Month: December 2021

Do We Really Need States to Be Bankers?

Mary Pat Campbell

Link:https://www.governing.com/finance/do-we-really-need-states-to-be-bankers

Excerpt:

In 1919, the state of North Dakota established its own bank as a public institution. It’s the only one of its kind in the nation, having operated successfully for a full century through the Great Depression and a dozen recessions. Nine other states tried to follow suit in the following decades, only to fail and close their banks’ doors. Founded to provide capital in a farm-centric economy that was underserved by large regional financial institutions that charged double-digit interest rates for ag loans, the Bank of North Dakota has served as an inspiration and touchstone to political populists, anti-bank politicians and easy-money advocates.

…..

Even beyond what we call the “global superabundance of capital,” however, what the advocates and professional literature overlook is the spectacular disruptive growth of “fintech” — financial technology — that is bringing capital to previously underserved communities and businesses. It turns out that the capital markets, big data, artificial intelligence and techno-wizardry are filling in many of the niches that supposedly cry out for public banks. But first, there are two other strategic public policy alternatives of note: “linked deposits” and using pension-fund capital for nonbank lending, or “shadow banking” as it’s termed by its critics.

As a young municipal finance officer, while moonlighting in grad econ classes in the late 1970s, I became enamored of the concept of linked deposits. The idea was that municipalities should invest in time deposits with banks that pledge to make local loans promoting economic development. I’ll never forget speaking on a panel at the state finance officers’ conference and watching the state’s most prominent public funds banker scowl and shake his head in disgust at what struck him as a pie-in-the-sky concept. At the time, that idea went nowhere.

…..

Meanwhile, with interest rates at record low levels, public pension funds have been searching everywhere for ways to get a better return on their fixed-income capital allocations. One of the vehicles that emerged in the past decade has been direct lending through professionally managed portfolios that provide loans to businesses at attractive interest rates.

Author(s): Girard Miller

Publication Date: 7 Dec 2021

Publication Site: Governing

Early data on Omicron show surging cases but milder symptoms

Mary Pat Campbell

Link:https://www.economist.com/graphic-detail/2021/12/11/early-data-on-omicron-show-surging-cases-but-milder-symptoms?utm_campaign=the-economist-today&utm_medium=newsletter&utm_source=salesforce-marketing-cloud&utm_term=2021-12-09&utm_content=article-link-1&etear=nl_today_1

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Excerpt:

Two weeks after the Omicron variant was identified, hospitals are bracing for a covid-19 tsunami. In South Africa, where it has displaced Delta, cases are rising faster than in earlier waves. Each person with Omicron may infect 3-3.5 others. Delta’s most recent rate in the country was 0.8.

Publication Date: 11 dec 2021

Publication Site: The Economist

COVID cases and deaths are on the rise

Mary Pat Campbell

Link:https://www.axios.com/covid-cases-deaths-vaccines-omicron-0623380c-e665-435d-a144-4996e74ef5ff.html?mc_cid=0b15989f29&mc_eid=983bcf5922

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Excerpt:

Where it stands: The U.S. is now averaging roughly 120,000 new COVID cases per day, a 26% increase over the past two weeks.

Average cases briefly dipped below 100,000 as the summer’s Delta wave receded, but the virus has rebounded quickly. New infections were climbing even before Thanksgiving, and holiday travel likely is accelerating the virus’ spread even further.

Deaths are also on the rise, after tapering off in the fall.

The virus is now killing about 1,300 Americans per day, on average. That’s a 14% increase over the past two weeks.

At this rate, the U.S. will pass 800,000 total deaths — roughly equivalent to the population of the Charleston, South Carolina, metro area — before Christmas.

