When Obama took over for Bush and the recession really got going they blamed Bush and the republicans for as long as possible.

 

Obama 'took over' for Bush in late January 2009.  The recession began in December 2007 and "really got going" in the Fall of 2008.  Just some points of clarification.  And I really don't have a problem with a newly elected administration refusing to take the blame for economic condition caused by the policies of the previous administration and/or congress.  Nothing magical happens during the swearing in ceremony which changes things in an instant (no matter what the candidate says they will do "on the first day in office").  It takes at least 6 months to a year for any real impact.  What I do have a problem with is the talking heads, the fringe websites and such, trying to place that blame.  If in January, February, and March 2013 the economy is losing 400,000 jobs a month, it certainly won't be Mitt's fault...... but the carousel has been set in motion and you better believe that is the spin which will be used (for retribution if nothing else)

 

Hts121:

I guess I will never convince you that I have no interest in slanting towards republicans or democrats with my comments. I think both parties have a lot of issues and in the end do what Wall Street and the Fed want. (That is my slant on political economic issues) The democrats were still pointing to the republicans and Bush for the economic mess 2 years into Obama's administration. I also believe if Mitt get elected and things are still in the dumps 2 years later republicans will point at Obama and democrats for the problem.

 

I was just saying that finger pointing is a major tool of both parties.

I don't know if you have been following politics in Germany, but Merkel is already in deep trouble.  The last two significant elections (on a more local, not national scale) have gone against Merkel and the Christian Democrats.  They have lost huge chunks of ground against parties on the left (who presumably are not as zealous about austerity as she).

 

It's hard to say how much trouble Merkel is in, or read the message in the regional elections.  She's also been under fire from some members of her own coalition for being too generous in bailing out flailing southern European states.  Her party did lose support and the primary opposition gained support in the regional elections, so she can't be happy about that, obviously.  Yet her policy of insisting upon tight fiscal responsibility from Greece and other EU states whose profligate spending and rigid labor markets have gotten them into trouble is still fairly popular at home.  Even if she loses next year--well, she'll have been in office for 8 years, so she'll still have had a really good run.

 

P.S. Gotta respect a party who gives its top slot to a physicist.  Can you imagine Nancy Pelosi or John Boehner being replaced by Steven Hawking?

Recently there was a discussion about workforce participation levels and the amount of boomers that are suppose to be leaving the workforce on a monthly bases. It looks like they might not be leaving or planning on leaving at that rate anytime soon. If this is the case it will suck for incoming workers of the next generation(s) if the economy can't start producing a lot more job opportunities.

 

Why Boomers Aren't Saving for Retirement

 

"Here’s a scary statistic: About 49% of Americans say they aren't contributing to any retirement fund.

 

A new survey conducted by LIMRA, a trade association for the financial services industry, shows less than a third of Americans over age 50 worked with a financial professional to plan for retirement.

 

So what gives? If boomers aren’t saving for retirement because they don’t have enough funds leftover after covering daily expenses like food, housing, gas and putting kids through college, how do they feel like they will have enough savings for retirement? Well, many don’t plan to ever retire fully or will delay leaving the workforce."

Read more: http://www.foxbusiness.com/personal-finance/2012/05/24/late-to-retirement-saving-game/#ixzz1volK0pat

Speaking of Germany. If politics don't bring Merkel down the German economy may.

 

Debt crisis now taking toll on German economy

Ifo tumbles; Greek exit ‘unleashing a second uncertainty shock’

 

"National data showed private-sector activity in Germany returned to contraction in May, with the country’s composite index falling to 49.6 in May from 50.5. Meanwhile, the Ifo Institute’s gauge of German business confidence tumbled more than expected to a six-month low at 106.6."

http://www.marketwatch.com/story/debt-crisis-now-taking-toll-on-german-economy-2012-05-24?dist=countdown

When Obama took over for Bush and the recession really got going they blamed Bush and the republicans for as long as possible.

 

Obama 'took over' for Bush in late January 2009.  The recession began in December 2007 and "really got going" in the Fall of 2008.  Just some points of clarification.  And I really don't have a problem with a newly elected administration refusing to take the blame for economic condition caused by the policies of the previous administration and/or congress.  Nothing magical happens during the swearing in ceremony which changes things in an instant (no matter what the candidate says they will do "on the first day in office").  It takes at least 6 months to a year for any real impact.  What I do have a problem with is the talking heads, the fringe websites and such, trying to place that blame.  If in January, February, and March 2013 the economy is losing 400,000 jobs a month, it certainly won't be Mitt's fault...... but the carousel has been set in motion and you better believe that is the spin which will be used (for retribution if nothing else)

 

Hts121:

I guess I will never convince you that I have no interest in slanting towards republicans or democrats with my comments. I think both parties have a lot of issues and in the end do what Wall Street and the Fed want. (That is my slant on political economic issues) The democrats were still pointing to the republicans and Bush for the economic mess 2 years into Obama's administration. I also believe if Mitt get elected and things are still in the dumps 2 years later republicans will point at Obama and democrats for the problem.

 

I was just saying that finger pointing is a major tool of both parties.

 

Eaaaaaasssssy Trigger.  I wasn't accusing you of any slant..... I was simply correcting the quoted statement.  Finger-pointing, by the way, is a major tool used by humans in all walks of life.  It is unfortunately in our nature.  You need only read your own thread.  Isn't that what this discussion has all been about?..... laying the blame here or there for either causing or prolonging the "recession"...... and pointing the finger at why this country is riding the perpetual handbasket to hell?

