While acknowledging the Bay Area holds a productivity edge with respect to the tech sector, which has been responsible for 100% of the Bay Area’s growth since 2005, and that the Bay Area has maintained its distinctiveness as an innovation hub, the latest Bay Area Council Economic Institute’s Economic Profile raises a few concerns.

While the resilience recently displayed by the Bay Area and its innovation economy is impressive, the benefits are not being evenly felt. Employment levels remain near their lowest point in fifteen years, and jobs are particularly scarce for blue collar workers, who account for only 16% of the current employment. Budget shortfalls are creating strains. Education, infrastructure, and the business environment pose serious challenges to the Bay Area’s ability to maintain its competitive edge.

Today, although the economy has largely persevered, the increased intensity of these underlying structural problems poses a challenge to the region’s ability to sustain economic leadership in the longer term. Overall economic growth has been anemic when one takes a longer view, at only approximately 2% over the past 5 years. The region needs to look to itself to truly address these problems.

In the words of the Council, while the outlook “does not suggest that the Bay Area is on the verge of an economic crisis” (phew!), it does recognize “a pressing need to work through the region’s many challenges.”
Bay Area Economic Profile: March 2012 [bayareaeconomy.org]

45 thoughts on “Bay Area Economic Outlook And Challenges”
  1. I enjoyed reading this.
    Section 2 and 3’s problems share a recurring theme of state and local budget shortfalls and deficits, driven by underfunded pensions and education, with services following closely behind.
    In that regard, it dovetails with The New York Times article two days ago regarding municipality bankruptcies testing the untouchable sacred cow that is CalPers.
    http://www.nytimes.com/2012/03/17/business/untouchable-pensions-in-california-may-be-put-to-the-test.html?pagewanted=1&sq=calpers&st=cse&scp=1
    In the coming years, one or more municipalities will inevitably end up in bankruptcy court and give Calpers the big legal finger(s).

  2. BillyBalls,
    Going after pensions is the next logical step in this Monopoly game.
    Step 1 – Lower taxes or make sure taxes are never following expenditures. (Prop 13, etc…)
    – Pass GO and collect $200
    Step 2 – Compensate lower tax rates by facilitating debt creation – which 1) Artificially increase property valuation which brings more transfer fees and more property tax revenue and 2) helps fill shortfalls with cheap borrowing.
    – Pass GO twice and collect $400.
    Step 3 – Wait for the whole thing to collapse. Get bailed out.
    – Pass GO and collect $200
    Step 4 – Say the problem comes from healthcare and pension costs and propose deep cuts. demonize the model our Grand Parents and our Parents built and defended during WWII. Raid pension funds while everyone waves their pitchforks.
    – Pass GO and collect $200
    But hey, we got that sweet tax cut.

  3. LOL,
    I know I often sound like a republican candidate with my debt shpiel, but I’m not.
    I doubt that there will ever be meaningful legislative reform because the political cost associated with responsible management is too unpopular: but its the RIGHT thing to do.
    How much wealth was lost in Vallejo as a result of the city going BK? how did that impact property values?
    I’m all for unions defending their pensions and benefits. If it puts a company/municipality into bankruptcy, however, then their actions are short sighted, and selfish.

  4. My only other comment on CalPERs is that the board recently lowered their investment target from 7.75% to 7.5%. That giant sucking sound you hear is city services being diverted to cover pensions.

  5. That’s hilarious LOL, especially because all of this is happening under Democratic control of the state.
    I think you need to shed that tinfoil hat. Might want to bone up on Occam’s Razor.

  6. Toady, I think LOL’s point is (pretty clearly) that this “process” has been underway since the Passage of Prop 13. It has little to nothing to do with the current Democratic administration of the state. There are fingers to point at both Democrats and Republicans, and ultimately at the brilliant voters of the State of California.

  7. Prop 13 passed on Jerry Brown’s watch when he was Governor the first time, that’s a fact. I distinctly remember his running up a state budget surplus just before Prop 13 was proposed/made it to the ballot. Of course, this incensed Howard Jarvis-types and their fellow travelers, who could then point out to voters that the state didn’t need the tax money they were collecting.

