment is a debit card issued by Chase Bank. The Unemployment Service’s spokesman warned, in no uncertain terms, that these cards have all sorts of strings designed to nick and gouge users, including limits on where you can use the things, how you can use them, and how many times you can use them. To get the government to direct-deposit the payments, you have to fill out yet another form (we filled out seven pages of forms today, including one that gave the gummint permission to examine all of our bank account activities). It takes two weeks or so to put your request in action.

As with regular unemployment compensation, you have to sit out a one-week “waiting period” after your first day of eligibility. This means you will not and cannot be paid for your first furlough day. So instead of receiving Shared Wages for 12 days, GDU employees will get it for 11 days. It smacks of another right-wing whack at the working poor, highly offensive in my view. If you’re unemployed for x days, you should collect Unemployment Insurance for x days, not for x – y days.

It certainly adds insult to injury. We’re the ones who are suffering from the shenanigans perpetrated by outfits like Chase, and now we have to pay the SOBs for the privilege of using our own unemployment insurance? That truly does stink.

But hey! Beggars can’t be choosers, eh?

Anyway, there it is. Better than nothing, I guess. Better than being canned now instead of later.

Update: It now begins to look as though at least the first payment from the Unemployment Insurance Service, a munificent $48 on $240 lost to a day’s furlough, may never be retrievable. Stay tuned for more entertainment.

State legislators get their way

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So, here’s what happens when you gut a state university’s funding:

§ Applications to next year’s freshman class at the Great Desert University are closing.
§ Four dozen academic programs are closing.
§ Each satellite campus will be left with only one college; all other colleges and programs at those campuses, which serve the eastern and western districts of a huge, far-flung metropolitan area, will be closed.
§ The nursing progam will be further reduced (enrollment had already been cut) and moved to the downtown campus.
§ The program for training firefighters will be closed.
§ The clinical laboratory sciences program will be closed.
§ The master’s degree in sports business will be discontinued.

Here’s a summary of other programs that will be canceled at this one university:

College of Liberal Arts and Sciences (Tempe)

• M.S. Kinesiology
• Master of Natural Sciences (MNS)
• Concentrations in Natural Science in
• Life Sciences
• Geology
• Speech and Hearing
• MA Anthropology concentrations in
• Archaeology
• Physical anthropology
• Sociocultural anthropology

Herberger College of the Arts

• Ph.D. in History and Theory of Art

Music

• M.A. Music and Music Theory Concentration
• M.M. Music concentrations in
• Performance (Music Theatre/Opera Directing)
• Music (Performance)
• Performance (Music Theatre Performance)
• Performance (Music Theatre Musical Director)
• Music Ed (Jazz Studies)
– Music Artist Diploma

Theatre

•  MFA Theatre concentration in Scenography

Mary Lou Fulton College of Education

• Ed. D. in Curriculum and Instruction
• Ph.D. Curriculum and Instruction
• Physical Education
• Ed. D. in Adult Education
• M.Ed. in Curriculum and Instruction
• Communication Art
• Professional Studies

College of Teacher Education and Leadership

• M. Ed. Education Administration & Supervision concentration inEducation Entrepreneurship

College of Technology & Innovation

• Computing Studies
• M.S. Tech. concentration in Computer Systems
• Electronic Systems
• M.S. Tech.
Electrical Engineering Technology concentrations in
• Instrument and Measurement Technology *
• Microelectronics

Mechanical & Manufacturing Engineering Tech

• M.S, Tech Mechanical and Manufacturing Tech concentrations in
• Aeronautical Engineering Technology
• Security Engineering Technology

Information Management Technology]

• M.S. Technology

Technology Management

• M.S. Tech.in Fire Service Administration
• Undergraduate Certificate in Fire Service Management
• BS in Industrial Technology
• BAS concentration in Materials Joining Manufacturing Technology
• BAS concentration in Fire Service Management
• BAS concentration in Aviation Maintenance Management Technology
• BAS concentration in Digital Media Management
• BAS concentration in Digital Publishing
• BAS concentration in Municipal Operations Management
• BAS concentration in Law Enforcement Management
• BAS concentration in Technical Graphics
*BAS concentration in Computer Systems Administration
• BAS concentration in Cyber Security Applications
• BAS concentration in Software Technology Applications
• BAS concentration in Microcomputer Systems
*BAS concentration in Alternative Energy Technologies
• BAS concentration in Instrumentation
vBAS concentration in Semiconductor Technology