China's economy suffers 'sharp slowdown'

'Clearly the economy is much, much weaker than most people thought until recently ... They have a real mess on their hands'

 

"XI’AN, China — A nationwide real estate downturn, stalling exports and declining consumer confidence have produced what a Chinese cabinet adviser, quoted on the official government Web site on Thursday, characterized as a “sharp slowdown in the economy.”

 

"The most striking feature of the slowdown is that it extends beyond the coastal provinces, which depend on exports and are closely linked to the global economy, to the country’s far more insular interior, including cities like Xi’an here in northwestern China.

 

China’s unexpected economic difficulties are starting to unnerve investors in world markets, especially commodity markets, as China is the world’s largest consumer of most raw materials and the second-largest consumer of oil.

 

A deepening slowdown would ripple across the world economy. Until now, China’s economy barreled ahead mostly unhindered as the main engine of global growth, even as Europe struggled with its government debt crisis and the United States limped along with a crippled housing market."

 

"The World Bank also warned on Wednesday of a slowdown.

 

“Clearly the economy is much, much weaker than most people thought until recently,” Ms. Choyleva said. “They have a real mess on their hands.”

http://www.msnbc.msn.com/id/47561828/ns/business-us_business/

 

 

European markets fall as Catalonia asks government for bailout

"Spain's wealthiest autonomous region, Catalonia, needs a bailout from the central government because it is running out of options for refinancing debt, warns Catalan President Artur Mas."

http://www.telegraph.co.uk/finance/financialcrisis/9290206/Catalonia-demands-a-bailout-from-central-government.html

^

maybe cheaper oil prices as a result of dampened demand?

 

 

 

Isn't that what this discussion has all been about?..... laying the blame here or there for either causing or prolonging the "recession"...... and pointing the finger at why this country is riding the perpetual handbasket to hell?

 

It could also be a running commentary and opinion on what is going on vs finger pointing.  The novel nature of the situation is probably topic enough for me.

 

Could be we are stuck in this economic twilight zone "weak recovery" until the next recession.  That there is no robust recovery like we had in the 1990s. 

 

 

 

^

maybe cheaper oil prices as a result of dampened demand?

 

 

 

If this keeps going we will clearly see cheaper oil and other commodities. This would give the FED another window of opportunity to do a QE3 in the face of deflation in many economic areas. Which they will need to do in one form or another if Europe doesn't stabilize soon.

 

On your comment about being stuck in an 'economic twilight zone' I think you are right. We will have limited to no true recovery until the underlining economic issues are actually dealt with. Right now we just print to mask the underlining mess. That can't create long term economic stability and robust growth. Matter of fact it just makes the day of reckoning more painful when it finally comes.

On your comment about being stuck in an 'economic twilight zone' I think you are right. We will have limited to no true recovery until the underlining economic issues are actually dealt with. Right now we just print to mask the underlining mess. That can't create long term economic stability and robust growth. Matter of fact it just makes the day of reckoning more painful when it finally comes.

 

Well, part of the problem is that there isn't much agreement on that the "underlining [sic] economic issues are" to be "actually dealt with."

On your comment about being stuck in an 'economic twilight zone' I think you are right. We will have limited to no true recovery until the underlining economic issues are actually dealt with. Right now we just print to mask the underlining mess. That can't create long term economic stability and robust growth. Matter of fact it just makes the day of reckoning more painful when it finally comes.

 

Well, part of the problem is that there isn't much agreement on that the "underlining [sic] economic issues are" to be "actually dealt with."

 

-National debt that is nearing a 100% of GDP and not slowing

-quality employment

-cost of living that is in balance with incomes

-underfunded items like social security

-personal debt (cc, student loans, etc)

-infrastructure deficiencies

-financially unsustainable sprawl

 

Just for starters. Some of these create short term weaknesses and all of them create long term economic issues.

 

Example: One of the reasons so many US municipalities, counties and states are having huge financial challenges are because of underfunded pensions, aging and deteriorating infrastructure and financially unsustainable sprawl.

Medicare/Medicaid - Social Security - Defense.  Any conversation about the country's fiscal difficulties starts and ends with those three programs. 

On your comment about being stuck in an 'economic twilight zone' I think you are right. We will have limited to no true recovery until the underlining economic issues are actually dealt with. Right now we just print to mask the underlining mess. That can't create long term economic stability and robust growth. Matter of fact it just makes the day of reckoning more painful when it finally comes.

 

Well, part of the problem is that there isn't much agreement on that the "underlining [sic] economic issues are" to be "actually dealt with."

 

-National debt that is nearing a 100% of GDP and not slowing

-quality employment

-cost of living that is in balance with incomes

-underfunded items like social security

-personal debt (cc, student loans, etc)

-infrastructure deficiencies

-financially unsustainable sprawl

 

Heh.  Those are the overlying issues, not the underlying ones.

 

The national debt is nearing 100% of GDP and deficits continue to accumulate.  True.  But what is the underlying cause of that?  Ask a liberal, and it's because we cut taxes too much on the rich.  Ask a conservative, and it's because the welfare state has made extraordinarily unsustainable commitments and needs to be dramatically pared back.

 

So on and so forth.  You'd get near-universal agreement that all of those phenomena you listed are problems.  The deadlock arises because people don't agree on the underlying causes of those problems--and therefore aren't likely to agree on solutions.

 

Medicare/Medicaid - Social Security - Defense.  Any conversation about the country's fiscal difficulties starts and ends with those three programs. 

 

Absolutely.  But, again, starting that conversation and reaching an agreement are two different things.  Also, even a complete solution to every problem facing those programs would not immediately jumpstart our recovery from the recent recession; in fact, in the short term, the adjustment costs could make things worse.  Fixing those problems today would help dampen the impact of the next recession. not the last one.

