“I’ve stopped defining worst-case scenarios because they keep getting worse every week”: San Francisco’s controller.
By Wolf Richter for WOLF STREET.
The lockdowns have created a fiscal nightmare for states and cities. But few major cities have gotten slammed as hard as San Francisco, whose single most important industry – tourism, including travel for leisure, conventions, and business – has essentially shut down and whose tech and unicorn startup sector has been laying off people in large numbers — a trend that started last year.
Uber, one of the largest employers in San Francisco, has been laying off people starting in 2019. Numerous startups have shut down or trimmed down before the lockdowns happened. Charles Schwab has been shedding staff in the City for a while and last November announced that it would move its headquarters to Texas. Macy’s announced at the beginning of February that it would shut down its tech center, the headquarters of macys.com, and lay off 1,080 people who’d been engaged for years making its ecommerce business a success. So the writing was on the wall.
Then in February, tourism plunged as travelers from China disappeared and as conventions were cancelled. The city is aggressive in extracting money from tourists at every twist and turn, including hotel taxes and rental car taxes. Since the lockdowns and travel restrictions came into effect in mid-March, tourism has practically died. The hotel industry alone employed about 25,000 people in the City.
The lockdown has pushed the unemployment rate to 12% when the household survey data was taken in mid-April, the worst level in recorded history, and much higher by now.
San Francisco, a city of about 883,000 people, has a gigantic budget of $12.2 billion in the fiscal year that is now ending, up a gigantic 11% from a year earlier, and up a gigantic 85% from ten years ago (2009/2010). San Francisco has been swimming in money. It was a boom town with booming business, booming tourism, booming population, booming jobs, booming home prices, booming homeless crisis, booming everything.
San Francisco embodied the Everything Bubble in its ripest form – including the starkest-ever wealth disparity. And the Everything Bubble burst on so many levels it’s hard to keep your sense of humor about it.
The City faces a $1.7 billion hole in its budget over the next 26 months, and “there’s a risk that even that $1.7 billion dollar number is too optimistic,” San Francisco’s controller Ben Rosenfield told the San Francisco Chronicle in an interview.
“I’ve stopped defining worst-case scenarios because they keep getting worse every week,” he said.
That $1.7 billion hole is based on some assumptions that may be too optimistic, including being able to further flatten the curve of the corona virus while re-opening the economy safely and bringing it to some sense of normalcy. Those are the projections baked into the $1.7 billion budget hole.
If revenues come in 5% lower than projected, the City can expect a $2.1 billion hole in its budget, Rosenfield told the Chronicle.
If the recovery is “W-shaped,” tripped up by another major virus outbreak and another economic swoon, the City can expect a hole of $2.5 billion.
The hotel tax alone generates about $100 million a quarter in revenues, but it could be down by 90% this quarter, Rosenfield said.
Sales taxes have plunged because people aren’t eating out and spending money in stores. And the City’s massively aggravating profit center focused on parking and collecting parking fines has taken a big hit as parking is now easy to find.
Hotel taxes, sales taxes, and parking revenues – “Those are the ones we’ve really seen falling off the cliff immediately,” Rosenfield said.
Other tax revenues will shrink over the long-term, he said. This includes property taxes assessed on office buildings, whose prices are expected to fall, and business taxes as companies are cutting staff, leaving the city, or shutting down.
The whole budget process has been delayed by two months to give people some time to sort through the impact of the crisis. The budget cuts that Mayor London Breed already instructed department heads to implement – 10% for fiscal 2020-21 and another 5% for the following year – cover only 25% of $1.7 billion hole, Rosenfield said.
And the other 75%? “That’s the rub,” he said. Next steps include raiding rainy-day funds and delaying capital projects and equipment purchases. And that won’t suffice either. Then come deeper cuts and raising taxes.
Additional cuts, according to Rosenfield, could include those that have been implemented during the last crisis in 2009, such as reduced street-cleaning, shorter hours at museums and recreation centers; reduced health services, slowing or suspending police academy classes, reducing the number of fire stations in operation at any given time; slowing the (already glacial) pace of repaving streets, etc.
“I’m not the one who will be making the hard choices — that will be the mayor and the Board of Supervisors,” Rosenfield said.
The economy isn’t expected to recover until 2023 and employment might take even longer to recover, Rosenfield told the Chronicle. And the economic future of the City is unclear, he said. This includes the impact of working from home that would reduce the contribution from the tech industry, which had been such a huge driver in the City. And how long will it take before the conventioneers and tourists come back in large numbers, as people fear packing into venues, hotels, and restaurants?
San Francisco is a boom-and-bust town, always swinging from one to the other. The boom has lasted a decade, the longest boom since 1945, even longer the dotcom boom. And now, there’s the inevitable bust.
The interview with Rosenfield was conducted before the looting erupted that led Mayor Breed to impose the 8 p.m. to 5 a.m. curfew that has now been extended “indefinitely.” This adds another dimension to the challenges and “worst-case scenarios” the City faces.
A near-real-time roller-coaster of home sales during the pandemic via charts. Read... From Ice-Cold to Hot: Daily Pending Home Sales in May so Far, 15 Cities Around the US
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“Additional cuts, according to Rosenfield, could include those that have been implemented during the last crisis in 2009, such as reduced street-cleaning, shorter hours at museums and recreation centers …”
Nope. Not happening. Maybe not even in bankruptcy court — there was a court case on it, but I can’t remember how it came out.
Government Workers Unions negotiate with Politicians, who only care about getting Re Elected – Politicians are negotiating with Other Peoples Money Not Theirs (BIG difference when it is YOUR money)… Public Sector Unions help compliant Political Beasts get re-elected, and defeat “feisty” ones who fight for the public good… Am I the only one who sees a PROBLEM WITH THAT??
No – https://www.fdrlibrary.org/unions
Calpers is worst pension fund if you’re city in trouble
when small cities tried to get out – Calpers CUT pensions enormously and gave cities HUGE BILLS per Calpers corrupt accounting
making already precarious position for city in trouble WORSE
By now ‘they’ should have figured out to manage the Boom/Bust cycle since SF is susceptible to Boom/Busts. I guess they don’t because of short-term thinking.
Public sector unions also make it very difficult to fire bad employees. The officer who killed Floyd had 18 excessive force complaints and the union backed him all the way. The union and the police chief should bear some responsibility for the wrongful death.