Morrison School of Management and Agribusiness

• B.S. in Agribusiness with concentrations in
• Golf and Facilities Management
• Professional Golf Management

New College of Interdisciplinary Arts and Sciences

• M.A.I.S. (Masters of Arts in Interdisciplinary Studies)
• M.A. in Communication Studies
• M.A. in Social Justice and Human Rights

Now, just between you and me, a few of these programs should have been closed years ago. But most are legitimate professional programs that train workers for decently paying jobs, many of which contribute not just to the state’s economy but also to the welfare and safety of the entire citizenry.

The wacko right-wingers have gotten their way: they’re killing the beast. Let’s just hope the next time the morons who vote for these people need a nurse, a firefighter, an IT specialist, or someone to diagnose and treat their hearing-impaired child, they remember to thank their elected representatives for the result.

If I were queen of the world…

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SDXB forwards this bit of intelligence from Bloomberg:

Feb. 9 (Bloomberg) — The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

And from the Latin American Herald-Tribune we learn this:

SAO PAULO — General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to “complete the renovation of the line of products up to 2012.”

“It wouldn’t be logical to withdraw the investment from where we’re growing, and our goal is to protect investments in emerging markets,” he said in a statement published by the business daily Gazeta Mercantil.

Got that? Unimaginable amounts of U.S. taxpayer dollars are being forked over to corporate interests, who are taking that recovery money and investing it in jobs in overseas, while American workers are being thrown out of their homes.

These two reports go to prove my own theory:

If Congress handed out the cash to the people who need it—that would be you and me, folks—the “crisis” would be solved.

If everyone in the country were given enough to pay off the average U.S. mortgage and required to use the money that way,the mortgage crisis would end today. People would suddenly have between $1,500 and $5,000 a month back in their pockets, and they would start to spend again. Everyone would be solvent, and bankers would no longer have to worry about whether people with credit scores in the high 700s could make payments on loans.

Let’s suppose your mortgage weren’t as high as the handout. You’d be required to pay off your mortgage, and then you could keep the rest of the dough. If you were one of those virtuous doobies who actually scrimped, saved, worked three jobs, and paid off your mortgage, you would get the entire handout, no strings attached.

If your mortgage exceeded the handout, you’d be required to apply it all toward your mortgage, AND your lender would be required by law to let you refinance the rest at a reasonable rate, no more than 5% or 5.5%.

Everyone would win. Mortgage lenders would get their money back and not be stuck with a dog of a house that can’t be sold. They could now start over with a clean slate. Borrowers would get out from under toxic debt. For most people, it would no longer matter whether they could sell their houses for what they paid for them. And people who were willing to stay in their homes for a few years would be golden.

What a flicking outrage. You don’t suppose I would ever buy another GM car, do you? I buy Japanese cars because the two Chevvies I’ve owned were junk (though not as bad as the Ford Lemon that was my first car). In the past, I’ve bought anything but American because of the awful quality and safety issues. Now, you can be sure, I won’t buy an American car on principle.

Health Insurance: Is your employer paying its part?

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One of M’hijito’s good friends, a young newlywed who had just purchased a house, was sideswiped by a fifth-wheel while he was on his motorcycle. Because he was wearing a helmet, the young man survived. However, he’s lost a kidney and his spleen, and he broke three vertebrae. He’s still in the hospital, a very sick puppy indeed.

As you might surmise from the fact that he and his bride qualified for a mortgage in these tough times, he had a good job with good benefits. Or so he thought.

