This will be short because I have appointments to attend.
Personally I don't have a problem with safety nets. I do have a problem when those safety nets become giant fishing nets. Giant nets that make and catch not just those that need help but the entire society. Add to it social insurance programs that have hardly any actuarial design to them.
The multiple workers to a few is upside down and something will need to change. How will we ever do it because everyone feels it is their net. The rich, the poor and everyone is in the fishing net. Just as the massive gill nets are an extremely destructive fishing method, so is the social fishing net that catches "All" people. So now that all people are in the net, the net will eventually fail.
The U.S. unemployment rate has already exceeded the baseline forecast, reaching 8.5 percent last month, the highest level since 1983. Gross domestic product probably fell at a 5 percent annual pace in the first three months of 2009, more than in the adverse scenario, according to the median estimate of economists surveyed earlier this month.
“The bottom line is if the unemployment rate peaks at 10 percent these banks can make it through,” FBR’s Miller said. “But if it peaks closer to 12 percent, nobody makes it. Or very few people make it.”
"Even the slowdown in debt accumulation will swamp the government’s stimulus. In 2007-08, the last year of our debt bubble, private debt rose by $259 billion–adding 20% to aggregate demand. The fall of this to zero–a simple stabilisation of private debt–will remove 20% of demand from the economy. This is what is causing unemployment to explode now.
"On the monetary front, Bernanke has literally doubled government-created money in the USA in a matter of months, but even so the ratio of private debt to this is close to 30 to 1. He’d need to create twenty times as much (and give it to the debtors to cancel their debts, rather than to the banks in a futile attempt to maintain their facade of solvency) before there would be any chance of a monetary stimulus working. I simply can’t see him trying it."
NDD, you need to hit the reply link so the comments stay threaded. Yes I know this isn't very good and I'm putting it off to the update. I've had to delay the update due to other issues, so in the meantime have to live with the crappy "reply" links.
the videos on Bear raids (naked shorts) and hedge funds:
part I (from above)
part II
part III
This is actually a very good series. I think next Friday I'll put these into the Friday Night videos and in the interim, if anyone else sees very good expose videos around fraud, naked shorts, the SEC, corruption, etc. let me know so I can add them as a "theme" video post next Friday.
Wish you would've mentioned there were two more after that!
Anyway, "naked shorting" when used in conjunction with rumors that a company has financial problems is called a "bear raid". Back in July of last year, I speculated that Fannie and Freddie were the victims of the biggest "bear raid" in history.
Something happened the last few days of June. Part 2 of the video series mentions the last Friday of June as the day that the July round of naked shorting began. The next day the IMF released its report that the US financial system was weeks or months away from collapse. Over that same weekend, anonymous posters on European-based web sites (conveniently out of enforcement range of US authorities) began spreading rumors about Fannie and Freddie.
Midtowng had a post here (mirrored in a highly recc'd diary at DK) on the Armageddonish warnings that came out that weekend.
Somebody had inside information perhaps on the IMF report, and used it as cover for the biggest Bear Raid of all time.
Aside from the event itself, the fact that the SEC was put to sleep by Bush and Cox, and never even in 2008 was roused to action, is infuriating.
I was looking for funny stuff and came across this video claiming the crash of Bear Sterns was Naked Shorts.
It has a lot of graphs and it does assuredly look funky but this is one view, versus knowing many derivatives were fiction money built on houses of sand.
I thought about this post and how by focusing in on one area of expertise, one knows it well, seemingly those cannot see the big picture, the relative scale and interplay of events.
Here's the link chain: the American Enterprize Institute, which has been at war with New Deal programs since its inception, writes a new version of its same old tripe, which then gets regurgitated in full by the WaPo Op-Ed page, which itself has been on a dishonest jihad against Social Security for a number of years. From there it goes to the blog you linked to, and thence to your post.
Here's a quick summary of Bruce Webb's counterpunch, but really you should read both pieces in their entirety:
If true this would be a totally 'Holy Crap Batman!' moment, because ... in 2007, [the Social Security trust fund] ... was still projected to be adding assets to the tune of $213 billion in 2017. How could all of that just vanish without anyone noticing?
Answer? It didn't. Hassett is mostly just playing word games....
Hassett has simply redefined this long known crossover point (known as Shortfall) as the time that 'surpluses' vanish. And then piles on by claiming that February numbers show that it had actually moved right up to today. This is totally misleading and verging on outright lying. ...