Ask a liberal, and it's because we cut taxes too much on the rich. 

 

Liberal here.  That wouldn't be my first response.  I would put the overseas campaigns and "domestic wars" far above tax cuts.  Worst part is, I don't think we have even touched the surface of the true costs of these wars.

 

As for the "ask a conservative"...... I think the answer would be much more limited in terms of what a typical self-proclaimed conservative views as the problematic "welfare state".  Inner-city poor people and unions are the problems in their view...... corporate welfare, handouts to farmers, etc..... not so much. 

I agree with your point. If you really start looking at what is causing these issues the will power/desire to address them and the ability to come to an agreement on how to address them is/will be very difficult to do.

 

That is why I believe we will see very little economic growth any time soon and more official recessions. These big items will just get worse because we can't agree on a solution.

 

If we continue down this path we will have a solution one day because the world economic system will force a solution (even if we don't like it). Some of the European countries are starting to learn this lesson now.

Dealing with Defense would be an overall issue dealing with the discretionary budget, which is sort of being solved via the forthcoming recission, but in a blunt way.  One could just asssume we cant afford the defense structure we have and just reduce it.  I think a consensus is heading that way.

 

Another way of dealing with a discretionary deficit is to increase taxes, like perhaps that Robin Hood Tax, or repealing the Bush tax cuts on the top brackets. 

 

Thats where the money is if you want to generate revenue...if the $$$ are going to to the 1% or 10% thats where you go to get the money.  Assuming the US economic elite doesn't decamp for the Cayman Islands or something....

 

Or, of course, seeing more economic growth which would mean more revnue, without having to raise taxes to pay for stuff.

 

The issue with Social Security and the various medical entitlement programs is deeper as they are entitlement spending and present a long term problem.  Social Security could be dealt with by extending retirment age, thus  shortening the time people spend collecting a pension btw retirement and death.

 

Medical entitlements and things like SNAP...hmm...seems cold to cut people off from that....

 

 

No need to "cut people off" medical entitlements..... but the system needs some major revamping and, more importantly, increased enforcement and harsher penalties.

 

I agree that raising the age of retirement (in a gradual manner) is the most practical way to deal with SS.  There also needs to be rules against poaching those funds for other purposes.

Many on the right have no idea that General Assistance welfare for the able-bodied no longer exists. In most (all?) states, you have to work 30 hours a week to receive assistance.

Many on the right have no idea that General Assistance welfare for the able-bodied no longer exists. In most (all?) states, you have to work 30 hours a week to receive assistance.

 

Say what?  You have a link to an official document or website to back that up?  There is no requirement other than being poor to get public housing or foodstamps.  And once you're qualified for the program, the only requirement is that you stay poor.  Able bodied, sound mind, no difference

Ask a liberal, and it's because we cut taxes too much on the rich. 

 

Liberal here.  That wouldn't be my first response.  I would put the overseas campaigns and "domestic wars" far above tax cuts.  Worst part is, I don't think we have even touched the surface of the true costs of these wars.

 

As for the "ask a conservative"...... I think the answer would be much more limited in terms of what a typical self-proclaimed conservative views as the problematic "welfare state".  Inner-city poor people and unions are the problems in their view...... corporate welfare, handouts to farmers, etc..... not so much. 

 

Increasingly, more and more conservatives are starting to concede on the latter point, too.  It isn't enough conservatives, I fully grant, but the trend is in the right direction on that.  Unfortunately, even if the trend continues, there may not be a political configuration allowing for much action on the latter items because farm subsidies have significant defenders in the Senate, and even a shrunken base of support for farm subsidies will still be able to wield political power to make them happen if that base happens to be concentrated in the Great Plains states.

 

As for the costs of the wars, it depends on how one twists the accounting.  More specifically, it depends on how many indirect costs one insists on seeing for the wars.  My problem with such arguments is that they seldom hold up other programs to the same scrutiny.  The major entitlement programs also have significant indirect costs.  Because of their more subjective nature, I tend to prefer to focus on direct costs even though I'm well aware that indirect costs exist for everything.

Does the "welfare" a permanently brain damaged soldier will require for the rest of his/her life constitute a "direct cost"?

No need to "cut people off" medical entitlements..... but the system needs some major revamping and, more importantly, increased enforcement and harsher penalties.

 

I think there are definitely some people who need to be cut off from medical entitlements, as well as from things like SNAP (which I don't classify as a medical entitlement; it's more income support than health care, though of course nutrition is important for health).

 

I agree that raising the age of retirement (in a gradual manner) is the most practical way to deal with SS.  There also needs to be rules against poaching those funds for other purposes.

 

I remain, and will probably always remain, a proponent of personal accounts/universal 401(k) accounts as a substitute for SS.  Yes, there would be some people who would get less in such a system, but the winners would far outnumber and enormously far outweigh the losers.  I say that with confidence simply because the current system doesn't set a very high bar to clear.  One reason I remain a fan of such a system is because it perfectly solves your second concern--the government can't poach a 401(k) account the way it can poach a Social Security entitlement.  It's private property and thus protected by the Fifth Amendment.  In addition, for the true long term--multiple generations out--401(k) assets do not vanish upon death the way SS generally does.  They can be passed down to one's heirs, and theirs, and theirs again.