Well, come to find out: his employer was not paying the employer’s half of his health insurance premiums. That means he’s not covered. He’s now relying on the state’s half-baked indigent health-care system to keep him in the hospital until he recovers enough to roll home in a wheelchair. The bills the kid has racked up will ruin him and his wife financially just as they are beginning their life together.

Lawyers say the employer is apparently broke—this is why he was welching on the health insurance policy—and they hold out little hope of getting any blood out of that turnip. The kids probably will have to declare bankruptcy, and that won’t get them out from under a mortgage that likely requires two paychecks.

I have no idea how a young person in good health who generally stays away from doctors would find out whether an employer really is paying its part of the health-care premiums, especially if it’s a small business with no HR department. Probably you could call the insurance company and confirm that you’re still on its rolls. Given the nature of our deprecession, if you have no recent confirmation that you’re enrolled in your health plan, it might be a good idea to check.

And please. Stay off motorcycles!

Suzuki photo byRich Niewiroski Jr.

Integrity, Confidence, and Trust: A financial manager’s view of the economy and the future

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This is a guest post by Stephen Taddie, managing partner of Stellar Capital Management, LLC, located in Phoenix, Arizona. Stellar, which manages my vast fortune, has contrived to keep my shirt and my IRA more or less intact as the economy has crumbled around our ears. The essay, which provides some insight into what capital managers and financial advisors think of the events leading up to the current recession and offers some prognostication about the near-term economic future, was Mr. Taddie’s New Year’s message to the firm’s clients.

People in positions of power often claim to have integrity, and the public needs to have confidence in those people in order to trust the system. The sheer number of “ethically challenged” individuals who have surfaced lately makes it increasingly difficult to see through the haze of hypocrisy and to trust anything. At present, we are seeing a crisis in confidence so great that many investors are willing to accept a zero return just to have the U.S. government hold their funds.

If you take a quick glance around the country, you’ll find a governor who attempted to sell a senate seat, a self-anointed savior of the masses (also a governor) patronizing a prostitution ring, a senator convicted of several felonies almost winning an election, and numerous other government officials taking liberties, receiving special treatment or deals. Those in professional sports also continue to be ethically challenged, from athletes doping to referees influencing games for personal benefit. Hollywood and the music industry provide enough content year-in and year-out to keep thousands of magazines, newspapers, and web sites in business. Remarkably, we allow this type of behavior to continue by giving candidates our votes and contributions, as we buy tickets, magazines and memorabilia for morally bankrupt celebrities. Integrity has been all but lost in political maneuvering, convenient omissions, and downright deceit.

I left the financial industry out of the previous paragraph only because its problems have been so plentiful it needed its own paragraph! Bigger, better, more complex has been the cry from Wall Street for the last decade, and that has produced overpaid, ethically challenged executives; programs and products like hedge funds and subprime loans; and fund-of-funds and credit default swaps. The list goes on and on. As things grew more complex, investors found themselves further removed from their money and the people actually responsible for its well being. Although stockholders could always vote on the tenure and compensation of a company’s management, most investors are not in a position to do so in a meaningful way. When twice removed from the actual investment, as is the case when investing in a manager of managers program or in mutual funds, investors must rely on highly paid executives to vote on the tenure and high salary of other executives, in a more or less self-perpetuating cycle. for most individual investors, exerting shareholder control has become a thing of the past.

As Warren Buffet said, “It’s only when the tide goes out that you learn who’s been swimming naked.” Growth hides many structural problems and 2008 was a year of revelations. Take the case of hard-money lenders. In many parts of the country these firms were lending money directly to developers and builders and offering steady 12 percent returns to investors. A few years ago, Stellar interviewed two such local firms and, after substantial due diligence, decided to wait out the brewing storm. In general, we saw that these programs were losing sustainability because of lack of appreciation and new buyer interest in development projects. One firm, now in the headlines, lacked enough internal controls for our comfort, and we eliminated them from consideration. I’m sure other firms like ours made similar decisions;but some did not. More recently, Bernie Madoff’s complex “Ponzi” scheme made the headlines, leaving a mess for investors and regulators. In both cases, integrity was lacking and trust was betrayed. Other firms misrepresented the scope of their services, appearing to be sophisticated money managers on the outside, but when the tide went out, were found to be nothing more than high-priced marketers or “feeders” for the real manager of the assets, offering no real value to their clients.

