Bizzy’s AM Coffee Biz-Econ Links (123005)

Biz Weak: “A Rough New Year for Consumers”

At MSNBC’s web site, Business Week (or Biz Weak, as I prefer to call it) paints a gloomy picture of all the things that are going up in price this year. It names consumer staples (including toilet paper-I kid you not), credit, health care, and utility bills, and attempts to portray rises in these items as reasons why the consumer confidence numbers, and consumer spending itself, may contract.

Most of the items they noted were already known by consumers when the confidence surveys were taken. Sorry, Biz Weak, you ‘re going to have to make a stronger case than that–just stay out of the way if you’re going to be a bunch of mopes.

City of Springfield, Mass. Near Bankruptcy

Now to a legitimate crisis which could go by the name “Win a lawsuit, lose your jobs”–The Bay State city appears to be near financial ruin:

SPRINGFIELD, Mass. –Springfield officials say bankruptcy and more than 1,000 layoffs are likely if the state refuses to give the city more money to avoid a deficit that could balloon to $70 million in the next six years.
“Does the state want us to lay off people and let the city collapse, or do they want to give us the money and the chance to fix the problems?” said city councilor Timothy Rooke.
Rooke’s year-long term on the control board overseeing Springfield’s finances expires next week. He said the city could be forced to hand pink slips to as many as 500 teachers and another 800 city employees during the next several years.
He and other officials say the layoffs could be necessary to pay city employees what they’re owed in frozen raises.
A recent ruling by Superior Court Judge Constance Sweeney found that Springfield illegally withheld raises for teachers three years ago. Sweeney is expected to decide next month exactly how much the city owes its teachers, who say they’re entitled to all negotiated raises that have been frozen since the 2004 fiscal year.
City officials fear that her ruling could entitle firefighters and police officers — who have also had their wages frozen — to millions of dollars in back pay.
“If that worst-case scenario goes through, it would collapse the system,” Rooke said.
Lawmakers have repeatedly said the city is not likely to receive more state aid.
If it doesn’t, “bankruptcy is inevitable,” Ryan said. The mayor met Thursday with Thomas Trimarco, Gov. Mitt Romney’s budget chief and a former member of the city’s financial control board.

Given the number of layoffs proposed for a city with a population of about 150,000, and besides the obvious back pay problem, this looks like the result of having way too many people on the payroll for way too many years.

The Rodney Dangerfield “No Respect” Economy has a Weak Spot in Washington

OpinionJournal.com (this article requires free registration) the litany of good news chronicled here and elsewhere on jobs, consumer spending, growth in real incomes, and the like. The article serves as a ready resource for reciting how well things are going.

There is an exception to the good news–out-of-control federal spending:

The most conspicuous blemish on the 2005 economic scorecard was frenetic federal spending, estimated to be up another $180 billion, or 8%. If Congress were to cut that spending growth rate in half, and if the economy continues to spin off tax revenue dividends as in 2005, the budget deficit would fall in half by this time next year. And, then, who knows, the pessimists may run out of things to complain about and this expansion might finally get the respect it deserves.

I happen to think that an allegedly Republican Congress facing the voters this year, coupled with a bit of newfound vigilance in the blogosphere, might actually bring some sanity back to fiscal policy in Washington. It’s always easy be an optimist as the New Year approaches–unless you write for Biz Weak.