FDR said public servants were too important to the nation to allow unionization.
You are absolutely right — it is perhaps the greatest un-/under-reported scandal in America: collusion between politicians and public employee unions to inflate salaries and pension benefits in exchange for votes, while under-funding the pensions via employee contributions that are far too low to ever meet future benefit payouts — it is shockingly amoral.
in 2002 SD city council got in trouble after pledging a large sum to the city pension fund. At the time I asked, do we want cops living in cardboard boxes? Housing bubble I and public employee wage spread was off the chart. This was after SDCC came up with a 40M bond issue for a new baseball stadium. Perennial cellar dwellers, SF got our manager and won three WS titles. By 03′ SD had cut back on the Fire dept and we had the Cedar fire. It all started with the housing bubble, the pension funding scandal, a local REP who went to jail, an FBI sting on the deputy mayor in his district, (while the sitting mayor was being forced out), and his replacement, a probusiness Rep. who went on to become the new mayor. The mayor of SF became governor. Now we have riots. We appreciate your problems.
Do cops live in cardboard boxes?
There are multiple ways to make it happen – courts cannot bind the subsequent actions of state legislatures/popular votes via initiative/referendum.
1) Subsequent votes taxing public pensions above $x0,000 per year, in order to zero out aggregate pension shortfall.
2) Subsequent votes requiring internal redistribution of public pensions above $x0,000 per year to public pensions under $x,000 per year, in order to zero out aggregate pension shortfall.
And many variations in form, thereof.
A court cannot bind the subsequent actions of the Legislature or public (via initiative/referendum) in the realm of taxation, regulation, etc.
Once people in California making less than $50,000 per year (while working full time) realize that their taxes are being raised to pay the lifetime $95,000/yr pensions of 55 yr old “public servant” retirees (working zero hours for the rest of their pensioned lives), political pressure will build and build.
At that point, the various fixes developed by those who have been warning of this ruin for 30 years, will be wheeled out and actually implemented.
CA is filled with people who are posturing liberals right up to the point when their own taxes go up (and their services/quality of life goes down).
CA courted this, and it is going to get it.
Once the balance of new workers exceeds the retirees these new workers will either opt out of the system, or petition for change. Overripe pensions are the reason districts routinely push out older employees. That has the net effect of turning over the pool of workers sooner. Employers prefer younger workers at the introductory pay scale. They usually have more education than their older counterparts, and tend to be better team players. I saw this in real time, in my office, the district came in and said, you will all have to take a pay cut for we will privatize you. The senior staff resisted, they got privatized, they took their nice pensions and early retirement, while the unsalaried were given a stick. Another demographic in the culture wars, young vs old.
Reduced street cleaning? In SF? Hahaha!
Additional cuts? May this city native suggest the
$300 million a year spent on homeless drifters who have traveled to San Francisco, an important bloc vote that keeps the supervisors who promise them more money each year from being defeated?
Think I am kidding?
Just more proof that abandoning a manufacturing economy for a pipe dream amounts to a hot steaming pile of dreams that you can afford civic piping and streets above. Maybe they can finally build Starfleet Headquarters with the new worlds’ e-money,…..er, g-money.
Some of us remember the large military presence we once had in the Bay Area and California, Moffet, Ord, Presidio, Mare Island, on and on. We don’t want the military industrial complex in our State. Thanks Rep. Pelosi, Sen. Feinstein & Boxer. Whoe cares? We got the important stuff like Uber, Airbnb, Apple, Facebook etc. Our genius CA pols are doing their level best to run Elon Musk off….
Facebook , Google, Twitter are the ‘new MIC’.
The military pulling out of places like SF is nothing new, it’s played out all over the US since the 80’s. If we didn’t spend so much money on the military and plow more of it back into other industry’s things would be much much better.
Tell that to Palantir…favored unicorn of the perms deep state.
You believe that is the military industrial complex? You certainly have proven your case of negligence against any education institution you might have attend.
Hey ed, please make the case for the theory YOU have, rather than comment regarding others education, or lack thereof, etc.,
This site is devoted to folks who want REAL data that the Wolf provides, along with reasonable, rational, and non personal comments in general, especially when personal comments do not follow ”standard American English” etc., such as, for instance, “you might have attend.”
Elon Musk represents perhaps the last of California as far as manufacturing and non-info technology industry (i.e., Space X and Tesla).
Manufacturing district here.
If you think “making stuff” is the only way forward I would be happy to show you around here. Factory parking lots are anything between 30 and 80% filled but the scariest thing are the lorries: there were actually more of them around during the lockdown.
I fully expect the bankruptcies to start in their earnest this Summer: so far only retailers have been affected but industrial bankruptcies are always complicated affairs, especially given debt loads. Too many folks here took out huge loans to expand into one of the toughest sector with thinnest margins (automotive components), tempted by the honeyed words from representitives from BMW and VAG, and now are left holding the bag as an already declining sector faces the hour of reckoning.
Low volumes and huge debts don’t mix well.
Orders haven’t completely dried up but the situation is grim to say the very least.
The end, in a away, of the beginning.
But probably the beginning of the end for so many businesses.
One dreads what the last quarters of 2020, and the first of 2021 will bring.
Requirement to keep employees on payroll to convert PPP loans to grants ends June 30th for 500 employee firms.
$600 a week unemployment federal supplement ends August 1st. All current unemployment benefits run out in New Year.
All mortgage forebearances are due and payable as lump sum in March 2021.
All we need is a big earthquake or maybe an asteroid strike to top that off.
“Five hundred or less firms” and “Greater than 500 employee firms.”
Guess you cant use the less than or greater than arrows in this posting software.
Good points MC01,
Thinking that this time may very well be different kind of crash (been watching crashes since ’56 one made dad out of work, ) and subsequent remodeling of global economic models, including manufacturing.
In a very real sense, there has been an incredible movement from ‘village’ to city,,, and equally or even more incredible movement from the ”shop” manufacturing to the Hugely factories, etc., and now may be the time that at least some of the manufacturing, especially the kind of ”stuff” that can be made entirely by manual labor, or with minimal electrical power can start going back to that model.