To recover from the present economic ills, massive stimulus programs are being worked into the system. This has effectively put a safety net under the economy in an effort to restore confidence. As confidence replaces fear, a valid case can be made for either a “¾ V-shaped” recovery, where the economy recovers into a less leveraged, slower-growth version of itself; or a “W-shaped” recovery with a double-dip recession beginning near the end of 2010. Due to decreased leverage in the global economic system, a more typical “V-shaped,” or complete, recovery does not seem likely in this cycle.

Barring more surprises, the economy should transition from stimulus-driven economic activity to organically driven growth late in 2009, leading to a ¾ V-recovery. As we approach 2011, the prospects of higher tax rates due to “sunset” provisions in the current tax code could cause economic activity to accelerate. This would create an after-the-fact lull in economic activity, pushing it back to recessionary levels in 2011, leading to more of a W-shaped recovery. The eventual shape of the recovery depends on how and how much stimulus is deployed, the extent and timing of its removal, and other policies established to smooth the transition both here and abroad.

At some point, the investment markets will turn around. Since mid-November, the S&P 500 has risen about 20 percent, rebounding from “technical support” and building a potential “bottom” around the 900 level. Volatility has calmed down a bit, and liquidity seems to be returning to the markets. However, that has not stopped the yield on 10-year U.S. Treasury bonds from falling to levels not seen since 1955, and coming close to the lows experienced during World War II. The economy is still trying to find a stable footing, and economic data in the next few months will probably continue to be ugly, but the markets may have already discounted the expected data and may be beginning to look beyond the present abyss.

While we believe that world affairs are in better shape than they were during World War II, the bigger issue facing capitalistic societies today is “trust.” Without it, the economy will stumble; with it, it will thrive. When trust comes back to the system, investors will be less willing to park money in essentially noninterest-bearing Treasury bonds and more interested in making educated, longer-term investments.

Here’s to trust…Happy New Year!

January 1, 2009

Can’t sell the house? Try swapping

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One of the local television PlayNooz programs claims that some people have taken to trading houses when they couldn’t sell them—no indication of whether these prospective traders are having any luck at the enterprise, though.

It’s an interesting idea. A year and a half ago, CNN reported that some homebuilders were taking old houses in trade for new ones. Not everybody wants to live in a cheaply built house in the remote and treeless suburbs, but if you do, trading could be a way to get there.

It appears that the most likely use of this strategy is to get yourself from one city to another. Few people would trade a $300,000 house for another $300,000 house in the same city, unless the city is so huge that there’s some value for each party in moving closer to their places of work. Exactly how this would work for the mortgage holders is somewhat fuzzy. Apparently each “buyer” gets a new mortgage and uses it to pay off the existing mortgage. Nice trick if you can do it, in the present lending environment. Both traders would need sterling credit and a long track record of paying on time.

Several sites are in the business of helping would-be house traders get in touch with each other. Check these out:

Craig’s List has a house swapping category. Some of these are vacation or short-term swaps; some are efforts to make a permanent trade. The one here in Phoenix looks pretty active: a lot of the offers are local, but some are coming in from all over the country. Check the site in your area—look under “Housing Swap.”

OnlineTrading.com charges $19 for the privilege of using its site. Turn off your sound before hitting this site: they have a particularly grating ad that starts blatting at you the instant you get there. The site called House4Trade.com is actually a front for OnlineTrading.com; with that sort of oiliness going on, I’d be careful of this outfit.

RealEstateExchange.com appears to be a separate entity. They’re advertising trades of commercial as well as real estate properties. This site has quite a lot of information posted, and its proprietors say they actively pursue scammers.

If you decide to go this route, you probably should consult a real estate lawyer to be sure the contracts are written correctly and your interests are protected. If you can find a Realtor who is experienced in trading property, that also would be advisable, though I have no idea where you would find such a person.