Sheila Bair, who served as Chairman of the Federal Deposit Insurance Corporation for five years through the financial crisis, has completed her term. In a weekend op-ed in the Washington Post, she urges America to rid itself of its addiction to financing consumption and “growth” with debt. This is the core requirement for America to become financially stable again and to return to “real” growth. From Bair’s Washington Post oped:
Now that I’m stepping down, I want to sound the alarm again. The common thread running through all the causes of our economic tumult is a pervasive and persistent insistence on favoring the short term over the long term, impulse over patience. We overvalue the quick return on investment and unduly discount the long-term consequences of that decision-making.
Our decades-long infatuation with financing our spending through ever-growing debt, in the private and public sector alike, is the ultimate manifestation of short-term thinking. And that thinking, particularly in business and in government, is actually getting worse, not better, as we look for solutions to put our economy on a sounder footing.
Will pension transparency shake muniland?
Joan Quigley of the Bond Buyer is reporting on how proposed guidelines to place unfunded pension liabilities alongside other liabilities has shaken up municipal governments. It’s really just a proposal to clean up balance sheets and get the real numbers out where people can understand them. Many governments have buried these giant, problematic numbers deep in the footnotes. This proposal from the Governmental Accounting Standards Board would force the dirty laundry into the sunlight. From the Bond Buyer:
Currently, many governments disclose pension information in the footnotes to their financial statements and generally only report the contributions they are required to make in a given year, as well as what they actually paid.