  8. The point is not that republicans are not also to blame, the point is that the democrats have been in power long enough that, had they wanted to fix this, they could have done it;
    The reduction of the rat from 7.75% to 7.5% is just a finger aimed at the taxpayers of California. In what crazy universe, can I now get a guaranteed 7.50% rate on my money? Is there something we do not know? Is CalPERS really a pension fund for Zimbabwe retirees? Then, maybe, one could see this rate as reasonable;
    The irony of this is that federal bankruptcy law
    ought to trump this vis-a-vis state law (the only other issue, I suppose, is the contracts clause but, that is a fairly weak argument) but those who oppose that interpretation will no doubt then clamor to get $ from the federales to pay off the bankrupt state’s debts such as pensions……
    As a political matter, this seems untenable too; if you think people will pay taxes so that their cash goes mostly to pay the not so overworked state pensioneers, while suffering cuts in services, you’re insane. Grandma’s house will be burned down by angry mobs before that happens on a large scale.
    As it becomes a state of “denial”, California might have to vie w/Delaware for the “DE”;
    In any event, the question is what to do now – California can’t print cash & eventually no one (other than the federales) will buy its bonds so the question is only can they muddle through until quantitative easing XXVI when, at the cost of a $100 to Y1 yen exchang rates, the Ben Bernanke comes to the rescue.
    Certainly that’s what the wild-eyed morons of the NYT editiorial page are cynically waiting for – the ultimate in redistributional justice.

  9. It’s not entirely a Democrat or a Republican issue. It’s a question about where our priorities are. We grew after WWII, got out of huge amounts of debt and still managed to finance education, defense, a moon program, decent retirement, healthcare. Since the early 80s the mantra is that there is no such thing as a bad tax cut. We’re creating debt to make up for lesser tax revenue, and still whining about paying too many taxes.
    The current state (and national) woes are voter-based self-inflicted wounds coming from short-sightedness. Of course everyone wants to pay less taxes. You will not feel the direct effect because our economy is so big and there are many ways to accommodate the short-term. But wait 10, 20, 30 years and see the results of the selfish decisions seep through.
    We’d vote ourselves 365 days of sunshine if we had the option, water be damned. We’ll always find a way, right?
    The most amazing thing is that people who created this mess are now the most vocal to kill government once and for all. Then yes, I will keep my tin foil hat, because there’s obviously a pattern there…

  10. wrath: “In what crazy universe, can I now get a guaranteed 7.50% rate on my money? Is there something we do not know? Is CalPERS really a pension fund for Zimbabwe retirees? Then, maybe, one could see this rate as reasonable.”
    In what universe is CALPERS offering a guaranteed 7.5% rate of return? Oh I know, one where you take a number out of context and then go on a rant about your made up assumption.
    http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2012/mar/discount-rate.xml
    “The California Public Employees’ Retirement System (CalPERS) Board of Administration today voted to reduce the discount rate to 7.5 percent, affirming the recommendation made by its Pension and Health Benefits Committee yesterday.”
    “The discount rate for the Public Employees’ Retirement Fund was last changed 10 years ago when it was lowered to 7.75 percent from 8.25 percent.”

    “The discount rate is calculated based on expected price inflation and real rate of return. According to studies conducted by CalPERS and external actuaries, inflation has been in decline for the last 25 years. As a result, CalPERS Actuarial Office recommended a reduction in the price inflation from 3 to 2.75 percent. When added to the current real return assumption of 4.75 percent, this produces a discount rate of 7.5 percent. CalPERS actuaries offered the Pension and Health Benefits Committee two options to protect the soundness of the pension plan: a 7.25 percent discount rate that includes an adjustment to add an element of conservatism to further protect against lower returns, or a 7.5 percent discount rate without such an adjustment.”

  11. Rillion, they’re still high. From your link:
    The discount rate is calculated based on expected price inflation and real rate of return.
    CalPERS Actuarial Office recommended a reduction in the price inflation from 3 to 2.75 percent.
    When added to the current real return assumption of 4.75 percent, this produces a discount rate of 7.5 percent.
    They ain’t getting 4.75 in this market from ANY fixed income.

  12. You can quibble if their inflation assumptions are correct or if they can actually obtain a 4.75% real rate of return on their diversified holdings. But are you defending wrath’s statement that the 7.5% discount rate that CALPERS uses in its models is in any way a GUARANTEED RATE OF RETURN? Is there anything in the press release that hints that CALPERS believes its figures are ‘guaranteed’?