While commenters and the Trustees alike for most purposes treat the Trust Funds as a combined whole there are legally two different funds, OASI (Old Age/Survivors Insurance) and DI (Disability Insurance). DI is approximately 10% of the size of OAS and has in recent years been much the weaker of the two. While the combined funds are projected to reach Shortfall in 2017 when DI is examined in isolation we can see that it actually hit Shortfall in 2005.... In fact the DI deficit overwhelmed the $525 million OAS surplus for the month [of February] to create a combined OASDI deficit of $1.25 billion and so leading Hassett and his faithful stenographer Montgomery to claim the sky was falling.
This is nonsense, they are simply counting on readers to not know these numbers or the breakdown of them between OAS and DI or how DI actually interacts with OAS. .
....
[T]he hit to DI is temporary while the hit from increased levels of early retirement is offset actuarially by a lower permanent retirement check.
....
.... But a potential crisis in DI is still not a reason to tamper with OAS. What we have here is just another use of crisis conflation, just as a real challenge to Medicare and Medicaid is used to sell 'Entitlements Crisis' so is a problem with DI turned into a crisis for Social Security as a whole. These guys want to kill traditional Social Security and always have.
OASDI cash surpluses were already dropping but the overall surplus is continuing to rise and in fact will continue to do so even after cash transfers from the General Fund start redeeming part of the interest. Only when those transfers exceed the total amount of interest owed and principal starts being paid down can Social Security even plausibly be said to be in deficit....
If we did decide to fix [DI] we are faced with an long term actuarial gap projected at 0.24% of payroll in the 2008 Report, which translates to $120/year for a median household earning $50,000. Hassett is just trying to make a mountain out of a mole hill.
Moral of this story: when any issue re Social Security pops up, the very first thing to do is to click on over to Bruce Webb at Angry Bear for the Truth.
I don't think there are a lot of fans of GS commenting here but where does one draw the line in comments? And what is your liability if I go further in my comments here than GS thinks you should allow me? Fer crissakes, who was the candidate last election, Goldman Sachs UA (uber alles)?
Yeah, it's going to be a huge problem but mostly because of the Blue Dogs and New Democrats, of which Obama is a self proclaimed member. Sadly, the movement conservatives have always been about destroying all of the social safety nets established in the New Deal and Obama provides the perfect political cover to accomplish that goal. He does appear to be a trojan horse (along with Rahm Emmanuel) and the corporate elites must be tickled pink at what they bought.
I keep thinking that this will not end well, and it doesn't matter whether there is a true populist uprising or not.
Having said that, it should be stated, for the record, that the biggest problem about Social Security at this moment, is that the government is losing its cash cow NOW rather in 2017, when it was forecast that payroll tax receipts would begin to fall short of benefits outlays. Even then, the Social Security Trust Fund is projected to remain solvent until at least 2040 UNLESS the government were to default on all of the Treasury Bonds it had swapped for borrowing of the surplus receipts since 1985!
Bruce Webb at Angry Bear has devoted much of the past two years to dispelling the myths of the "impending doom of Social Security". The fiscal hawks use very clever tactics in trumpeting "common sense" alarm about our "entitlement" programs. If you are not sure about what is happening with Social Security then Bruce's series of reports (I think there are more than 60 now) are a must read before making final judgement.
In conclusion, I am not arguing with midtowng's report. I only caution that, on a current accounts basis the CBO projections are alarming, but mostly due to their impact on the current projected budget deficit. It does not mean that Social Security is "insolvent" or even "underfunded". The truth is it has been "SURPLUS FUNDED" for almost 25 years and the various administrations have pissed that away in their annual expenditures, year after year after year, all along issuing Treasury Bonds, with the full faith backing of the US Government, as collateral. If the US Government wants to default on these "full faith" obligations and place Social Security and its recipients in jeopardy then fine. But just admit that is what is happening and refrain from all of this fiscal responsibility bullshit.
I leave you with these excerpts from a Time article earlier this week.
Payroll tax receipts generally hold up much better in recessions than income taxes, but job losses have been so severe that the CBO expects them to decline slightly from 2008, while benefits rise almost 9% because of cost-of-living adjustments and the beginnings of the baby boomer retirement wave. If you count the $17 billion in income taxes expected to be paid on Social Security benefits, the system will still manage to provide a slight surplus for federal coffers in fiscal 2009. But from 2010 through 2012 there are small projected deficits, and after heading back into the black from 2013 to 2015 the program will become a growing drain on federal finances after that, projects the CBO.
Back in 1983, when Social Security last faced deficits, Congress approved a set of Social Security reforms that included a graduated hike in the payroll tax and an increase in the retirement age. Thanks to those changes, payroll tax receipts surpassed benefits in 1985, and the system has been operating at a surplus ever since. The money has been invested in Treasury securities that the Social Security system is supposed to live off in the future. But in the meantime it has provided a significant boost to the federal bottom line for almost 25 years. No more.
