Turbo Grande

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

Interesting article; totally wrong and mis-leading but interesting none the less. The comments that it draws are the most illuminating part.

2.7 million workers have a strangle-hold on the electorate? Please...

Comparing the average government worker's salary to the overall average salary for the entire United States? Give me a break; that is like comparing apples to oranges.

Now if you were to compare the average government worker's salary to the average salary at Boeing, IBM, GE, or some other corporation with a large proportion of its workforce in business and professional roles, then at least we could have a discussion.

Our country is going through a tough time right now, and we all feel the pain. I feel for folks who are unemployed and I pray for a speedy recovery. But scape-goating everyone else (be it Wall Street Bankers, politicians, immigrant workers, government employees, etc. etc.) is not the solution to our economic problems. We need to all pull together here, not tear one another down.

When I took a job with the Department of Defense I accepted a lower salary than was available from several private employers. However, that was right after I had been laid off during the big recession in 1982 and I was willing to make the trade for a little less salary than I could have made in the private sector for a little more job security. That decision feels pretty good right now; back in 1984 when I was living on beans-and-rice as an entry level GS-7 engineer it didn't look too smart.

Now I hire engineers; government and private sector. It costs me at least 50% more to hire a contract engineer than it does to hire a government engineer. And if that contract engineer works for a major corporation (like Boeing, GE, Honeywell, etc.) then it costs me 100% more to hire a contractor vs. a government employee. Government employees are paid less than their private sector counterparts for similar work and responsibilities. I know. My friends and former classmates who are engineers working in chemical plants, refineries, and even think tanks all make more than I do.

The benefits for new government personnel are pretty similar to those available in the private sector; whether you're talking health insurance or 401K plans. The retirement benefits were "reformed" back in the 1980s and no new government employees will ever retire at 55. We all look forward to drawing Social Security someday, just like the rest of the workforce.

The job security with the federal government is better than in the private sector, and that is our only major drawing point. That doesn't carry a lot of weight with most folks except once every 10 - 20 years.

Four years ago I couldn't hire an entry level engineer right out of school for a government job, and I had a very hard time attracting any experienced talent either. Obviously, the pay wasn't excessive 4 years ago. I could not pay them what they were making in the private sector.

Now, if I have an opening I can hire some good people. The same can be said for anyone who is hiring today. The federal government is not laying off employees in the midst of a recession.

The federal government's employment decisions are pretty counter-cyclical (as it should be). During the boom years of the mid to late 1990s, the federal government had hiring freezes and downsizing. Now that we are in the midst of the worst recession of the past 80 years the government is not laying people off. If we were, this recession could be even worse. Is that what you're looking for? Misery loves company?

This too shall pass, and the economy will recover. When it does, and when corporations are hiring again and competing for talent, we FEDs will probably be in another budget-balancing hiring freeze. When that day comes, and I am sure that it will, I'll try to have the good manners not to complain too loudly then about my pay freeze.

Tough Love for Detroit Is Long Overdue

I saw an interesting suggestion in one of the articles I've read, and i think it desevres further discussion.

The government could actually bail out GM for less than $2 billion, once and for all.

At GM's current stock price it is worth well under $2 billion. Congress should buy all of the common stock and just give it to the UAW for free. The company is now yours, lock, stock and barrel. Best of luck to you.

Bond Wars Update: International and Junk

If I'm not mistaken, Emerging Market bonds (like those held by PCY) are dollar-denominated and therefore not subject to currency fluctuation issues.

10-Year TIPS: An Investor's Benchmark

I decided to diversify a portion of my IRA into TIPS last year. I purchased the SPDR TIP ETF (symbol IPE) in early October 2007.

There's an old saying that "I'd rather be lucky than smart". I guess I'll have to agree in this case. As you can see from the chart posted in this article TIPS have been a FANTASTIC investment over the past 12 months, especially considering that almost everything else I hold has been going down (except commodities).

Kraft: A Tasty Long-Term Play - Barron's

Paul:

I own a little KFT and it has made me some money over the past couple of years.

You need to fact-check your numbers. I believe that KFT sold for $36.50 a share back in June 2007, thats more than 10% above the high for the year that you quoted.

I've bought in under $31 and sold out over $35 a couple of times, and collected dividends in the interim with little downside risk. I know this isn't the Buffet way, but it has worked for me.

However, your incorrect figures mask the fact that this is a stock that can be traded profitably.

What Would Buffett Do? 3 Safe Financial Picks

Doesn't Mr. Buffet own BAC as well?