  13. “What is the “discount rate”?
    The discount rate is generally the same as the expected rate of return on investments, and is used to calculate the present value of expected plan payments.”
    So (a) it is a RATE OF RETURN (we’re goin’ ALL CAPS baby!)
    (b) if you do a CURSORY (ALL CAPS baby!!!!!) look over the INTERNET (hell yeah!!!!!) you will note (maybe) that the idea is that a lower projected return means an increased obligation by the municipalities – just the way CalPERS works;
    now, I suppose the 7.75% rate of return is NOT guaranteed by CalPERS (I give you that) but what is agreed is what is in the munipality level contracts (which may or may not be > 7.75%);
    can I go on ranting now?

  14. ‘The discount rate is generally the same as the expected rate of return on investments, and is used to calculate the present value of expected plan payments.”
    “I suppose the 7.75% rate of return is NOT guaranteed by CalPERS”
    CA Constitution GUARANTEES the payouts to retirees
    So CALPERS might not be GUARANTEEING the 7.5%
    But The Taxpayer sure is!

  15. yes, the constitution guarantees them that but I was just pointing out that the specific return is probably in the contracts (or are you saying the constituion actuallly provides a specific rate of return?)

  16. “(or are you saying the constituion actuallly provides a specific rate of return?)”
    No.
    Just that if 7.5% is what they need to guarantee expected payments and payments are guaranteed by the constitution then actual returns below 7.5% will require cash from the taxpayers to make those payments.
    “a 7.25 percent discount rate that includes an adjustment to add an element of conservatism to further protect against lower returns, or a 7.5 percent discount rate without such an adjustment.””
    Doesn’t look like they even went with the safety margin

  17. “now, I suppose the 7.75% rate of return is NOT guaranteed by CalPERS (I give you that)”
    Thank you, that was my point. It is not a guaranteed rate of return. But an estimated rate used for present value calculations that span decades. As of the end of their last fiscal year (June 30, 2011) here were their actual rates of return:
    “Even with gains in fiscal 2011, the pension fund has earned 3.41 percent annually on average in the past five years, 5.36 percent in the last 10 and 6.97 percent in the last 15. It has only beat its assumed rate of return with a 20-year average of 8.38 percent annually.”
    Obviously their returns have been greatly impact by the 1990’s stock market run-up (hence the great 20 year numbers) and subsequent crashes of 2000 & 2008 (the more mediocre 5-15 year numbers).
    So over decades CALPERS has actual met its number although it has not met its that rate recently during the worst recession since the great depression. Shocker.
    Yet you say somehow a 7.5% rate some how makes it “Zimbabwe” like? Perhaps the issue isn’t the discount rate CALPERS is using but the high pension payouts that government workers are offered and their ability to ‘double dip’? No, no far better to try to mock the IRR.

  18. ” It is not a guaranteed rate of return. But an estimated rate used for ”
    An “estimate” that taxpayers have to make good on (i.e. GUARANTEE ) if the “estimate” is not met
    “Calpers in January said it had only about 70 percent of the money it needs to cover benefits promised to government workers when they retire. ”
    And theyre already 30% in the hole!!!
    Read! Really!

  19. Rillion,
    Calpers is in an unfairly overpowered position. They’re a pension fund whose returns are also taxpayer subsidized.
    My issue remains that if calpers wants to play hedge fund they should have to get in line with a bankrupt counterparty in federal court like everyone else.
    Their constitutional mandate should preclude them from rolling the dice and taking the hits they’ve taken.
    And what they did to Vallejo is an outrage. No private entity would ever have been allowed to lean on a bk municipality the way they did.
    I’ll say it. Pension reform. Calpers wants to play hedge fund, fine, but do so without subsidized returns. Privatize them, and let state employees invest alongside the rest of us poor schmuks.
    No one is guaranteed a cushy retirement, much less one subsidized by taxpayer returns.