 

I'm lucky enough to be able to max out a 401(k) and Roth IRA contribution every year even after sending a big chunk of my income into the SS black hole (which I don't gamble on ever seeing again, given how many years the government has to screw things up between now and when I'll retire, and given that SS is effectively a Ponzi scheme at this point--the money I'm paying in is funding existing retirees, not building up real assets that will be used to fund my own retirement a few decades from now).  Many people don't have that ability and will rely entirely on SS.  I feel for them.  While it's true that things could completely fall apart in the next 40 years or so, the historical odds strongly favor the conclusion that the disparity between myself and those others in retirement will be even greater, in proportional terms, than it is during our working years, because my private retirement assets will grow at a respectable compound rate, whereas assets channeled into SS don't grow that much even for those of lower income who will get some help from the existing benefit-calculation formula.

Does the "welfare" a permanently brain damaged soldier will require for the rest of his/her life constitute a "direct cost"?

 

Yes.  However, the lost economic opportunity (he could have been doing something else good for the country if he had not suffered that injury, his wife or other caregiver could be doing likewise) is an indirect cost.  Those are the costs that I admit are real but that I nevertheless don't think can be fairly measured or fairly included, because the spin-off costs of entitlement spending (crowding-out effects, etc.) are likewise real but difficult to quantify.

^They are highly speculative.  We have plenty of soldiers who returned all "messed up" even if not physically disabled.  You could speculate that even those soldiers would have turned out to be more productive members of society had they never had to endure war..... but there is no way to know for sure.  When I was saying earlier that we are barely scratching the surface, I was speaking more towards direct costs as you and I agree they should be limited to.

 

I will tell you one industry that is getting a windfall from the wars....... domestic relations law.

Many on the right have no idea that General Assistance welfare for the able-bodied no longer exists. In most (all?) states, you have to work 30 hours a week to receive assistance.

 

Say what?  You have a link to an official document or website to back that up?  There is no requirement other than being poor to get public housing or foodstamps.  And once you're qualified for the program, the only requirement is that you stay poor.  Able bodied, sound mind, no difference

 

I'm talking about cash welfare assistance (General Assistance). I guess you haven't heard the radio and TV PSAs about it or know someone who receives benefits. And it's been like that since 2010. I'm not digging through government websites and long PDFs to illustrate this, but here's a Dispatch article that illustrates penalties states face when not enforcing the 30-hour rule:

 

The state requires adults in single-parent families to engage in work activities 30 hours a week, while two-parent families need to work up to 55 hours a week, with some exceptions.

http://www.dispatch.com/content/stories/local/2012/04/02/ohio-welfare-rolls-drop-by-18-percent.html

 

A worker at a neighboring business to mine nearly quit his job because the owners initially wouldn't sign the paper stating that the worker was fulfilling the requirement because they refused to believe that you had to work to receive welfare. After he was gone a few days applying to fast-food chains that were familiar with the requirements, he was able to prove to them how it worked and they signed it. It was something that they, as employers, needed to know.

 

Food stamp and public housing requirements are different.

I remain, and will probably always remain, a proponent of personal accounts/universal 401(k) accounts as a substitute for SS.  Yes, there would be some people who would get less in such a system, but the winners would far outnumber and enormously far outweigh the losers.  I say that with confidence simply because the current system doesn't set a very high bar to clear.  One reason I remain a fan of such a system is because it perfectly solves your second concern--the government can't poach a 401(k) account the way it can poach a Social Security entitlement.  It's private property and thus protected by the Fifth Amendment.  In addition, for the true long term--multiple generations out--401(k) assets do not vanish upon death the way SS generally does.  They can be passed down to one's heirs, and theirs, and theirs again.

 

I'm lucky enough to be able to max out a 401(k) and Roth IRA contribution every year even after sending a big chunk of my income into the SS black hole (which I don't gamble on ever seeing again, given how many years the government has to screw things up between now and when I'll retire, and given that SS is effectively a Ponzi scheme at this point--the money I'm paying in is funding existing retirees, not building up real assets that will be used to fund my own retirement a few decades from now).  Many people don't have that ability and will rely entirely on SS.  I feel for them.  While it's true that things could completely fall apart in the next 40 years or so, the historical odds strongly favor the conclusion that the disparity between myself and those others in retirement will be even greater, in proportional terms, than it is during our working years, because my private retirement assets will grow at a respectable compound rate, whereas assets channeled into SS don't grow that much even for those of lower income who will get some help from the existing benefit-calculation formula.

 

The problem is that only about half of working people have access to 401Ks.  Of those people, not everyone is willing or able to contribute to a 401K.  Those that do contribute do so well below the maximum.  Also, over the last decade or so the performance of the stock market has been pathetic to say the least.  With all this in mind, 401Ks would be a perfect replacement of Social Security if you don't mind the vast majority of Americans living in abject poverty upon retirement.  That would leave either taxpayers on the hook to sustain those retirees, or just simply allowing them to suffer and die.  At least with Social Security you're forcing working people to put aside some of their dollars for a rainy day.

I remain, and will probably always remain, a proponent of personal accounts/universal 401(k) accounts as a substitute for SS.  Yes, there would be some people who would get less in such a system, but the winners would far outnumber and enormously far outweigh the losers.  I say that with confidence simply because the current system doesn't set a very high bar to clear.  One reason I remain a fan of such a system is because it perfectly solves your second concern--the government can't poach a 401(k) account the way it can poach a Social Security entitlement.  It's private property and thus protected by the Fifth Amendment.  In addition, for the true long term--multiple generations out--401(k) assets do not vanish upon death the way SS generally does.  They can be passed down to one's heirs, and theirs, and theirs again.