Author(s): Sam Baker, Kavya Beheraj

Publication Date: 9 Dec 2021

Publication Site: Axios

Omicron Wave Sees South Africa’s Weekly Excess Deaths Almost Double

Mary Pat Campbell

Link:https://www.bloomberg.com/news/articles/2021-12-08/s-african-weekly-excess-deaths-almost-double-amid-omicron-wave

Excerpt:

South African excess deaths, a measure of mortality above a historical average, almost doubled in the week ending Nov. 28 from the preceding seven-day period as a new coronavirus variant spread across the country.

During the period 2,076 more people died than would normally be expected, the South African Medical Research Council said in a report on Wednesday. That compares with 1,091 the week earlier.

The rise, while only reflecting a week of data, contrasts with hospitalization numbers that show that most admissions have mild forms of the coronavirus, spurring hope that the omicron variant is more benign than earlier strains.

Author(s):Antony Sguazzin

Publication Date: 8 Dec 2021

Publication Site: Bloomberg

The muni market: How two big changes could impact government borrowing

Mary Pat Campbell

Link:https://lizfarmer.substack.com/p/municipal-market-trends-outlook

Excerpt:

The pandemic created a lot of uncertainty around state and local government revenues for much of 2020. That was a big reason for the dramatic boost in the rate of bonds issued with insurance that year: In total, $34.45 billion in new bonds carried insurance — the highest since the Great Recession ended in 2009. Even with the economic stabilization this year, insurance is still going strong. Through October 2021, wrapped municipal bond issuance totaled $31.5 billion, according to RBC Capital Markets.

Looking ahead, the chatter about municipal climate risk has been increasing in recent years. Extreme weather events linked to climate change have called into question the preparedness and resiliency of utilities and other government issuers, while studies point to the potential long-term economic effect. One BlackRock Investment Institute report estimated that some vulnerable cities could see economic losses of up to 10% of GDP without decisive action.

The bottom line: Insurance provided safety for muni market investors during the pandemic and its continued use indicates that investors and issuers are both finding it attractive in situations where there might be a little more long-term uncertainty. Climate risk plays right into this notion. While no one expects bond insurance to dominate the market as it once did, it’s likely that the pandemic spike in usage is here to stay.

Author(s): Liz Farmer

Publication Date: 8 Dec 2021

Publication Site: Long Story Short at substack

Millions of workers retired during the pandemic. The economy needs them to “unretire,” experts say.

Mary Pat Campbell

Link:https://www.cbsnews.com/news/retirement-covid-pandemic-unretire-labor-shortage/

Excerpt:

An economist will tell you it’s a hot labor market: A record number of people quit their jobs in September, and the U.S. is seeing record job openings as the economy chugs back to life from the coronavirus pandemic. The pandemic drove millions of workers into early retirement — and experts say they could be key to reviving the economy.

The number of people who retired rose much faster than the typical pace during the pandemic. More than 3 million additional people retired compared with normal, a Federal Reserve Bank of Saint Louis analysis found. Meanwhile, the economy is still down nearly 4 million jobs from before COVID-19.

“40% of the older workers that were pushed out of the labor market because they were unemployed, they were laid off, they were fired during the pandemic, 40% of them were permanent job losers and most of them said OK, I’m not just a discouraged worker, I’m not a long-term unemployed, I’m going to tell the [Labor Department] survey I’m retired,'” said Teresa Ghilarducci, labor economist and professor at The New School.

….

But even if retirees return to work at the average pre-pandemic pace, it will take more than two years to bounce back from the recent surge in retirements, the Federal Reserve Bank of Kansas found.

Last month, employment among workers 55 and older increased while unemployment dropped slightly. Older workers are typically more likely to face long-term unemployment than younger workers. While long-term unemployment among older workers changed little last month, it has declined in recent months. Older Americans coming out of retirement might not be returning to the same landscape.

