by ilene - February 24th, 2011 10:37 pm
Courtesy of Bruce Krasting
I follow what’s being discussed about Social Security. A Google alert produces 20 stories a day on average. In my view most of it is drivel. The passionate (and prolific) supporters of Roosevelt’s great legacy constantly make the same assertions. That SS has a Trust Fund that will last until 2037, and that SS does not have any impact on the deficit. Neither of these things are true.
When you look at a financial statement always look first to the lower right for the “bottom line”. It’s no different with SS. Their bottom line for 2010 was a deficit of $49b.
This is how the Trust Fund presents its results. They don’t hide the deficit. They highlight it, as they should. I just wish that Huff Post and all the others that are blathering that "SS is off limits in 11’ as there is no problem” would just shut up and read what SSA is reporting.
I try to forecast these numbers. My estimate last summer was -35b. So I was off by $14b. I thought I had a negative view. I still missed the revenue number by 3%. A year ago a fellow who knows SS quite well suggested that I was “Chicken Little” with my forecast that SS would begin a period of perpetual deficits in10’. After all, this was not supposed to happen until 2016. But, of course, it has happened.
In 2010 there were 1,509,278 net new beneficiaries of SS checks. Ten years ago in 2000 the number was 462,740. The rate of increase is more than three times what it was just a decade ago. There are a bunch of folks who are, let’s say, leaving the system. Therefore the actual number of newbies getting checks is closer to 2.5mm a year. It comes to 60,000 a week. Business must be booming at SSA. Clearly this is a “growth” story. If you’re looking for work, file an application with the local SS office. They’re hiring. AdMin at SS was $6.5b last year. Look for that to go up by at least $500mm in 10’.
My current outlook for SS in 2011 is a picture not unlike that of 10’. I see some evidence that the revenue side (payroll tax) has stabilized. On the assumption that we see full year GDP growth around the current thinking of +3% I would expect revenue to…
Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World
by ilene - November 3rd, 2010 3:05 pm
Living Beyond Our Means: 3 Charts That Prove That We Are In The Biggest Debt Bubble In The History Of The World
Courtesy of Michael Snyder at Economic Collapse
Do you want to see something truly frightening? Just check out the 3 charts posted further down in this article. These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none.
But that is not even close to accurate. The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world. Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
We have been robbing future generations blind for so long that it doesn’t even seem to bother most people anymore. We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.
Just check out the chart posted below. It shows the total credit market debt owed in the United States. In other words, it is a measure of what everyone owes (government, businesses and consumers).
30 years ago, total credit market debt owed was less than 5 trillion dollars. Today, it is over 50 trillion dollars. Total credit market debt is now at a level equivalent to about 360 percent of GDP. This is what has been fueling the great era of "economic prosperity" that we have been experiencing….
So what is the answer to this problem?
by phil - September 14th, 2010 8:12 am
That is big news after having 5 different ones the past 4 years. With the last PM lasting just 9 months, word was Kan was going to challenge the record for shortest term after being forced into this election just 3 months after being elected the first time. When we talked about this yesterday, the race was considered "too close to call" but the incumbent Mr. Kan ended up winning 60% of the vote – kind of makes you wonder how far off our own pollsters are with their early election calls…
Now the stage is set for the Oct 4th meeting of the BOJ, where action must be taken to get the Yen under control. Ozawa was clearly better for the Dollar, as he favored strong intervention to bring the Yen down including a program of both QE and stimulus and they Yen blasted to 15-year highs on the result of this election, now at just 83 Yen to the Dollar, down from 120 in 2007 (30%) with a 15% move up since May. This is TERRIBLE for Japanese exporters, who get paid relatively less for everything they sell but it’s good news for commodity pushers, who get paid in devalued Dollars.
To what extent is Japan’s deflation simply a function of their currency appreciating an average of 10% a year? If their deflation rate is 2% then doesn’t that mean it’s really an 8% INflation rate masked by a too-strong currency? Perhaps that’s why the people of Japan, who get paid in Yen and shop with Yen, strongly preferred Kan, who was only really opposed, in the end, by Parliament, where he won 206 to 200 – the Japanese version of the US Senate. This means that, like Obama, it will be very difficult for Kan to get anything done despite his popular support and, also like our own Senate: "Having witnessed the shaky ground he stands on, opposition parties are licking their chops to begin their attacks on Mr. Kan," said Koichi Nakano of Sophia University.
Doesn’t it make you feel good to know that, despite our cultural differences, politicians around the World are all the same – just a bunch of power-hungry, vindictive bastards who put their own interests ahead of the people who they are supposed to represent? Like Obama, Kan still faces difficulties navigating what the Japanese call a "twisted parliament," where the DPJ has a minority in…
by ilene - August 11th, 2010 11:21 pm
Courtesy of JESSE’S CAFÉ AMÉRICAIN
I have not read it yet, but Kotlikoff has a book out called "Jimmy Stewart Is Dead" which was reviewed in April by Craig Heimark at Naked Capitalism.