Certainly, there will always be some demand for some kinds of ”gidjets” that must be made in huge factories, but equally certainly that does not include any kind of transportation machine other than possibly those for ”space travel.” And I say that with regard to the huge industry building ever more specific cars and pick up trucks and airplanes, etc…
And BTW, recent reading indicates serious development in theoretical physics extending Einstein’s work such that we can and should expect a ”gravity mirror” will soon (relatively soon anyhow) make SO much extra energy available that all current foci will have to go home where it belongs, with petroleum only being used for ”plastics,” etc., rather than consumed as fuel.
Manufacturing economies don’t work when most of the work is automated.
The idea of AMC hiring 25,000 employees at a SoCal factory to build 50,000 Hornets a year is dead and gone. Never to return.
“Manufacturing economies don’t work when most of the work is automated.”
And, yet, China…with 3 trillion in foreign exchange reserves (IOUs from importing nations) and 8%+ annual GDP growth for 25 yrs.
Take a look at how much money China prints, much of the GDP is baked into that.
Yeah, I’m sure Americans would love working 80 hour weeks at Foxconn factories, sleeping in mass bunk facilities with suicide nets, under the watchful eyes of armed PLA soldiers, for $3 a day. We totally should build our society to be like that!
There is no future for a “manufacturing economy” . It died in 1924. It’s why, unknowingly for Trump, but the far left has moved to degrowther models. This though was predicted by many, including Ruskin especially. Hence the move to support total automation.
But …. tomorrow the stock market will go up BIG.
Broken Window Theory.
Fed’s gonna pay the looters to loot every 2 weeks i.e. CARES act part deux.
Anyway, my Black Swan theory remains, everyone thinks the US will go down LAST in the coming economic conflagration, but what if it’s the FIRST to go down?
For sure in this forever broken market. My prediction is that the market will find these as positive/silver lining news and continue to rally tomorrow and probably end June higher. Let this cruel joke continue.
Riots across the country – Not that bad, at least it doesn’t have the mass numbers and persistence of protests in HK or the yellow vest protest so it won’t turn into a throw our corrupted leaders out of office revolution but rather just looters seizing opportunities..great time to rally up.
Not being an American, that’s a good question as we English are always about six months behind the USA when it comes to financial problems………
Current pensions are based on past negotiated and legal agreements, and implemented in the public sector in lieu of higher pay for the work performed. It is part of their wage, and reducing pension payments to retirees is no different than raiding someone else’s bank account.
Pensions going forward can be reduced in a negotiated fashion, but not simply stripped away from individuals who are reliant on them as much as a landlord needs rent, or a wage earner needs a pay cheque. Perhaps money could be borrowed from members, to be repaid at a later date….and perhaps not. Regardless, you just can’t take it out of convenience.
What a concept. Reduced hours at museums and rec centres, no brainer. You pay the police that is needed, the garbage collection as required, and fire protection. Other things can be shut down or reduced, going forward. If citizens scream for more services, then ask them how much they are willing to pay for them.
Vancouver BC mayor is currently under attack for wanting to hire one more information specialist at 95K. The city is broke and then some, much like SF. Yet, they already have a 40 person communications staff at YVR city hall. They probably have an excess of 39, if the truth be told. I am sure it is a similar in SF and other Bay Area communities.
Taking the money from pensioners is exactly how it sounds. Put a face on it and it doesn’t sound so great. From a local SF paper, “Larry Bradshaw, vice president of Service Employees International Union Local 1021, said the averages are skewed by highly paid workers and “your meat and potatoes city worker” like janitors and clerks earn pensions not much higher than $20,000.”
Okay, going forward pensions can be capped, or retirement dates delayed, negotiated as a condition of employment. But you just can’t take the money from others to pay for stuff you can no longer afford.
I wanted to add: It always sounds like a good idea when it is someone else. Kind of like the old saw, “trimming the fat”.
If you’re a taxpayer, maybe you hate pensions because you feel it’s your money that’s paying them.
If you’re a small business owner, you might like pensions, because if the pensioners get cut off also, nobody at all will have money to spend.
“trimming the fat” reminds me of an old quote (unfortunately I cannot remember who said it) that goes like this: ” take any government budget and cut it in half…then cut it in half again…it is at that point then that you go in there and look for waste”….I just love that !!!! Too much truth in that statement from my vantage point.
In some states, pensions are constitutionally protected once vested. In others, they are not. Working people frequently confront cuts in salary or income. Retirees depending on interest bearing bonds and CDs do as well. Why should public pensioners be the sole exception?
Generous pensions are a means of keeping skilled people in public services jobs that pay considerably less than their private sector counterparts. It’s a form of back -loading the pay of public servants who stay with jobs that are often quite difficult, dangerous and thankless.
I started teaching in the NYC public schools in 1997, with a Master’s Degree and 30 credits above. My starting salary was $27,000 per year. In 2016, my daughter started a corporate job at a salary that took me over twenty years to qualify for as a teacher.
Stealing pensions from public sector workers is a sign of the Class War advancing throughout the increasingly failed state that is the US.
Public sectors work for us, the people paying the taxes. Nothing more. Although I sympathize with your points and even agree to some extent, when things go wrong people will treat a bankrupt government like a bankrupt business. Old debts will be thrown away if the money simply does not exist.
Oddly, it won’t be politically viable even though most people would be in favor of discarding pensions for public workers if it meant large tax increases for themselves. Media will make sure of that. So *massive* Federal bailouts seem most likely. Prep for inflation down the road!
What about the retired firemen and policemen who get pensions that are the almost the same as their highly inflated salaries?
Maybe back in the day I could see the argument of generous pensions helping keep ” skilled people” in ” public service” jobs. Today I would really question the ” skilled” adjective. It seems more like a gravy train on the tax payer’s back.
There was article about a week or so back detailing there are 340,390 government employees bringing home six-figure salary and pension checks in California currently. City managers, University administrators, lifeguards, public school administrators ( 350K+ for a superintendent… not bad if you can get it).
The collapse is going to be epic.
Pensions? Have you seen the actual salaries of California officials? Every California taxpayer should bookmark this site:
An example: “Veronica Taylor, Correctional Sergeant. $625,311.00
There is no such thing as a a skilled person in public service.
Government is where the incompetent go to leach off the productive people in society…..
My daughter went to San Francisco on a HS field trip back @ 2000. She was smitten with the city and vowed she would live there some day. Fast forward to 2005, her dream came true. She moved there after managing to secure employment in the Financial District. She was in heaven.