  20. “No, no far better to try to mock the IRR”
    yes, my whole argument was based on trying to mock the IRR as applied by CalPERS. Not, the fact that CA public employees through CalPERS & our taxpayers are guaranteed whatever rate they are guaranteed (which btw may well be > 7.75%). The point is there is a guarantee in place (btw I never said it was CalPERS who was guaranteeing it)
    CalPERS is a state entity & the reason they feel the heat is b/c otherwise municipalities have to raise taxes or cut services – so, no CalPERS does not guarantee the return (how could it?) but the state (its sponsor/owner) does & your taxpayer money is witness to that;

  21. I am bored and stuck on the shuttle bus in traffic this morning, so excuse me in advance for the long post.
    ——
    People take lower paying public sector jobs for many reasons, but the good benefits is one of them.
    We have had an unusually bad decade for investments, but CalPERS and most other institutional investors have done better than 7.75% over the long run. It is wise of them to bump down their expected rate of return, due to demographics. Didn’t they just bump up the required contribution for employees?
    If you think public sector workers have it so great, why don’t you go get a job in the public sector?
    I have a friend who works for the UC and since he is a public employee, his salary is public knowledge. I make about 80% more than he does. His job is comparable to mine and we have equivalent levels of skill and training. We used to work in the same computer lab as an undergraduate and we have stayed in touch, so I have a pretty good idea where he is in his career.
    Now he is going to have a very nice pension in 20 years, but I should be able to have enough money to retire at a similar standard of living much sooner.
    I had to suffer long periods of unemployment after the dot-com bust and probably have worked longer hours in general, but it is not clear to me that he got the better end of the stick. Especially considering the huge number of public sector workers who have gotten sacked during the Great Recession.
    You will find this in general for highly skilled professionals and managers: the private sector is more remunerative. For lower skilled workers, it is inverted. I personally believe that it is fine that the State of California pays low skilled employees like janitors better in overall pay and benefits than private employers do, but your opinion might differ.
    The truth is with 5 years of nothing but pay cuts and layoffs public sector workers are demoralized and finding it increasingly difficult to hire good people, especially highly skilled professionals. I think further demonization of them and efforts to further cut their pay and benefits is counterproductive.

  22. I agree w/you, NVJ. I have a similar situation. My sis and I have a basically a similar tech degree. Yet she chose a government job and I went to research in the private sector. Luckily I wasn’t too affected by the tech crash, having hopped to a solidly growing dot-com right when things went south everywhere else. Sis has been shuffled around due to budget cuts lately but is still enjoying her career. Just like you I plan to retire much earlier but the big big question is healthcare. She will not have this problem. What she does is extremely valuable and totally underpaid.

  23. “If you think public sector workers have it so great, why don’t you go get a job in the public sector?”
    That’s like saying you can’t think prisoners should not have free education classes or tvs in their cells or any “play” time, b/c otherwise you clearly think they have it so “great” and should just go and “live in prison”?
    So, no, I think they just have it better than they should;
    And the real reasons people choose public employment are (1) so that they can work less
    and (2) b/c many of them are not employable in the private sector;
    Put differently, the public sector functions largely as more unemployment assistance – b/c most of what many of these people actually do at work can best be described as “unemployment”;
    That is why any sensible reform has to eliminate not just unemployment assistance but also vast swaths of the federal, state and local bureaucracies – if they continue to be unemployed, they can go to the PRC or UAE where employment is apparently skyrocketing;

  24. wrath has officially made it into the “most uneducated post” hall of fame.
    Next time you get your flu shots, be thankful some competent scientist at the CDC made sure you wouldn’t be poisoned by a private company cost-cutting measure.
    Next time you call 911, be thankful for the great and selfless work of firemen and cops. Putting their life on the line, they deserve their pay and benefits.
    Next time you enter Muni, be thankful the drivers are getting their hours of sleep and proper healthcare, and that the maintenance crew doesn’t cut corners.
    Next time you drive on a street, be thankful your car is not swallowed by a sinkhole because of shoddy planning or corrupt public construction.
    We need government for all these things and much more. We lose it and we’ll quickly look like a third work country.