I have not followed Kotlikoff closely and will attempt to read some of his more serious material in the near future. I did listen to a long discussion on Bloomberg television this afternoon, and he made some real sense to me, although he did not penetrate the miasma of corporate sloganeering that represents the minds of the anchors. They seem to lean to the ‘cut everything that is not a subsidy to or a cashflow owned by the oligarchy’ school of economic reform. And he takes that sort of supply side hoaxing to task, and harshly.
I have to take a closer look at his analysis of Social Security, which is highlighted in this Bloomberg piece (quelle surprise). But his comments on the need for reform in the financial system was point on.
He disagrees with both the supply siders and the demand siders, favoring a systemic overhaul and reform, and so my interest in what he says is obvious.
Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.
What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.
Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”
But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds
by ilene - July 31st, 2010 9:39 pm
Courtesy of Michael Snyder at The Economic Collapse
In a very alarming sign for the U.S. economy, foreclosures have continued to dramatically increase in 2010. But there has been a shift. Back in 2007 and 2008, experts tell us that most foreclosures were due to toxic mortgages. People were being suckered into mortgages that they couldn’t afford with "teaser rates" or with payments that would dramatically escalate after a few years, and when those mortgages reset, the people who had agreed to them no longer could make the payments. But now RealtyTrac says that unemployment has become the major reason for foreclosures. Millions of Americans have become chronically unemployed during the economic downturn and many of them are losing their homes as a result. But whatever the cause, one thing is certain – foreclosures have continued to skyrocket at a staggering rate.
According to a new report from RealtyTrac, foreclosure filings climbed in 75% of the nation’s metro areas during the first half of 2010. At a time when the Obama administration believes that we are "turning the corner", things just seem to get even worse.
Some areas of the country continue to be complete and total disaster areas when it comes to real estate. For example, you have got to feel really sorry for anyone trying to sell a house down in Florida right now. According to RealtyTrac, Florida led the way with nine of the top 20 metro foreclosure rates in the country during the first half of 2010.
by ilene - July 25th, 2010 3:20 pm
Courtesy of Karl Denninger at The Market Ticker
Snippets this time, since I’m on vacation….
The economic expansion that began in the middle of last year is proceeding at a moderate pace, supported by stimulative monetary and fiscal policies. Although fiscal policy and inventory restocking will likely be providing less impetus to the recovery than they have in recent quarters, rising demand from households and businesses should help sustain growth. In particular, real consumer spending appears to have expanded at about a 2-1/2 percent annual rate in the first half of this year, with purchases of durable goods increasing especially rapidly. However, the housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction.
Uh huh. Note the word appears. In political circles this is known as a "weasel word", and gives the speaker an out if the claim turns out to be pure nonsense down the road (and it will.)
The most-important part of this paragraph, however, is the fact that it recognizes that the government has stepped in and replaced 11% of final demand with borrowed money.
Inflation has remained low. The price index for personal consumption expenditures appears to have risen at an annual rate of less than 1 percent in the first half of the year. Although overall inflation has fluctuated, partly reflecting changes in energy prices, by a number of measures underlying inflation has trended down over the past two years. The slack in labor and product markets has damped wage and price pressures, and rapid increases in productivity have further reduced producers’ unit labor costs.
Note the direct contradiction with the above paragraph (does Ben really think we’re dumb enough not to notice?)
by ilene - July 18th, 2010 1:39 pm
Courtesy of JESSE’S CAFÉ AMÉRICAIN
America must decide what type of country it wishes to be, and then conform public and foreign policy to those ends, and not the other way around. Politicians have no right to subjugate the constitutional process of government to any foreign organization.
Secrecy, except in very select military matters, is repugnant to the health of a democratic government, and is almost always a means to conceal a fraud. Corporations are not people, and do not have the rights of individuals as such.
Banks are utilities for the rational allocation of capital created by savings, and as utilities deserve special protections. All else is speculation and gambling. In banking, simpler and more stable is better. Low cost rules, as excessive financialisation is a pernicious tax on the real economy.
Financial speculation, as opposed to entrepreneurial investment, creates little value, serving largely to transfer wealth from the many to the few, often by exploiting the weak, and corrupting the law. It does serve to identify and correct market inefficiencies, but this benefit is vastly overrated, because those are quickly eliminated. As such it should be allowed, but tightly regulated and highly taxed as a form of gambling.
When the oligarchy’s enablers, hired help is the politer word, and assorted useful idiots ask, "But how then will we do this or that?" ask them back, "How did we do it twenty years ago?" Before the financial revolution and the descent into a bubble economy and a secretive and largely corrupted government with a GDP whose primary product is fraud.
Other nations, such as China, are surely acting for their own interests, and in many cases the interests of their people, much more diligently and effectively than the kleptocrats who are in power in Washington and New York these days. How then could we possibly subvert the Constitution and the welfare of the people to unelected foreign organizations? If this requires a greater reliance on self-sufficiency, then so be it. America is large enough to see to its own, as the others see to theirs.
by ilene - July 10th, 2010 5:59 pm
Roosevelt Institute Fellow Mike Konczal joined Demos’s Nomi Prins and GRITtv host Laura Flanders last week to discuss the state of financial reform, whether the current bill does enough to change the culture of risk on Wall Street, and whether taxpayers are going to be stuck holding the bag — again.