 

I'm lucky enough to be able to max out a 401(k) and Roth IRA contribution every year even after sending a big chunk of my income into the SS black hole (which I don't gamble on ever seeing again, given how many years the government has to screw things up between now and when I'll retire, and given that SS is effectively a Ponzi scheme at this point--the money I'm paying in is funding existing retirees, not building up real assets that will be used to fund my own retirement a few decades from now).  Many people don't have that ability and will rely entirely on SS.  I feel for them.  While it's true that things could completely fall apart in the next 40 years or so, the historical odds strongly favor the conclusion that the disparity between myself and those others in retirement will be even greater, in proportional terms, than it is during our working years, because my private retirement assets will grow at a respectable compound rate, whereas assets channeled into SS don't grow that much even for those of lower income who will get some help from the existing benefit-calculation formula.

 

The problem is that only about half of working people have access to 401Ks.  Of those people, not everyone is willing or able to contribute to a 401K.  Those that do contribute do so well below the maximum.  Also, over the last decade or so the performance of the stock market has been pathetic to say the least.  With all this in mind, 401Ks would be a perfect replacement of Social Security if you don't mind the vast majority of Americans living in abject poverty upon retirement.  That would leave either taxpayers on the hook to sustain those retirees, or just simply allowing them to suffer and die.  At least with Social Security you're forcing working people to put aside some of their dollars for a rainy day.

 

I do mind the vast majority of Americans living in poverty upon retirement, which is exactly where SS will lead us and where universal 401(k)s offer an escape for most.  You obviously didn't do any reading on universal 401(k) proposals before sounding off against them--nor have you looked at the likely effective rate of return on SS contributions for our generation, which is less than 2 percent pretty much across the board and is negative for many populations--including African-American males, incidentally, because their lower average life expectancy reduces their average expected lifetime payout.  As for the universal 401(k) proposal, that means a law establishing an account for each citizen independent of any employer, and mandating contributions to that instead of to the easily-raided SS "trust fund."

 

You are correct to note that the stock market's returns over the last ten years have been bad--but they're still ahead of U.S. government debt issued over the same time period, which is basically what you're investing in with your SS contribution.  (Now, if you're lucky enough to be a bond investor with older U.S. Treasuries paying higher rates of interest, those have performed somewhat better, but if you're sophisticated enough to even understand the concept of yield curves and the dynamic of lower interest rates increasing the value of higher-interest existing bonds, you're probably in much better shape for retirement than most.)  Also, remember that the average working lifespan is north of forty years, and over that span, you'd have a hard time picking any 40-year period since SS was conceived in which the stock market did not significantly outperform SS.

Leading up to this there was a lot of happy talk in the MSM about how consumer confidence should start rising as gas prices fall. I guess the consumer has more on their minds than just gas prices.

 

Consumer confidence falls in May

"WASHINGTON (MarketWatch) — A gauge of U.S. consumer confidence declined for a third month, with gloomier views in May on present and future conditions, the Conference Board reported Tuesday.

The consumer-confidence index fell to 64.9 in May — the lowest level since January — from a revised 68.7 in April. A prior estimate for April pegged the level at 69.2, according to Conference Board, a membership and research group.

Economists polled by MarketWatch had expected a reading of 70 for May."

http://www.marketwatch.com/story/consumer-confidence-falls-in-may-2012-05-29

 

 

Home prices flat in March: Case-Shiller

Index remains at post-recession low

 

"WASHINGTON (MarketWatch) — U.S. home prices were unchanged in March but remained at a post-recession low, according to the S&P/Case-Shiller 20-city composite index."

http://www.marketwatch.com/story/home-prices-flat-in-march-case-shiller-2012-05-29

 

 

Dallas Fed May Business Activity Index Drops To -5.1 From -3.4 In Apr

http://www.4-traders.com/news/Dallas-Fed-May-Business-Activity-Index-Drops-To-5-1-From-3-4-In-Apr--14347568/

Gramarye said:

As for the universal 401(k) proposal, that means a law establishing an account for each citizen independent of any employer, and mandating contributions to that instead of to the easily-raided SS "trust fund."

 

I don't think most Americans would appreciate a law that forces you to hand over a percentage of your earnings to a hedge fund manager on Wall Street. 

 

I view SS as an insurance policy for my 401K plan and riskier Roth IRA investments.  Why does it makes sense for every American to be forced into an inherently riskier system?  Everyone knows they could *probably* be returning more with a private account, but SECURITY is the number one priority of SS.  I'd much rather have lower returns and low risk on this small portion of my retirement plan than have the entire thing be tied to the ups and downs of the stock market.

 

Another thing that should be thought about when talking about SS is how it works to stabilize the job market.  When the market crashed in 2008 we saw a lot of people pushing off retirement until the market rebounded.  This decrease in retirements rippled through the economy and made it harder for some young people to find work because jobs weren't opening up.  This problem would have been exacerbated if SS was privatized.

Gramarye - if the individual mandate is struck down as unconstitutional, wouldn't a mandatory 401K plan be unconstitutional as well?

Gramarye - if the individual mandate is struck down as unconstitutional, wouldn't a mandatory 401K plan be unconstitutional as well?

 

That is entirely possible, which is why I've said that advocates of social security personal accounts are making a strategic error even if they wind up being correct on the law.  Alternatively, from a strategic calculus perspective, most of the advocates of personal accounts may simply have calculated that personal accounts have no actual chance of becoming law, whatever their economic merits, so they are not losing any realistic opportunities by arguing for a constitutional doctrine that may impede a policy they favor later.

 

And, of course, structurally, it would be possible to set a personal account system as a system of "taxing and spending for the general welfare" rather than as a "regulation of commerce between the states."

..... like they should have done with Healthcare

..... like they should have done with Healthcare

 

Like they could have done with ObamaCare, perhaps.  The question of whether they should have has yet to be answered, though we'll probably get the answer to that soon.

 

Remember, a lot of Obama's coalition wants to expand the power of the federal government to mandate private economic decisions.

