Overheard at American Airlines

"The market immutably sets
The fares and the fuel in our jets,
But a bankruptcy filing
May turn back the dial in
Our benefits, pensions and debts."

AMR Corp has filed for Chapter 11 bankruptcy protection in an effort to bring its cost structure into line with that of the airline industry. The parent of American Airlines is the last of the big "legacy" carriers to restructure its balance sheet and compensation costs in court. Mindful of its proud, 91-year history, American had long avoided a judicial reorganization, but in an environment in which fares are driven by the lowest-cost competitor, the Fort Worth-based carrier's position became untenable.

We Owe How Much?

The two trillion dollars in debt
Of the states may incite one to fret,
But if one were to mention
Their unfunded pensions,
They'd triple their borrowing yet.  

Taking some poetic license with the figures cited by Josh Barro in National Affairs (that's a public policy journal, not a racy romance novel), we note that US state and local governments' $2.4 trillion in total debt would increase to $6.4 trillion if their obligations to underfunded pensions were included.  This is the urgent arithmetic to which governors of every political stripe must now respond.  (Hat tip to "The Analyst.")