Then the city went downhill to the point where she was having to run the gauntlet of increasingly aggressive homeless from BART to her office. One day, one of her co-workers was stabbed in the leg with a hypodermic needle by some druggie while walking to work.
Then came the poo. Non-prosecution of thefts under $950 (considered a misdemeanor). Basically, the thin veneer of civility broke down.
Sometimes the “romance” and “breath taking views” runs smack into reality of living there. Her income was relatively high but her expenses were as well. Sitting down and putting a pencil to it brought it all to light. She quit her job, sold her house, and moved away. She hasn’t been back since and will likely never return.
We used to visit as well… until the taxes on a hotel room reached astronomical levels. The juice wasn’t worth the squeeze.
“Why should public pensioners be the sole exception?”
Because we’ve make billionaires and Wall Street excepts.
Adding work folk to that list, is a no-brainer IMO.
For a substantial chunk of the public sector, that is “no work” folk.
Alternatively, “auction vote” folk.
The wealthy also have fluctuating on income, much more so than working people. And of you don’t want to support billionaire incomes, don’t buy their products. Taxpayers have no such choice with public pensions. We are on the hook.
And the argument that high pensions are needed to keep people who would otherwise be earning more in the private sector if pretty dubious. What intrinsic skill set does the average postal worker have that justifies their far above market wage? This only applies to a few government jobs for tech, science, and engineering.
And where in the private sector can you retire comfortably on 3/4 of your income at age 55? Or even 60?
Public pensions are an anomaly. And not a good one for the taxpayers.
States and cities can always renege on pensions and renegotiate payouts with future plaintiffs later in a settlement.
That’s one reason I’d much rather have a 401k/403b versus a pension. One in the hand is worth more than two in the bush, as they say.
You can’t get blood from a stone.
> and reducing pension payments to retirees is no different than raiding someone else’s bank account.
It’s completely different.
Your employer can’t put dollars into your bank account unless it has dollars in its own bank account.
Government employers can promise pension payments with money they don’t have.
This is why pensions are just IOUs. They’re debt. If you’re a pensioner, you hold your former employer’s debt.
In bankruptcies, debts are discharged.
Debts are discharged in bankruptcies? Have you been reading the news lately? Debt is bailed out by Congress and the Fed. And it is massively encourage by the Fed with 0% and punishment of savers. If junk bonds junkies and stock buy queens can get bailed out, IT’S ONLY FAIR pensioners be as welled. And you argue with that.
Well said! I’m tired of people hating on the poor and working class folks and blaming them for all of society’s ills, while at the same time the Fed merely bails out the market. THAT is the real looting that has been going on!
Wolf, you should have a post on the Bailout Queens — all the companies that have most benefited from all the Fed interventions and Congressional bailouts. From tax cuts, to lower rates, to the Fed’s junk bond purchases, etc. And yes, refer to them as Bailout Queens, because that’s all they are at this point.
Most overleveraged people and companies are not bailed out. See all the recent retail and PE backed healthcare company pending bankruptcies.
And just because the Fed is acting badly and saving banks and some other lenders from the consequences of their actions doesn’t mean we should compound that error further with taxpayers money. The bailouts are all a bad idea.
A municipality can go bankrupt just the same as a company.
Pensions, like wages, negotiated by unions with threats of collective walkouts are nothing short of criminal extortion.
Take the city bankrupt and stuff the pensions, same as will happen to many in the private sector!
$20,000? I call rubbish. What are their medical and Rx benefits worth?
The average retiree from San Francisco city government earns an annual pension of $46,272, according to the San Francisco Employees’ Retirement System. The average retiree who worked at least 30 years in city government earns an annual pension of $76,981.
I realize it is an average, but add in the medical and other benefits?
Are California’s Pensions that good? I work for the VA and people claim we get a really good pension. If you retire at 62 with 20 years service, you get 1.1% of your avg 3 per month. So if you made $100,000 on average your 3 highest paying years (not including OT), you get $13,200 per year.
Thx for the great comment on pensions.
Yes, too many don’t understand that money involved in pensions usually mean a compromise with more increased wages; pensions lower the “now” cost and shift to the future.
Anyway, you did a great job defending……
“Negotiated” with corrupt political appointees, suborned by public sector unions, whose intense political operations ate notorious – almost as notorious as the mediocre/ruinous job performance of their politically insulated memberships.
There was no mythic wage/pension tradeoff – the public sector has median compensation levels in both areas significantly in excess of the private sector. All the data has long been publicly available.
Just another carefully crafted, aggressively promoted lie by public sector unions.
Paulo said: “Current pensions are based on past negotiated and legal agreements, and implemented in the public sector in lieu of higher pay for the work performed. It is part of their wage, and reducing pension payments to retirees is no different than raiding someone else’s bank account.”
In The USA a lot of public sector workers are better compensated, better benefitted, better pensioned, and have more job security than comparable private sector workers. Some of the “negotiated” agreements between the public sector unions and the politicions should be scrutinized under the RICO act.
“no different than raiding someone else’s bank account.”
ZIRP has been doing this for 20 yrs…and the public sector not only did not give a sh*t, it was the author and beneficiary of the policy.
No tears for the long corrupt political class.
I read an article a while back which basically said public sector workers make more then their private sector counterparts. Add in the very generous pensions and lifetime healthcare and they far outpace the private sector.
The article stated the average wage for public sector was ~$88,000 while private sector was ~$59,000…… these numbers are wage only, the gap gets bigger when factoring in benefits.
If these numbers are accurate your argument would need to be revisited
Municipal and state budgets, already blasted by the Covid shutdowns are now further impacted by the rioting / looting / arson black swan. Notice that I didn’t use the word ‘protests’. All that police and fireman overtime, as well as damage to police cars, it all adds up, big-time. Social unrest and anarchy have been unleashed. Are there any responsible politicians and public figures willing to speak out against this? Times were already troubled enough with the pandemic.
People can see that voting doesn’t work. There is no reason to think that it would start to work. Rioting might be questionable but at least it isn’t crazy. If you have a better idea why don’t you tell us?
Yeah, I was surprised that bank branches are being burned and the Treasury Dept in DC was broken into…
I’d say these riotors are doing better job this time compared to Occupy Wall Street…
Now just need to see 33 Liberty Street (FRBNY), One Lincoln Street (State Street) and 55 East 52nd Street New York (BlackRock) get firebombed for the party to get started!