^Examples?  What do you see as the next "mandate" in the pipeline should the individual health care mandate be upheld as constitutional?  If you are speaking more abstractly, I would say that is a matter of perspective.  Many government policies indirectly "mandate" private economic decisions one way or another.  But I don't think the current administration (or 'coalition' as you might call it) has any desire to directly mandate private economic decisions.  They love to incentivize them, but stricly mandating such things is only favored when the ends significantly outweigh the means (such as with the health care mandate) and those means can be narrowly tailored.  I suspect IF the mandate is upheld, the decision will be limited strictly to that specific situation of mandating health insurance coverage for those who can afford it but choose (for non-religious reasons) to not buy it.

 

The level of desperation is clearing reaching a feverish pitch. Of course you have a plan that just adds more debt to the system. Short term relief that will create even bigger issues long term. I think Alessandro di Carpegna Brivio has hit on what is behind QE, bailouts, etc. its to fill (or refill) the world's banks vaults. Once you view it this way things that have been done for housing, QE, wall street, Europe etc. actually make more sense. Most of these things are not about saving nations, main street or sovereignty its about saving banks. Not saying there is not value in saving a Country's banking system but there comes a point when the cost seems to be to high.

 

Europe’s debtors must pawn their gold for Eurobond Redemption

"Southern Europe’s debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany."

 

"The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton’s Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today.

 

Chancellor Angela Merkel shot down the proposals last November as "completely impossible", but Europe’s crisis has since festered, and her Christian Democrat party has since suffered crushing defeats in regional elections.

 

The Social Democrat opposition supports the idea. The Greens say they will block ratification of the EU Fiscal Compact in the German Bundesrat -- or upper house -- unless Mrs Merkel relents."

 

"Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy," he said."

http://www.telegraph.co.uk/finance/financialcrisis/9298180/Europes-debtors-must-pawn-their-gold-for-Eurobond-Redemption.html 

Oops... deleted

Gramarye said:

As for the universal 401(k) proposal, that means a law establishing an account for each citizen independent of any employer, and mandating contributions to that instead of to the easily-raided SS "trust fund."

 

I don't think most Americans would appreciate a law that forces you to hand over a percentage of your earnings to a hedge fund manager on Wall Street.

 

Which is why I propose no such law.  Hedge funds are for people who are already materially secure and who have significant assets that they can afford to risk.

 

FirstMerit manages my 401(k).  They are not a hedge fund.  They are a plan administrator that sponsors a "cafeteria plan" of various funds.  Not even any of those funds is a hedge fund.  They are all mutual funds and money market funds.  Some are somewhat more risk-friendly, such as real estate and international equity funds.  Some are just boring U.S. Treasury bond funds, as well as the standard U.S. equity index fund (there probably isn't a 401(k) plan in the country that doesn't have one of those).

 

I view SS as an insurance policy for my 401K plan and riskier Roth IRA investments.  Why does it makes sense for every American to be forced into an inherently riskier system?  Everyone knows they could *probably* be returning more with a private account, but SECURITY is the number one priority of SS.  I'd much rather have lower returns and low risk on this small portion of my retirement plan than have the entire thing be tied to the ups and downs of the stock market.

 

It makes sense because the existing system is not generating anywhere near the wealth necessary to be sustainable and solvent over the long term.  Paradoxically, trying to avoid all risk is itself a risk--and one that is basically guaranteed to backfire.

 

As for lower risk, those who feel as you do would be free to invest in nothing but money market and U.S. Treasury funds.  Basically every 401(k) plan in the country offers those options--sight unseen, I'd be willing to bet that more than 99% of all plans do.  I'd be happy to make that mandatory for any participating plan administrator, along with a U.S. broad market index fund.  Of course, I reiterate what I said above: trying to completely avoid all risk is not as safe as one might think or wish.

 

Another thing that should be thought about when talking about SS is how it works to stabilize the job market.  When the market crashed in 2008 we saw a lot of people pushing off retirement until the market rebounded.  This decrease in retirements rippled through the economy and made it harder for some young people to find work because jobs weren't opening up.  This problem would have been exacerbated if SS was privatized.

 

Why?  A privatized system would have been producing significantly superior returns for the older generation for decades had it been in place from the outset.  Many would have been able to retire even with a temporarily significantly reduced pool of assets to draw upon (particularly if they had been switching over to primarily income-producing assets, which people near retirement are generally advised to do) and still be living on more retirement income than SS offers them now.  Someone who put off retirement because they were looking at just the paltry dole from SS plus maybe $50,000 in retirement savings might have felt a bit differently if they had $750,000 or $1,000,000 in a personal account (very achievable over a 40-year working life with a 7% CAGR, which is itself quite achievable, especially with dividend reinvestment).

You Republicans seem to enjoy labeling any payment from the government as some kind of welfare.  Social Security is not a "dole", it is a pension that we have been paying for.

 

I am sure that the Social Security pensions, which are an inflation adjusted annuity, are a much better product for most Americans than the "privatized" system that you describe.  Many of us have no need to pass wealth to another generation.  Your "privatized" system would be strained by people taking money out of the system to create inheritances.

 

It is quite likely that a family could expect to accumulate a million dollar portfolio over a lifetime.  But current financial advice is that one can draw barely over two percent of their portfolio and expect it to last thirty years, which is a likelihood that a couple should plan for.

 

So, with no Social Security pension, a couple who drew $50,000/year in another decade of scant returns in a corrupt market would be spending $30,000 more per year than they can afford and be left with only $700,000 after a decade.  That is what happened to retirees a decade ago.    Current rates of inflation would make that worth about $500,000.  Imagine being 75 years old and having to support two people and pay Medicare, medigap, and prescription drug coverage out of that. 