  25. If it’s the “most” uneducated post, how can there be a “hall of fame”? Am I on top or not? Make up your mind please;
    “Next time you get your flu shots, be thankful some competent scientist at the CDC made sure you wouldn’t be poisoned by a private company cost-cutting measure.”
    Yes, I will also thank the FDA for delaying hundreds of potentially life saving cures as a result of all the hoops that the agency is making the pharmaceutical industry go through;
    “Next time you call 911, be thankful for the great and selfless work of firemen and cops. Putting their life on the line, they deserve their pay and benefits.”
    I will – although, to be fair, if, like last time, they put me on hold for 5 minutes, perhaps less so (I swear I overheard someone at dispatch saying, “they can’t go, they’re getting donuts”);
    “Next time you enter Muni, be thankful the drivers are getting their hours of sleep and proper healthcare, and that the maintenance crew doesn’t cut corners.”
    I don’t use Muni – it interferes with my God & Constitution given right to unfettered use of my car (I’ll grant you it is not easy to maneuver my Yukon Denali (McKinley really) XL in SF but if, I think driving/parking will be an issue, I just bring the ol’ H3;
    But more seriously, the Muni, c’mon. I already had to install a double-door autoclave, an ultraviolet light passbox, and a disinfectant dunk tank, after riding the BART; It’s a pain in the a*s and after awhile the germs just adapt;
    “Next time you drive on a street, be thankful your car is not swallowed by a sinkhole because of shoddy planning or corrupt public construction.”
    Don’t be ridiculous, the only reason my Yukon Denali has not been swallowed up by the potholed Bay Area roads is because, well, it’s a Yukon Denali; Having said that, it does take a beating on these awful throughways so that I have to upgrade every other year or so;
    “We need government for all these things and much more. We lose it and we’ll quickly look like a third work country.”
    No doubt, it was government in your view that built America & pre-Wilson America was just an unlivable place (which is why so many people hopped over in the 1880s-1920s);
    But more to the point, is your argument that all of this falls apart unless CA taxpayers pay their workers 7.75% (pardon 7.50%) on their pensions (which are, unlike mine, defined benefit plans – the same ones that are always bankrupting the airlines/have bankrupted the car maufacturers, etc.)?
    You think having firemen, cops, nice roads (or even the CDC), &, if you insist, the Muni, requires us to spend trillions of dollars? For one thing, if the federales actually want to micromanage every aspect of our lives, why do we even have state legislatures/executives? Why replicate? Why not do it like in France where there is one level of government & no one pretends that there is a federal structure?;

  26. I know I often sound like a republican candidate with my debt shpiel, but I’m not.
    I doubt that there will ever be meaningful legislative reform because the political cost associated with responsible management is too unpopular: but its the RIGHT thing to do.

    Take heart BB, I’ve got just the gal for you.
    Ms. Raimondo drove perhaps the boldest pension reform of the last decade through the state’s Democratic-controlled General Assembly. The new law shifts all workers from defined-benefit pensions into hybrid plans, which include a modest annuity and a defined-contribution component. It also increases the retirement age to 67 from 62 for all workers and suspends cost-of-living adjustments for retirees until the pension system, which is only about 50% funded, reaches a more healthy state.
    Did I mention shes a Democrat?

  27. What do you think tipster, how much did each of the 12 employees of Insagram get each? 300-400k, maybe 100k after taxes?

  28. I think if the people who were planning on buying facebook stock don’t wake up and realize how fast and easy it is to build a competing social network, driving down the value of their fb investment, they are going to lose a lot of money.
    And yes, instagram employees were very, very lucky.

  29. EBGuy,
    Thanks for bringing this to my attention. It plays, even for a progressive democrat. The focus has to be on future investment, less on zero sum turf wars. I’m curious as to the relative number of state and local worker votes in rhode island and in California.
    Could this fly here?

  30. BB, Here’s a CA Democrat perspective:
    “This year [2011] the state will directly spend $32 billion on employee pay and benefits, up 65 percent over the past 10 years,” says Crane later. “Compare that to state spending on higher education [down 5 percent], health and human services [up just 5 percent], and parks and recreation [flat], all crowded out in large part by fast-rising employment costs.” Crane is a lifelong Democrat with no particular hostility to government. But the more he looked into the details, the more shocking he found them to be.

  31. I will read it and get back to you EBGuy. Every downturn people like to write off California, particularly East Coast media types. They are jealous of our success, I honestly believe.
    On a personal level, I really appreciated Meredith Whitney’s absurd forecast. It created a stampede out of CA Muni bonds, which I took advantage of. The result:
    “California state and local debt returned 14.8 percent last year, according to a Bank of America Merrill Lynch index tracking prices and
    interest income. That’s the most since 2009 and more than the 11.2 percent return for the broader market, 9.8 percent for Treasuries and
    7.5 percent for top-grade corporate debt.”
    http://www.bloomberg.com/news/2012-02-29/california-cuts-yield-in-second-day-of-2-billion-debt-sale-1-.html
    Notice that the S&P has revised CA’s bond outlook to positive.