Author(s): Sarah Ewall-Wice

Publication Date: 8 Dec 2021

Publication Site: CBS News

‘We’re losing IQ points’: the lead poisoning crisis unfolding among US children

Mary Pat Campbell

Link:https://www.theguardian.com/us-news/2021/dec/08/lead-poisoning-crisis-us-children

Excerpt:

Turokk Dow is one of about 87,000 young children who are diagnosed with lead poisoning in the US each year, more than three decades after the neurotoxin was banned as an ingredient in paint, gasoline and water pipes. Today, lead lingers in houses and apartments, yards and water lines, and wherever states and communities ramp up testing, it becomes clear that the nation’s lead problem is worse than we realized, experts say.

A study published in JAMA Pediatrics this fall suggested that more than half of all US children have detectable levels of lead in their blood – and that elevated blood lead levels were closely associated with race, poverty and living in older housing. Black children are particularly at risk.

“Most American children are exposed to lead, a substance that is not safe at any level,” said co-author Dr Harvey Kaufman, a senior medical director at Quest Diagnostics, which led the study. According to the CDC, “[e]ven low levels of lead in blood have been shown to negatively affect a child’s intelligence, ability to pay attention, and academic achievement.”

….

In California, for example, a 2020 report found that 1.4 million low-income children who were supposed to receive testing never got checked for blood poisoning. In some states, like New York, testing of all children is required, but there is often insufficient followup. A study by the New York City comptroller found that 9,000 rental buildings where children tested positive for blood poisoning were never inspected for lead, resulting in additional children being poisoned.

Author(s): Erin McCormick in Rhode Island and Eric Lutz

Publication Date: 8 Dec 2021

Publication Site: The Guardian UK

THE SCOURGE OF SOCIAL INFLATION

Mary Pat Campbell

Link:https://www.rstreet.org/wp-content/uploads/2021/12/RSTREET247.pdf

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Excerpt:

If unchecked, social inflation, driven by the myriad factors discussed in this study, will become a self-perpetuating phenomenon that sends improper signals regarding the value of damages to jurors, judges and defendants. This will lead to higher insurance premiums, financial strain on insurers, depletion of municipal resources and disincentives for businesses to take risks. This hidden “tort tax” benefits no one except plaintiff attorneys and their clients who engage in practices that lead to social inflation.

There are two broad responses that need to be pursued to combat the perpetuation of social inflationary pressures. One is to influence the development of public policy at the state and federal levels to reveal and control excesses. The second is for insurers and defense counsel to adopt and deploy more aggressive strategies that push back and formally object to tactics violating existing norms of courtroom behavior.

Author(s): Jerry Theodorou

Publication Date: December 2021

Publication Site: R Street

COVID Data Follies: Vaccination Rates, Relative Risk, and Simpson’s Paradox

Mary Pat Campbell

Link:https://marypatcampbell.substack.com/p/covid-data-follies-vaccination-rates

Video:

Graphic:

Excerpt:

On Monday, December 6, 2021, I gave a talk with the title “COVID Data Follies: Vaccination Rates, Relative Risk, and Simpson’s Paradox”, to the Actuarial Science program at Illinois State University (thanks for the t-shirt, y’all!):

You may have heard statistics in the news that most of the people testing positive for COVID, currently, in a particular location, or most of the people hospitalized for COVID, or even most of the people dying of COVID were vaccinated! How can that be? Does that prove that the vaccines are ineffective? Using real-world data, the speaker, Mary Pat Campbell, will show how these statistics can both be true and misleading. Simpson’s Paradox is involved, which has to do with comparing differences between subgroups with very different sizes and average results. Simpson’s Paradox actually appears quite often in the insurance world.

I will embed a recording of the event, copies of the slides, the spreadsheets, and the links from the talk.