Bonus Riot Points for hacking a MQ9 flying overhead and crashing it into Jamie Dimon’s office!
During the primary, exit polling showed an unusually high variance from reported results. The United Nations uses 4% variance from exit polls as an indication of vote fraud. The variance of our recent primary was well into double digits and flavored the candidate officials were supporting at the time. And, the Ivy League geniuses Supreme Court has affectively ruled vote fraud is constitionally protected, as needed.
Timbers, since the Iowa debacle and the forced Wisconsin in-person voting, I have been wondering if the mail-in voting flap is about it being easier to “adjust” the computer vote.
Better idea: get a grip on your emotions, be responsible, be civilized. Wait for just to take its course. There will be bullies in police departments. That’s a reality. Bullies are attracted to law enforcement. Being pissed off about the legitimate (but rare) atrocities committed by bad people isn’t a license to loot, pillage, and burn down the damned city. How about the media taking responsibility not to inflame passions and add to the political discord every damned day. Rioting isn’t crazy? The hell it isn’t.
I will assume: Obviously you are against protest against violent actions committed by our law enforcement agencies.
“Those governments that do not allow for peaceful protest against injustices only open the door to more violent actions.”
The focus must not be on the ridiculous “looting”, but on the reasons for this protest that has so much of the country upset.
I’m OK with protests. I am against lawless rioting, looting, and arson. You do know that there is a difference … don’t you?
Sierra7: how many riots have you seen after cops are killed? How many riots after 50 blacks are shot by other blacks in Chicago in one weekend? See the bigger picture and try and get out of the victim mentality.
Just what the hell good do protest do anyway, other than inflict financial harm on municipalities and businesses? Explain it to me.
Well, they hike CNN’s ratings.
For a couple weeks.
The focus most certainly can and should be on both. We can have peaceful demonstration and action regarding policing AND stop riots and looting. In fact we require this.
I bet the prestigious tenderloin district hasn’t taken much of a hit.
I remember when they found a 50-gallon trash bag half-full of human feces, on a street corner in the ‘loin.
It was a CLEAR trash bag.
What the fuck, people.
Did they ever find who stole the other half?
I understand the National Guard is hiring – great benefits I hear. I wonder how long the Fed can push on the monetary string to get some traction – stressed folks don’t spend, they save. Meanwhile the mkt is in Lala land – what metrics are supporting this valuation is beyond my 25yrs experience. #gold #cash #bullets
Jay Gould said that he could always hire half of the working class to shoot the other half. Reprise of the Gilded Age?
FYI the National Guard is a State funded organization and controlled by the States via the Governors. Which is how they can call out the “Guard”.
The Reserves are a Federal Branch of the Services and very different.
Sounds like a recipe for increasing home prices to me. How can job cuts,decreased services and more taxes and fees add up to anything but people bidding up home prices to the moon.
money printer goes brrr?
Seneca’s cliff now has a bridge.
Yes, overlooking the falls.
Protesters will burn houses down, reducing supply.
Housing prices going UP!!!
Buy, buy, buy.
I think we will need to get ol’ SoCaljay in there with some “boots on the ground”….
It’s all “bass-awkwards”.
It’ll get worse before it gets better. Small landlord mortgages are based on rent revenues. If rent goes down, the mom and pops are forced to sell. But all’s well as long as private equity can swoop in with newly minted Fed money and snap up every distressed property the minute it gets discharged in bankruptcy court. Right?
Great post. Been making that for the longest time. One correction: it will get worse before it gets worse.
I do think it will get better, timbers. Wolf’s commenters seem to skew a bit older and upper middle class. I’ve noticed that this demographic struggles to understand Millennial behaviors and attitudes which are far more cooperative and collaborative than their parents. They are disgusted by our nothing-matters-winner-take-all system.
Clearly, we are experiencing tectonic shifts in every system on every level. When the smoke clears, I expect to see Millennial leaders more firmly in control with Boomers sliding quickly into irrelevance.
I see a better world for Millennials and Zoomers. Gen X (the Daria generation) has always been sidelined and will likely remain that way. Boomers will continue shouting “get off my lawn or you won’t get any of my money!” but nobody will listen, let alone care.
Nonsense! You are doing what my dad ”cautioned” me about many times MF, ‘generalizing on the basis of insufficient data.”
So far, there is no such delta between any of the current generations, and it is unlikely that there ever has been: Most folks are SO much like their parents in SO many ways,,, unless and until there is some sort of really really traumatic situation, far beyond this current virus event; and, even then, kids tend to ”regress to the mean” of their parents behaviours, in general.
This is documented quite clearly in various studies, and though I will admit much personal concern with the methodologies of those studies, they are the best estimates we have so far.
As it is true “nobody gets out of here alive,” the Boomers will be gone and and Gen Y and Z will have to deal with the results. Gen Y is already dealing with how to survive “old age” with no Social Security cushion that they have been paying into all their working lives, and anyone who pooh-poohs that or thinks a tax holiday will solve everything is … never mind.
Don’t forget us younger gen x’ers. We hear you Millenials because we saw it coming in the 90s. Actually, the smarter ones knew as soon as the neoliberal agenda first reared it’s ugly head in the days of Thatcher and Reagan in the early 80s.
MF- Spot on. I hate to wax poetic but… many Boomers will argue this isn’t the case til the cows come home and eat the very lawn they are protecting. The role this denial plays in the current protests/uprising cannot be underestimated. The compulsion to retain the lion share of money, career opportunities, and power over the society and its mores well into old age is unprecedented. Boomers rarely retire and never seem to quench their thirst for more. And they love, love Law and Order when it is their stick to wield.
So moo. The next generations are coming. Paying them would be cheaper than the alternatives.
My apologies to the more enlightened and empathetic of readers from said generation who often comment here.
Millennials, Zoomers and Gen X need to remember – Tuesday is Soylent Green Day.
Wolf, take care, hope all is well in your neighborhood.
The situation around the Bay Area is starting to get out of control it seems.
The dow future is positive, the rest doesn’t matter!!! All is well!!!
What a screwy world we live in, it’s like the Twilight Zone.
Stocks are just rich people trading assets between themselves. More unemployment means lower wages, lower land prices, lower interest rates, lower jet fuel prices, and taxes and regulations are at all time lows. What’s not to like?
The worse things get, the more people save,
instead of spend — deflation.