 

 

 

 

Schiff: America is Already Bankrupt

By Jeff Macke | Breakout – 3 hours ago

 

Peter Schiff makes it clear, up front, why he's not trying to save America from fiscal disaster. He's not un-American, he's just too late. "We're already bankrupt," Schiff declares in the attached clip. "Better to acknowledge that fact than to pretend we're not."

 

The author of the new book The Real Crash says it's the stimulus that got us into this mess, or at least exacerbated the one we already had. Because of the Feds effectively zero percent interest rate policy the U.S., both as individuals and a collective, spends, borrows, and generally wastes far too much while saving nothing.

 

"We can't have real economic growth until interest rates go up," says Schiff. "If we admit we're bankrupt and at least restructure, we can start repairing the damage and preparing the economy for real growth."

 

http://finance.yahoo.com/blogs/breakout/schiff-america-already-bankrupt-115722723.html?l=1

Schiff has it exactly backwards.  We need another trillion dollar jobs bill to pump up the GNP.

 

Schiff: "Right now the government can spend as much as it wants because it can borrow." But there's a limit. Once U.S. interest rates are forced higher by concerned lenders, the party is going to be over for the U.S. Of course, there's no actual deadline for when those rate spikes happen.

 

We have been hearing warnings about impending interest rate hikes for many years and it hasn't happened.  I think he just wants an excuse to cut social spending to make room in the budget for more tax cuts for the rich.

You Republicans seem to enjoy labeling any payment from the government as some kind of welfare.  Social Security is not a "dole", it is a pension that we have been paying for.

 

No, it is a Ponzi scheme in which the contributions of current workers do not build assets to fund an income stream for themselves in retirement (which is what a pension or annuity would do); those contributions are simply distributed to existing retirees, who got the benefit of the trust fund assets being spent on them for the past generation and now get all the benefits of looting the young as well.

 

I am sure that the Social Security pensions, which are an inflation adjusted annuity, are a much better product for most Americans than the "privatized" system that you describe.

 

Sorry, but the numbers do not support that.

 

Many of us have no need to pass wealth to another generation.

 

Then go ahead and spend all your money on yourself.  Also, if you have no children, you are likely in better financial shape than most--choosing to have children is a noble choice and we rely on people doing so, but let's not pretend that it's an inexpensive choice.

 

Your "privatized" system would be strained by people taking money out of the system to create inheritances.

 

You operate under the false assumption that invested money is "out of the system" and that only consumption spending is "the system."  Nothing could be further from the truth.

 

It is quite likely that a family could expect to accumulate a million dollar portfolio over a lifetime.  But current financial advice is that one can draw barely over two percent of their portfolio and expect it to last thirty years, which is a likelihood that a couple should plan for.

 

First, I was being conservative.  Many people, particularly those in the middle class and above, would retire with universal 401(k) accounts significantly in excess of $1 million, plus their own private 401(k) and IRAs as well.

 

Second, I don't know where you get this 2% notion.  Even if you converted your entire portfolio to cash in an account that paid no interest at all, you would be looking at only drawing down only 60% of it over 30 years (2% x 30).  Many extremely safe income-producing investments yield more than 2%, unless you really think (or, in your case, perhaps the word is "dream") that Wal-Mart, Exxon, Intel, FirstEnergy, etc. are heading for bankruptcy.

 

So, with no Social Security pension, a couple who drew $50,000/year in another decade of scant returns in a corrupt market would be spending $30,000 more per year than they can afford and be left with only $700,000 after a decade.  That is what happened to retirees a decade ago.    Current rates of inflation would make that worth about $500,000.  Imagine being 75 years old and having to support two people and pay Medicare, medigap, and prescription drug coverage out of that.

 

If someone with $1 million is drawing $50,000 per year, that's 5%, not 2%.  That's also more than $4,000 per month, which is nearly four times the current average Social Security benefit for retired workers:

 

http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

 

The average monthly benefit for a retired worker is $1,232.60.  That is why I speak with such confidence that the country would do better with a personal-account system than with the existing system.  I'm well aware that even in a personal-account system, not everyone could retire in luxury.  But $14,791.20 per year is not a hard bar to clear.

Schiff has it exactly backwards.  We need another trillion dollar jobs bill to pump up the GNP.

 

Schiff: "Right now the government can spend as much as it wants because it can borrow." But there's a limit. Once U.S. interest rates are forced higher by concerned lenders, the party is going to be over for the U.S. Of course, there's no actual deadline for when those rate spikes happen.

 

We have been hearing warnings about impending interest rate hikes for many years and it hasn't happened.  I think he just wants an excuse to cut social spending to make room in the budget for more tax cuts for the rich.

 

I think most people if they were being honest don't believe we will actually ever make good on all our debt. Europe is in the eye of the storm at this time and its problems are actually helping us sell our debt on the world markets (lesser of two evils at this time). This helps us keep interest rates low for the time being (of course we are needing to buy more and more of our own debt since the world's appetite is dropping for our debt as well). Sooner or later the world's attention will turn to us. I believe our only real long term hope is to inflate as much of our debt away as possible and since we control our own currency that may very well happen one day. Two other options that have been seem to come and go over time is a world currency through the IMF and the Amero.

 

I believe as long as Europe stays in the eye of the storm we will continue to plug along. Low/no growth and in and out of technical recessions.

I think most people, if they were being honest, don't believe our debt-holders WANT us to make good on our debt.  Do you think if we brought a few aircraft carriers full of cash to China and said "here ya go... consider yourself paid", they would be happy about it?  Point being.... it is not an "evil"

Per my comments above.

