.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;}
Dear Mr. Berko:

Dear N.R.:

Toward the end of Bill Clinton’s second term, America was at high tide, and ebb has been running ever since. We embraced a high-speed, get-me, buy-me culture, consuming our prosperity of the last 20 years like hordes of locusts. Yesterday, we participated in an era of government handouts; we drank from the government trough and spooned gravy from the train. Today, we are entering an era of citizen givebacks, from companions-fly-free and senior discounts to paying for each piece of luggage and charging full price.

Investors are not fully mindful of this change. And though the recession is over, the Dow’s return to the 14,500 level is going to be a much slower journey than the previous ride.

This new math emerging in the current cycle is putting a damper on traditional growth. The new math is the enormous imbalance between revenues and spending at the state and local levels. And unlike all other recoveries, municipal employment rolls and services may be slashed to the marrow.

The breakdown in local government finances will reduce government services, force onerous layoffs and truncate domestic growth. Municipal bosses would do well to remember Parkinson’s law, “Work expands to fill the time available,” and Berko’s corollary, “Employment expands to fill the money available.”

Would you believe that the city of St. Petersburg employs one manager for every 4.7 employees? Considering the thousands of people it takes to run the city, many obscenely paid and incompetent managers will be canned. Now the city wants to usurp taxes to complete an art museum.

Kansas City is closing 28 of its 58 school campuses, eliminating 700 jobs, including 285 teachers. Baltimore, Columbus, Atlanta, Los Angeles, Boston, Seattle, Phoenix, Philadelphia, Miami and other large cities have been sucker-punched by lower tax revenues and will reduce work forces that have been fashionably over-bloated for a dozen or more years.

All over America, municipal budgets are being cratered by shortfalls brought on by the financial crisis, the recession, falling real estate values, plus lower property and sales receipts. Meanwhile, declining revenues, serious pension fund shortfalls, decreased state aid and rising health-care and insurance premiums are forcing municipal officials to make very hard choices.

Philadelphia is considering a seriously big tax hike, and New York will implement a major increase in property and sales taxes. Detroit, Kansas City, St. Louis and other municipalities are also looking at ugly tax increases. Because new tax hikes are generally difficult to enact due to ballot initiatives, municipalities should have the nerve to tell unions to “stuff it” and ignore demands for wage and benefit concessions and costly workforce restrictions.

Though employment gains will be made among some of the larger corporations, a large portion of those gains will be offset by higher unemployment in the municipal sector.

As a result, the recovery will be a slow one that will inch up a few steps, then inch down a step or two. But don’t sell your “stuff,” because whatever it’s replaced with will be subject to the same economic forces.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.Com