With every (careless) loan, the money supply increases;
with every (sad) default, it goes down;
Arsonists/Looters/losers chant “eat the rich”;
winners in China and Singapore think differently;
Warren Buffett sits on 137 billion $ in cash;
— not gold, not stocks, cash.
Berkshire Hathaway has over $100 billion worth of debt in addition to their cash.
The median sales price of a home in San Francisco is about $1.45 million. The sales price per square foot was slightly down year on year. I can not think, “Poor San Francisco.” A million could buy more real estate in the rust belt.
Yea but no awesome jobs in the rust belt. And often times the internet access is subpar.
Deflation? Maybe, but look at the price of Gold in Yen after 22 years of Japanese ‘deflation’.
Not exactly. Cash, i.e. currency, is very different from a bunch of e-credits sitting in nethervaults. With that much in real cash actually withdrawn, he could seriously bring down entire sectors of the economy, but he’d need one hell of a complex to store the paper. As long as it is held only in credits, he’s just another slave to the markets and the reserve banks know it.
Jeff Relf, just curious–do you know how to prepare a simple meal, make coffee, unplug a kitchen drain or fix a faucet, install telephone and internet service…? I could go on and on.
Jeff said: “With every (careless) loan, the money supply increases;
with every (sad) default, it goes down;
Not true. Defaulted debt does not remove one dollar from the money supply.
Mr. “cb” corrected me, saying:
> Defaulted debt does not remove
> one dollar from the money supply.
Deadbeats don’t get additional loans;
In uncertain times people save, not spend;
Warren Buffett is hoarding cash, 137 billion $;
— not gold, not stocks, cash.
Arsonists/Looters/losers chant “eat the rich”;
winners in China and Singapore think differently;
Be that as it may be, or may not be – Defaulted debt does not remove one dollar from the money supply.
That defaulted debt reduces the money supply, is a common misconception, often stated and taken for granted by many.
and, it’s more meant to inform than correct. It is a common misconception.
I wonder what that $1.5 million home would be worth in, let’s say, central Wisconsin where I live – $150K? Maybe this is where location, location, location goes bye-bye. Still, I have a great deal of sympathy for you folks in SF.
Wait a minute… give a deep discount and sell at $1 million. Move to Wisconsin and still make $850k profit. I been doing things all wrong I see.
Who needs a bay view, when you can have a river & papermill view.
If you visit Tomahawk, Wisconsin, that’s a pretty nice view actually. And parking is free!
That’s how my dad retired 20 years ago, and how a very large number of Californians plan to do it in the not too distant future.
Ask folks in the States they’re moving to how that works out.
“San Francisco, a city of about 883,000 people, has a gigantic budget of $12.2 billion in the fiscal year that is now ending, up a gigantic 11% from a year earlier, and up a gigantic 85% from ten years ago (2009/2010).”
For perspective, I live in Brevard County, Florida (home to NASA). We have a population of 610,000 and a budget of $1.3 billion. And we get along just fine with a bloated Sheriff’s Department, 150 or so parks, well-maintained roads and water systems, and all the rest.
I’m confident San Fran can somehow make it through.
How can people save when most have no savings? Can we really believe these saving stats?
Welcome to the Real United States of America . The party is just starting.
We’ve been here before. We’ll get over it and move on. Not to say that systemic problems don’t need to be addressed, and probably won’t be, but not yet…
A typical boom-bust cycle is an exercise in mean regression. At the Federal level these cycles can be managed through stimulus measures. At the local level you do not have this ability so foresight is a key to survival. This article indicates that SF is over-reliant in tourism for revenues. Also, assuming Silicon Valley will last an eternity thereby providing a solid underpinning of home values was a mistake as well. When you lose these two revenue streams you’re screwed.
Diversification of a local economy is imperative if you want to survive these boom-bust cycles. But achieving that requires a different skill set than what the current pols possess. Perhaps SF should elect people with common sense. That might help going forward.
Satya-very true, but I see it as the NATION retreating from a truly diversified economy since the ’80’s, our American hubris discarding any serious thought to dealing effectively with the changes that were slowly eliminating our formerly-large, and stabilizing, middle class. Reversing that trend is the challenge then, and now, facing us. Can we still rise to that challenge at a time when we’re looking more and more like a banana republic with nukes???
and, may we all find that better day…
ack-typos, “…WAS the challenge then, and now..”. Apologies.
“Diversification of a local economy is imperative if you want to survive these boom-bust cycles. But achieving that requires a different skill set than what the current pols possess.”
that right there is all of America (the states) and why i see a split: the SKILL SETS for handling Real Life.
that’s the wild card to ME.
this country has become a nation of Employees.
and it’s why i don’t think Millennials are quite ready yet to actually DO anything YET. millennials need to re-acquaint themselves with the complexities of off-screen life and in the meantime i see Gen X’ers making a comeback, whether they want to or not, and getting back up and doing new things and teaching the millennials and the rest how to get back into the Real World.
besides in actually Doing Things, Gen X’ers are the last generation with a sense of humor and more fun to hang out with in Real Life than millennials right now.
Depression Era folks are the FUNNIEST; they can cut a person to slivers with barely a glance, like they’ve picked snot bigger than your Great Ideas.
Thank you for that incredible compliment!!!!
As a child of the Great Depression I do remember lots of “snot”!
Not much of anything else!! LOL!
And if you go chasing rabbits
And you know you’re going to fall
Tell them a hookah-smoking caterpillar
Has given you the call
Go ask Alice, I think she’ll know…
We are entering a black hole in this metaphor. The rate of entropy/velocity through electro-mag/liquidity insertion will be less the mass/gdp. Everything must shrink- deflate at some point.
This is why they want negative rates, but it won’t work.
We must enter a totally new universe of debt extinction and limited liquidity creation. It probably will be forced upon us eventually.
So if the FED can print money but the cities and states can’t, how will they make up for the lost revenue? You can cut only so much. So you increase taxes, especialy property taxes. So now you take away more, creating uncertanty that triggeers the “saving gene” in people. And then even less money comes into the system…they increase taxes…cut jobs…A neverending vortex.
