The headline is actually “Post Office Might Miss Retirees’ Payment” but the click-on-me teaser at the WSJ reads Post Office Nears Its First Default. The use of the word “first” not very subtly implies that there will be more. And there will be.
Indeed, saying that the USPS “might” miss the $5.5B payment due in ten days is a bit too polite. They do not have the money and Congress has made it clear they will not act before the August recess. And there is a second $5.5B payment due at the end of September.
Which is not to say that missing these payments will cause much in the way of visible effect. They are, essentially, to make up an underfunding in the Postal Service’s pension plan. Skipping them may have serious long-term consequences, but for now the USPS can still buy diesel for its trucks and make payroll. For now.
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I am, as a general rule, an identity theft skeptic. Of course, I know it is a real problem, I just think the smoke to fire ratio is very high. The fear, stress, and peculiar behavior that ID theft causes in consumers is out of all proportion to the actual danger.
Part of the reason the fear outstrips the danger is a widespread misunderstanding about who is the usual victim of identity theft. It is generally not the person whose identity is stolen, but the financial institution that gets defrauded in part two of the operation.
And the fact that it is generally large and sophisticated outfits that are the victims leads to the other reason the fear is overdone. ID theft is just not that easy to pull off. It takes a fair amount of effort and cleverness to get a credit card in somebody else’s name, and then the reward is merely that you can charge things for a short period, possibly lasting only hours, before the card company catches on and shuts you down. That is a tough way to make a living.
Or so I thought. Turns out there is one very large financial institution that you can cheat with only the minimum of ID thieving effort. It is called the Internal Revenue Service.
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I know many of you have been asking yourselves, what does Frank think of all this crisis stuff going on in Europe? Is he worried about it? Should I be?
The trouble in Europe has been going on for rather a while now, arguably since the financial crisis began in 2008, although it took a while for everybody to really notice. So quite a lot has already been written and said about it. If you have not been paying close attention, then 1) good for you and 2) maybe my comments will help fill you in.
It is really a pair of twin interrelated crises on the very slow burn in Europe. There is a banking crisis. And there is a sovereign debt crisis.
The European bank problems are similar to the ones we had on this side of the Atlantic. Indeed, in as much as European banks bought surprisingly large amounts of American mortgage backed securities, it is the exact same problem. But European banks, particularly Spanish and Irish ones, also lent heavily into their very own hometown real estate bubbles.
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There are a few recurring themes here at BMA that arose unplanned. One of them is college, specifically the wisdom of paying so much for it. I have asked Is a College Degree Worth Anything? and followed-up with Is a Fake College Degree Worth Anything? I mused on the big picture with Why Go to College? and Does it Matter Which College You Attend?
The answers to those titular questions were yes, college degrees are generally economically valuable, and even fake ones have their uses. Which is why most high school graduates should go to college. And it matters which one you go to, sometimes a lot.
However, my advice to the generic 18 year-old, that he or she should go to the best college he or she can get into (where “best” considers cost) is in conflict with my broader society-wide view. Way too many of us go to college.
In 1940, there were 1700 institutions of higher learning in the US and 1.1% of the population was enrolled in college. 5% of the US population over 25 then had a bachelors degree or better.
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It is the last Friday of the month, and the start of a holiday weekend, so time to clear off the desktop of items I have been meaning to get to.
I will kick it off with a story from Salt Lake City. It seems that a public high school in suburban (exurban?) Kaysville, Utah has been fined $15K by the Feds.
As we all know, it is a Federal offense to sell carbonated beverages at public school lunches. Davis High had arranged to turn off their vending machines during the 47 minutes allotted daily for lunch, but they overlooked the fact that their bookstore also sold the vile liquid. Luckily, Federal inspectors caught it and stopped the madness.
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