Check out the full interview:
Mike notes that one of the key questions of reform is “who’s going to pay for this, and ideally we want the people who caused the trouble to pay for it, not regular citizens.” Instead, he says Republicans like Scott Brown have transferred the cost from banks to the FDIC and the savings accounts of average Americans.
On the subject of possible criminal charges for Goldman Sachs, Mike says that the lack of major arrests compared to previous crises “shows how much people haven’t internalized the disaster they’ve caused. The culture is still very much the same.” The problem, he explains, is that firms like AIG “thought they were being very clever when they were actually getting gamed.” The fact that we still aren’t sure how much of this was illegal “shows how disturbed the regulation is.”
Mike pushes back on AIG’s attempts to shift the blame for its reckless bets, noting that “when we talk about what AIG was doing, that’s millions of Americans who are actually in those bonds, that were given loans that they shouldn’t have so that AIG could juke some statistics.” Unfortunately, he offers a grim prognosis for AIG’s victims: “The foreclosure crisis is ongoing, it will be ongoing next year, and the President’s plan there, HAMP, has been a total failure that most credible people have walked away from at this point. We have a quarter of homeowners underwater and they have no relief, and they’re paying into a system that is pretty much insolvent.”
Finally, responding to deficit hawks’ calls for cuts to programs like Social Security, Mike argues that “if they were very concerned about protecting anyone, they would go much harder into financial reform. Because this is really where the deficit’s coming from right now, the fact that we have a major financial crisis. There’s two things that…
by ilene - May 14th, 2010 11:25 am
Courtesy of Marla Singer, Zero Hedge
On the 5th of March in 1946, in Fulton Missouri, at Westminster College, Winston Churchill delivered an address (since christened the "Sinews of Peace") lamenting the burgeoning power and influence being slowly but surely gathered up by the Soviet Union. Perhaps the address will be familiar to some of you owing to its most famous passage:
From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe. Warsaw, Berlin, Prague, Vienna, Budapest, Belgrade, Bucharest and Sofia, all these famous cities and the populations around them lie in what I must call the Soviet sphere, and all are subject in one form or another, not only to Soviet influence but to a very high and, in many cases, increasing measure of control from Moscow. Athens alone — Greece with its immortal glories — is free to decide its future at an election under British, American and French observation.
Ironic, as I will address, that he should mention Greece.
Much less well known perhaps is this later passage:
Our difficulties and dangers will not be removed by closing our eyes to them. They will not be removed by mere waiting to see what happens; nor will they be removed by a policy of appeasement. What is needed is a settlement, and the longer this is delayed, the more difficult it will be and the greater our dangers will become.1
The "Iron Curtain" came, of course, to signify the cavernous ideological, and eventually concretely physical, divide between East and West. It took some 43 years before it was lifted once more, first and haltingly, in the form of the removal of Hungary’s border fence in mid-1989 and then, of course, finally via the fall of the Berlin Wall in November that same year.
Not to be compared with a production of Italian Opera, the Iron Curtain did not describe a sudden, smooth, abrupt descent over the stages of Eastern Europe. Quite the contrary, its drop was in stutters of discrete, fractional lowerings, such that it was a full fifteen years after Churchill used the term before its ultimate expression, the Berlin Wall, was finally…
by ilene - May 12th, 2010 4:59 pm
Courtesy of Jr. Deputy Accountant
Surely this does not come as a shock to anyone.
The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday.
It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had forecast and was striking since April marks the filing deadline for individual income taxes that are the main source of government revenue.
Department officials said that in prior years, there was a surplus during April in 43 out of the past 56 years.
Remember, Social Security should have its own fund of around $2 trillion but instead has a stack of IOUs in the form of US Treasurys and no money.
The non-partisan Congressional Budget Office, in a report issued May 10, projected an April deficit of $85 billion. “The decline in non-withheld individual income tax receipts and the increase in individual refunds were partly offset by higher revenues from other sources,” the CBO said in the report.
Revenue and other income fell 7.9 percent to $245.3 billion in April from $266.2 billion the same month last year, the Treasury said.
Corporate tax receipts totaled $77.1 billion for the year to date, an increase of 8.9 percent. Individual income tax collections were down 11.6 percent so far this fiscal year to $500.8 billion.
Spending for the entire government for April jumped 14.2 percent from the same month a year earlier to $328 billion.
Outlays by the Social Security Administration rose to $437.7 billion for the fiscal year to date. Spending by the Department of Health and Human Services, which administers the Medicare and Medicaid programs, rose to $504 billion.
The question now is how the hell we can dig our way out of this hole. The easy answer (without wasting years pursuing a Masters in econ) is we can’t. If you’ve ever been buried in debt, you understand how difficult it is to ever right your financial situation once you’re in over your head. The government seems to believe that normal rules don’t apply because of that whole world reserve currency thing but I imagine there will come a point when the world will…