Michael Hudson is a economics historian and he has analysed debt extinction throught civilisation. It is said that during an economic crisis Louis the 16th sided with the bankers and against the comon people. We all know how that went. If the US would have granted a debt relief of 18,000$ per household, the same money they gave wallstreet the economy would have a debt relieved workiing force and consumers,
Control is the reason TPTB are desperate to hold the survival hammer over people’s heads. They are all pathetically frightened because they don’t know how they will survive without slaves, or how they will afford their personal security forces if it all falls apart. Like the guy who on Sunday turned out the WH lights and went and hid in his bunker.
“….the guy ….who….turned out the lights and went and his in his bunker”……took two things with him:
A violin in a case and and an instruction book: “How to play the violin while the US burns.” LOL!
good one! personally, I think he was about to cr*p his big boy pants.
The bigger issue is the disparity of wealth, and with that, earning power. Overcoming $18,000 of debt isn’t that big a deal, but when that is compounded with the huge inflation in housing over the last several years, those without have a much bigger burden to gain a sense of security. If youre on the wrong side of the debt/rent/inflation bubble, you’re getting unmercifully squeezed.
The good news, at least, is the bad news keeps on coming. If that stopped happening the stockmarket would crash, so we should be thankful for that. Powell should recall the National Guard back to barracks.
Yes, the looting must stop: [Thom Hartmann, 6-1-20]
“In 1981, when Ronald Reagan ended the New Deal era, crushed labor unions, and massively cut the top personal and corporate tax rates, he kicked off the most massive and widespread looting of America since the 1920s.
Working people all across the nation have seen over $7 trillion of their wealth looted by the top 1 percent just in the past two decades, reducing them from the middle class to the working poor.
Small and medium sized businesses, since Reagan stopped enforcing the Sherman AntiTrust Act in 1983, have seen their companies looted by giant monopolies and predatory banksters like Mitt Romney.
Millions of homeowners across the nation had their homes looted by thugs like Steven Mnuchen, California’s “Forclosure King,” and Wall Street banksters like Jamie Dimon, a practice that’s again exploding. …”
Oh, wait…he left out private equity and hedge funds.
Time for all the people who aren’t down with doing business the Family Way to FOAD I guess./S
I had something to say but you said it all for me.Merci
Portia-sagacious, as usual!
A better day and good health to all…
This is my first time commenting and I just wanted to say I love your column. But, at the same time, I feel like Bobby Hill, who didn’t figure out what his father meant by the saying…”that’s about as useless as throwing an egg in a hurricane” until the hurricane hit. No matter how much people hope for change it’s never going to happen until the Fed is stopped from printing money. Great work, though.
I guess the saying “It sucks to live in Frisco” has never been more true than nowadays.
There are many beautiful parts of SF; even now with a failing budget, homeless excrement, poor quality politicians etc., etc.
Twin Peaks or “top of Market St.” on a clear cool winter night that sparkles with countless stars; Cliff House drive; of course the Presidio; Marina beaches; 5,000 sailboats on “sailing opening day” (usually in May); Golden Gate Park; Dolores Park; St. Francis Woods; The Palace of Fine Arts; the much maligned public transportation system that is at the heart of being able to live in an incredibly expensive urban area for the younger generation and elders who don’t drive anymore; The wonderful (but sometimes too cool) clean fog cleansed air; The arts/music etc.,; and the hills….oh yes, the hills! So many memories of driving all over SF getting up at top of steep streets with “stick shift cars and trucks” and having to pause on the brink to look both ways!! That was driving at it’s best!! The restaurants, the food!!!! The bakeries!!!! Try to get a decent loaf of sourdough french bread when leaving SF…..go ahead, make my day!!
Another part is across the Golden Gate bridge to the “Marin parking lot” on the north end….MY GOD! That has to be one of the most beautiful, inspiring vistas of all overlooking the Bay with SF in the background. I will end with sailing in the Bay and feeling so fortunate to be alive at the time!
Yes, SF has serious problems but as Mr. Richter states: “…it is a boom and bust city.” It will come back.
I have a b/w photo print from about 1905 (just before the big event) taken on Twin Peaks looking down the long view toward Market Street and the ports. There are cattle and rail fences on the hill. Them cows had the finest view that even the richest industrialists couldn’t buy. [This shot has never been published in any source I could find. Just a lost photo found in an old wood desk frame.]
Do a digital scan and post it online then, since it has fallen on the public domain due to being so old.
“Uber, one of the largest employers in San Francisco”
Wolf – interesting fact. I had no idea. I knew Uber has about 3 million drivers, but apparently they also have more than 22,000 employees globally.
I get what their drivers do, for very little money, but what exactly are these other 22,000 employees doing? A company like this needs only so many administrators, lawyers, lobbyists, accountants, and developers to maintain their smartphone app. Especially since its drivers pay for most of the overhead in its transportation network, its drivers require minimal administration because they have no labor protections, and this firm basically ignores most taxi regulations.
For comparison, Blackrock oversees $6.3 trillion in assets (its the worlds largest investment manager) with 14,900 employees, Visa runs one of the world’s largest retail electronic payments network with 19,500 employees, and Netflix streams round the clock tv and movies to 183 million subscribers with only 8,600 employees.
My point here is not to justify recent corporate layoffs, especially in this crisis environment, but rather to draw attention to another reason that Uber’s business model makes no sense.
A few of the things these other people do:
1) Maintain the back end servers which actually do the work.
2) Compliance with all of the various city/state/nation regulations
3) Customer service
4) Driver service
6) Security of the entire cloud infrastructure
The infrastructure necessary to service the tens of millions of drivers is non-trivial – internet hype to the contrary. Uber and Lyft each have hundreds of hours of outages a year, for example.
How many of them do sales? What used to be commission only independent contractors are now called “employees”.
It’s all semantics.
“2) Compliance with all of the various city/state/nation regulations”
Now THAT’S funny!
Uber is a hugely complex operation, far beyond anything Netflix or Visa will ever attempt.
Uber moves billions of people and things everywhere, all the time. And they track it all flawlessly. There are thousands of discrete business processes transparently embedded in their public operations.
Design, deployment, and maintenance of these processes is highly labor intensive. Nobody at Uber corporate who survived the layoffs is loafing at home.
” Nobody at Uber corporate who survived the layoffs is loafing at home.”
Does that mean the quarter of Uber who got laid off was in fact loafing at home?
As Wolf said before, the reason for Uber to exist is to find the greater fool who would take on the burden of providing subsidized rides for the consumers. The biggest problem is that now, the consumers are locked away, and they don’t need rides. It’s like people giving away money, and nobody wants it.