 

Treasury yields hit new low on Spain worries

Yields on 10-year, 5-year notes touch record low

 

"NEW YORK (MarketWatch) — Treasury prices rose on Wednesday, pushing yields to a record low, as increasing worries about Spain’s fiscal health and its banks weighed on the euro and equities, increasing the appeal of the relative safe haven of U.S. bonds and the dollar."

http://www.marketwatch.com/story/treasury-yields-hit-record-low-on-spain-worries-2012-05-30?dist=countdown

I think most people, if they were being honest, don't believe our debt-holders WANT us to make good on our debt.  Do you think if we brought a few aircraft carriers full of cash to China and said "here ya go... consider yourself paid", they would be happy about it?  Point being.... it is not an "evil"

 

I think holders of our debt, companies, individuals, etc. absolutely hope and expect us to make good on our debt 'promises'. I think China is showing their concern as they have been reducing their exposure to US debt. This is one reason why the FED has become a major buyer of our 'debt'. Supporting data for both of these items have been posted in the forum this year.

 

I think oil is sending a signal about were the world economy is currently at and is headed.

 

Oil closes below $88 for first time since October

Spain woes, scaled back China stimulus hopes weigh on futures

 

"SAN FRANCISCO (MarketWatch) — Crude-oil futures dropped Wednesday to mark their lowest close since October as the U.S. dollar strengthened and as concerns over Spain and scaled-back expectations for Chinese economic stimulus dulled the prospects for oil demand."

http://www.marketwatch.com/story/crude-oil-drops-closer-to-90-a-barrel-2012-05-29?dist=countdown

This is not a very good sign for the 'housing recovery'. Since April through about June is the peak of the buying season.

 

Pending Sales of U.S. Homes Decrease by Most in a Year

 

"The number of Americans signing contracts to buy previously owned homes fell in April by the most in a year, indicating the U.S. housing recovery remains uneven."

http://www.bloomberg.com/news/2012-05-30/pending-sales-of-u-s-existing-homes-decline-by-most-in-a-year.html

I think most people, if they were being honest, don't believe our debt-holders WANT us to make good on our debt.  Do you think if we brought a few aircraft carriers full of cash to China and said "here ya go... consider yourself paid", they would be happy about it?  Point being.... it is not an "evil"

 

Well, if we did that with money we just printed, no, they would obviously not be happy about it.  That would be monetizing the debt, with significant destructive consequences for both the debtor and creditor nation.  If it were actual revenue generated without inflating the money supply, though, I think they would welcome that payment.

 

Of course, they would probably take that payment and turn around and use a lot of that payment to just buy more Treasuries.

 

More importantly, though, China's happiness is not our overarching concern.  Nor, for that matter, are the feelings of all the various American financial institutions that invest heavily in Treasuries (particularly those getting fat off the carry trade).  If the U.S. were running a fiscal surplus, those lenders (foreign, private, whomever) would have to find other debtors to lend to--in particular, private sector actors.  To those of us who think that (a) the private sector generally utilizes capital more productively than the public sector, and (b) it is absolutely ridiculous that there is so much liquidity out there in the economy and yet we have trouble persuading, cajoling, or bludgeoning banks into making loans, putting those lenders in a situation where they have to take more risks than just lending to the U.S. government is a good thing.

 

I think those funds loaned to the U.S. government would be much more productively used by the Cleveland Clinic, Eaton, Forest City Enterprises, Timken, Goodyear, FirstEnergy, and the hundreds of smaller companies looking to get financing for investments and operations in the area.

Spain faces 'total emergency' as fear grips markets

 

"Spain is facing the gravest danger since the end of the Franco dictatorship as the country is frozen out of global capital markets and slides towards an epic showdown with Europe."

 

"Italy felt the full brunt of contagion from Spain on Wednesday, with 10-year yileds back near 6pc. The euro fell to a 2-year low of $1.239 against the dollar. Crude oil and metal prices plummeted and save-haven flight pushed rates on 2-year German debt to zero. Gilt yields fell to 1.64pc, the lowest in history."

 

"The country is caught in a classic deflationary vice: a rising debt burden on a shrinking economic base. “Once you get into such a negative feedback loop, you can move beyond the point of no return quickly,” he said."

http://www.telegraph.co.uk/finance/financialcrisis/9301270/Spain-faces-total-emergency-as-fear-grips-markets.html

 

ITALIAN BONDS UNDER PRESSURE, AUCTION FALLS SHORT OF TARGET

 

"(ANSA) - Rome, May 30 - Italian bonds came under pressure on the money markets on Wednesday when the Treasury failed to hit its target in an auction of five-year and 10-year bonds.

 

The Treasury sold a total of 5.74 billion euros of bonds, compared to a target of 6.25 billion, and had to offer higher yields."

http://www.lifeinitaly.com/news/en/152904

 

Spain is the most sympathetic case of the distressed European economies and the one that really deserves more attention than Greece, which is an essentially doomed basket case that should be surgically removed from the eurozone as quickly and efficiently as possible (even with the knowledge that it may not be possible to be that quick or efficient about it, or at least, not that efficient).  It is basically <a href="http://www.ocregister.com/opinion/germany-356574-wealth-national.html">culturally incapable of supporting a First World currency</a>.

 

Spain, on the other hand, was one of the eurozone's most fiscally responsible members before the contagion from the Spanish housing bubble hit.  Its debt-to-GDP ratio and its deficit were both lower than Germany's pre-crisis.  It's the one subplot in all the various ones going on over there that really does look like there were regulatory safeguards missing, not just regulatory overreach impeding normal market operation (though Spain obviously had a good measure of that as well).