Author(s): Mary Pat Campbell

Publication Date: 8 Dec 2021

Publication Site: STUMP at substack

McConnell Won’t Block Debt Ceiling Increase, Says He Wants Democrats To ‘Proudly Own It’

Mary Pat Campbell

Link:https://reason.com/2021/12/08/mcconnell-wont-block-debt-ceiling-increase-says-he-wants-democrats-to-proudly-own-it/

Excerpt:

Congressional showdowns over the debt limit are nothing new, but this time around there’s a unique wrinkle. The House approved a bill on Tuesday night with what was essentially a party-line vote that paves the way for Congress to avoid a possible default on the national debt in the coming weeks. Here’s the tricky part: “The measure would create a special pathway—to be used only once, before mid-January—for the Senate to raise the debt limit by a specific amount with a simple majority vote, allowing Democrats to steer clear of a filibuster or other procedural hurdles so that Republicans would have no means to block it,” The New York Times reports.

The upshot, assuming this deal holds up long enough to avert the December 15 deadline for raising the debt limit, is that there won’t be another showdown like this before the midterm elections next November.

Author(s):Eric Boehm

Publication Date:8 Dec 2021

Publication Site:Reason

New Jersey Taxpayers ‘On the Hook’ for Massive Debt: Report

Mary Pat Campbell

Link:https://www.theepochtimes.com/new-jersey-taxpayers-on-the-hook-for-massive-debt-report_4139948.html

Excerpt:

New Jersey has amassed a huge, and possibly dangerous, level of debt, according to a new report that reviews the financial health of state governments across the country.

Each Garden State taxpayer owes tens of thousands of dollars and the state is a tax “sinkhole,” according to the nonprofit organization Truth in Accounting (TIA), because state lawmakers of both parties have overspent and used accounting “gimmicks” for decades. The organization defines “sinkholes” as states that lack the necessary funds to pay their bills.

….

The S&P report also gives New Jersey a low grade on debt practices.

“On our scale of ‘1.0’ to ‘4.0’, where ‘1.0’ is the strongest score and ‘4.0’ the weakest, we have assigned a composite score of ‘3.7’ to New Jersey’s debt and liability profile,” according to S&P.

Moody’s, in its July 14 report, gave New Jersey an A3 rating on its general obligation (GO) bonds, a low rating. But it praised recent efforts by  Murphy to solve the problems of long-term debt.

….

Fitch Ratings, in its April 13 report, gives New Jersey an A- grade. It said its rating reflects New Jersey’s “adequate financial resilience.” But it also said that its condition isn’t as good as that of most states, and stirs up some troublesome ghosts.

Author(s): Gregory Bresiger

Publication Date: 8 Dec 2021

Publication Site: Epoch Times

Diseasonality – Why is winter flu season?

Mary Pat Campbell

Link:https://astralcodexten.substack.com/p/diseasonality

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Excerpt:

Cold and humidity are definitely important – scientists can make flu spread faster or slower in guinea pigs just by altering the temperature and humidity of their cages. But it can’t just be cold and humidity. But if it was just cold, you would expect flu to track temperature instead of seasonality. Alaska is colder in the summer than Florida in the winter, so you might expect more summer flu in Alaska than winter flu in Florida. But Alaska and Florida both have lots of flu in the winter and little flu in the summer.

(if it was just humidity, same argument, but change the place names to Arizona and Florida.)

It’s the same story with people being cramped indoors. Common-sensically, this has to be some of the story. But if it were the most important contributor, you would expect to see the opposite pattern in very hot areas, where nobody will go out during the summer but it’s pleasant and balmy in the winter. Yet I have never heard anyone claim that any winter diseases happen in summer in Arizona or Saudi Arabia or terrible places like that.

If it was just vitamin D…look, it’s not vitamin D. Nothing is ever vitamin D. People try so hard to attribute everything to vitamin D, and it never works. The most recent studies show it doesn’t prevent colds or flu, and I think the best available evidence shows it doesn’t prevent coronavirus either. African-Americans, who are all horrendously Vitamin D deficient, don’t get colds at a higher rate than other groups (they do get flu more, but they’re vaccinated less, so whatever).

Author(s): Scott Alexander

Publication Date: 7 Dec 2021

Publication Site: Astral Codex Ten