7) Get speculators to take free fed money and “invest” in their money incinerating ponzi.
SF has a golden opportunity to fix it’s budget problems by cutting expenses.
SF will however let this good crisis go to waste!
SF will probably just borrow whatever money they need instead.
If SF has to stiff somebody, they will stiff pensioners since they don’t elect city politicians.
Gee. San Francisco has $12.2B in tax revenue for 883,000 citizens; that’s $13,800 for EVERY citizen…wonder who’s paying all those extra tax dollars…
Before I retired, I lived in and around San Francisco. When I visit now, I fly into Sacramento & go directly to wine country.
I’m actually quite surprised how well San Francisco tourism has held up. Lots of people back here in the East are still in the “if you’re going to San Francisco, be sure to put a flower in your hair” era. Perception on the ground (so to speak) is very different.
Really, at least try a little.
SF has around 350K to 400K housing units.
If we assign a value of $750K per unit plus a property tax rate of 1.2%, this yields $3.38 billion. The actual property tax revenue is $2.36 billion primarily because of the numerous Prop. 13 subsidized homes in SF.
Other major sources of revenue:
Charges for services: $3.125B
Business taxes: $687 million
Various transfers in – state and federal payments of various kinds – multiple types in the $1 billion to $1.5 billion range.
You can look up the details at: openbook.sfgov.org
“primarily because of the numerous Prop. 13 subsidized homes in SF.”
Not quite: you are ignoring commercial properties. Much of downtown has been owned by the multiple generational descendants of the German Jewish and Anglo immigrants who built the city and its industries in the 1800s; Levi Strauss, Charles Crocker etc.
Thanks to Prop 13, these properties are taxed at 1975 assessed levels, the base year for Proposition 13, plus the small yearly percentage increase. Even when they change hands, only the controlling interest in the “owner” changes hands. This is a huge scam. If owner occuped HOMES only were covered by Prop 13 and commercial properties were not, there would be no budget shortfall.
My snarky comment about San Francisco city/county budget was implying a HUGE contribution required from other taxpayers to support the SF dream (and human feces removal).
You’ve asked me to “try harder”, and after reading your analysis showing, with Prop 13 adjustments (if ever passed), SF generates somewhere around $8B of it’s own $12+ budget.
I’m sticking with my comment about HUGE contribution required from other taxpayers to support the SF dream…
JC-still a supply-and demand issue. Until Yogi’s immortal ‘…no one goes there anymore, it’s too crowded…’ scenario seriously kicks in in an urban complex, this will exist in ANY urban complex with high population pressure. Decent housing (unless one counts Soviet-style domitorying of average folks (and, yes, many would say SF is already there)) requires adequate and suitable land, something hard to find (and even harder to manufacture) when overrun by a human population. (or, more simply, any space will degrade when it’s carrying capacity is exceeded…).
A better day to us all.
When HGTV folds, I will know America will be back. But many posts I read on this site have the HGTV mentality.
Debt based ponzies destroyed.
Please explain what YOU mean by HGTV for us older than boomer folks who may have never watched AND cable tv,,, , and the younger boomer types who might not know either
I am talking about inefficient debt based consumption with overfed people holding existing jobs that are debt based zombies. The economy and society need a cleansing. Attitudes need to change. HGTV is the definition of the plague.
no debt? that sounds like you are talking about the end of “capitalism”
“HOME and GARDEN TV.”
The network that shall not be named?
The programs are basically giant advertisements for the advertisers and the lifestyle itself so portrayed that is a giant real estate fixer upper scam to incite consumer lust.
Not seeing any economic rebound yet. Shutdowns ending don’t count.
Oh yea? Try recovering without one.
I think what you’re trying to get a grip on is how close (and ok, and how fast) is the return to normal will we be in 90, 180 days.
Those jobs (derogatorily called non-essential) are what feed & clothe millions of families. Parasitic (in the positive sense) government can’t just snap their “essential” fingers and re-create a $22T economy. Capitalists built it originally, and are required to re-boot do it,
30-year resident here. I have been bucking the shutdown and coming into work regularly since St. Patrick’s day.
I was and am stunned to see parking spaces along Grant Street between California and Broadway at noon on a weekday. Unheard of – I cannot recall seeing that in thirty years. I d$%n near took photos!
For the locals – there are a few good places to get a bagged lunch near the Financial Center – Molinari’s has been open since the plague commenced and is excellent. Great-grandson of the founder firing out the pastramis, swing music on the PA. Not to be missed!
Dude, it’s called Grant AVENUE. Damn recent arrivals.
Do they still handle cash and meat and credit cards with the same gloves at Molinari’s?
Tony 22 – I will verify but I think the answer is YES. Try the wet market in Oakland Chinatown for an even better exemplar. Or don’t.
As far as I am concerned, San Francisco stopped being worth even visiting much less living in back in the 80’s. Today, it is just a sad remnant of what it used to be. Quality of life is just not there. It is kind of depressing.
1) US post office is closed on Sun, but is serving Amazon. Postmen vans deliver Amazon Prime every Sun afternoon.
2) AMZN weekly in a trading range since Sept 4 2018.
3) On Mar 2020 AMZN made a jump when 100K senior citizens lost their lives.
4) US tax payers subsidizing Amazon Prime.
5) Amazon win when the competition is looted or boarded up from CV19.
6) Malls are fortresses protecting shoppers from looting.
7) 480K BK Chinese businesses will dissect the supply chain. Global recession is reality. Most retailers cannot breath anymore.
Thanks Tony22! For extra credit – what was Grant Avenue called before the change?
Double extra – what do the old school Chinatown denizens still call it?
San Francisco’s problems are just one example of all the local, state and regional governments around the world and their fiscal situations. Everyone seems to focus on national budget deficits as disasters, but national governments can deficit finance and print money. The “other” governments are a funding mixed bag, some can deficit finance such as State or Provinces, while most cities and counties can only do so for specific capital projects. None can print money to get out of their mess. My guess is these other levels of government are all going to have deficits and funding gaps as large as their national governments. However, without new bailouts from national governments these local governments will have to start laying off people and reducing services soon. More unemployment, more people to join the riots….. and make the stock market go up more……
Funny how progressives have been able to run every major city in the country into the ground all in pursuit of some fantasy that doesn’t help anyone but follows some liberal professors idea what society should be.