  32. Every downturn people like to write off California, particularly East Coast media types.
    Note that the article was written by PRoB resident Michael Lewis. Like most of his work, its a mix of personality profile (the Arnold stuff is pretty funny) and substance (not so funny). I still think we face significant challenges at the state and local level that we need to work through. But I get your point. We’re the world’s ninth largest economy and far from roadkill. YMMV.

  33. “I think if the people who were planning on buying facebook stock don’t wake up and realize how fast and easy it is to build a competing social network, driving down the value of their fb investment, they are going to lose a lot of money.”
    Comedy gold these days.

  34. Fron CNBC.com yesterday, Meredith Whitney Muni Call Was 100% Wrong: Bond Pro:

    The reality behind municipal bonds and their low default rate contrasts with the high-profile call from banking analyst Meredith Whitney, whose prediction that munis would suffer a wave of defaults was “entirely” wrong, Lebenthal said in a CNBC interview.

    “I have come up with a new measure of risk, which is knowledge risk,” said the president and CEO of Lebenthal and Co. “Is the person who is talking about municipal bonds, corporate bonds, equities, what have you, knowledgeable and should people be listening to them?”

    At least she’s still not working at Oppenheimer.
    Michael Lewis isn’t a Berkeley resident any more than the rootless multinational cosmopolitans who own condos at The Infinity and stay there for less than forty days a year are residents of San Francisco, IMHO. Up until fairly recently, he lived in France. Not that there’s anything wrong with that.

  35. All is well in Stockton and Hercules. And pension bonds? No worries.
    San Jose will be fine.
    I just hope she isn’t proven right in the long run. Public safety and other municipal employees retiring is a bit like watching the paint dry. Over here they just start closing down the pools and scaling back services to the poor.

  36. tipster’s comment is indeed hilarious. He should offer his services to the probably well-funded G+ team who cannot seem to catch up FB (yet).

  37. Yes, it was so funny that fb parted with a Billion dollars over the threat. Must have been hilarious to write that check.
    G+? Not a threat. Google has become too big.
    The threat will be from 100 much more nimble and creative groups.

  38. On a personal level, I really appreciated Meredith Whitney’s absurd forecast. It created a stampede out of CA Muni bonds, which I took advantage of…notice that the S&P has revised CA’s bond outlook to positive.

    You have to take what these finance and economics pundits say with a whole shaker of salt.
    From the Wall Street Journal today; Meredith Whitney Blew a Call—And Then Some:

    It is amazing that after costing investors who traded on her December 2010 analysis of the municipal-bond market dearly, Ms. Whitney still finds an audience on Wall Street and in the media. She continues to appear on CNBC and Bloomberg and was cited by the Financial Times and CNNMoney for her stock-picking abilities and other talents…

    Ms. Whitney…got airtime again Monday, trying to explain away that call she made about municipal bonds. Her alarmist warning of 50 to 100 “sizable” defaults never materialized, though it did wallop the muni market by spurring a huge, fear-based selloff in early 2011.

    …None of the predicted doom and gloom has happened. The $3.7 trillion municipal-bond market is enjoying one of the most prosperous periods in its history. Yields have fallen, although admittedly not as much as those for Treasurys; muni yields measured by the 20-Bond Buyer Index have fallen roughly 20% since Ms. Whitney made her call, to the lowest levels in at least 40 years. Rather than view the market as full of land mines, investors have flocked to munis because they are a haven.

    And those defaults? They are up slightly, but nothing like Ms. Whitney described. She said “sizable” defaults…there were just five defaults last year, or about 1.8% of rated issues. Only 71 Moody’s-rated bonds and 47 S&P-rated bonds have defaulted in the 41 years since 1970, a minuscule slice of the 54,486 bonds issued in the same period.

    …So, yes there were some “sizable” defaults. It’s just that the number—eight—is only slightly above the historical mean and not even close to Ms. Whitney’s minimum of 50 defaults

    Emphasis mine. Like they say in the blogosphere, go read the whole thing.
    Of course, as the article allows, it’s only been twenty-two months and she could be proven right in the long term. But I certainly wouldn’t bet on it and in fact, like NoeValleyJim I did the opposite.

  39. Evidently various union muni groups felt threatened enough to pass legislation that says cities must undergo a 60 day mediation period before they can declare bankruptcy. For those who want a little muni-bond insurance, you can get some at the ballot box in November — and also give hardworking public employees a (voluntary) raise — with a yes vote on Prop 32.

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