[Snip]
There's been some media coverage since then of Social Security's declining revenues, but none clearly makes the point that Social Security is about to cease playing its decades-old role as subsidizer of the rest of the federal government. This is partly because officially Social Security is still running a substantial surplus, and will be throughout the next decade, according to the CBO. A key source of that surplus, though, is interest payments on federal debt held by the Social Security trust fund.
[Snip]
Now, with a budget deficit projected at $1.8 trillion this year, we've got far bigger fiscal issues to worry about. That still leaves the question of Social Security's long-term financing needs, which will be reassessed soon in the system's annual trustees' report. But a couple of years of below-expected payroll tax receipts shouldn't dramatically change that forecast — and whatever long-run deficits the trustees project for Social Security will pale beside those expected for sister program Medicare.
I noticed that there are the massive "tea bagging" parties going on but behind the scenes are our classic corporate, "attack social safety nets" neocon types.
But what the people are outraged about is very real and I think odds are those who are "conservative" are thumping hard on the same thing we are...but the problem is the message on what's going on, the details get buried to promote "alternative" agendas.
This is amazingly bad news and I really fear that team Obama is going to lead the charge to attack what is left of the social safety nets.
There is credibility to the claims of an export collapse (with which I agree, because they are also confirmed by the container shipping numbers coming out of the West Coast ports; and because it is an admission).
But do you think China's claims of continued growth of 6%+ are also credible? I see shrinking trade and a shrinking surplus as almost necessarily requiring a shrinking Chinese GDP as well.
In China, there's no penal distinction when it comes to white collar crime: all get executed. In China white collar banking crimes are punishable by death. Also, only Party members are allowed to be senior bank operations managers.
Our problem here is that crooks can buy their way out of harm's way. They stash funds and retire off to...wherever.
The Chinese see these as crimes against the socius.
I hate to say it, but there may be some credibility behind these claims.The latest info on international trade has the deficit shrinking to - $26 billion from the previous - $36 billion.
And while companies like Dollar Tree are reporting sales, they are all reporting that folks are still not buying that much.. If the news that we're now saving north of 2% of our income versus nothing before, and that we used to spend spend spend, well it has to come from somewhere and once more that is spending. Consumers are weary, they see friends losing jobs or worse..homes.
A month or so back, there was the big toy expo. It was reported that almost a third of manufacturers who either were job shops for foreign firms like Mattel or they themselves produced their own brands, had gone out of business. A lot of Asian companies are not getting the prices they used to fetch. If you look at Import Export prices released this past week, you'll see a continuation of the decline. Given that oil, while itself seeing a descent into hell, has stabalized somewhat, so you have to figure that a good chunk is products being sent here.
China is essentially the mother of all hedge funds. On one end of it's portfolio is its sales of goods serving as volitile cashflow instruments. At the other end is their more "boring" part, their holdings in bonds. Now perhaps one of the reasons you hear Beijing squeling about a reserve currency because the boring side is starting to look less calmer, which is a big no no for them. There has to be a balance for them, and I think they're losing in their "volitile" portfolio because of a drop in demand and are not liking the possibility that their "hedge" is also looking like that as well.
This will be short because I have appointments to attend.
Personally I don't have a problem with safety nets. I do have a problem when those safety nets become giant fishing nets. Giant nets that make and catch not just those that need help but the entire society. Add to it social insurance programs that have hardly any actuarial design to them.
The multiple workers to a few is upside down and something will need to change. How will we ever do it because everyone feels it is their net. The rich, the poor and everyone is in the fishing net. Just as the massive gill nets are an extremely destructive fishing method, so is the social fishing net that catches "All" people. So now that all people are in the net, the net will eventually fail.
Link
So much for the stress test. But this raises an interesting scenario if unemployment goes higher than the optimistic scenario.
"Even the slowdown in debt accumulation will swamp the government’s stimulus. In 2007-08, the last year of our debt bubble, private debt rose by $259 billion–adding 20% to aggregate demand. The fall of this to zero–a simple stabilisation of private debt–will remove 20% of demand from the economy. This is what is causing unemployment to explode now.
"On the monetary front, Bernanke has literally doubled government-created money in the USA in a matter of months, but even so the ratio of private debt to this is close to 30 to 1. He’d need to create twenty times as much (and give it to the debtors to cancel their debts, rather than to the banks in a futile attempt to maintain their facade of solvency) before there would be any chance of a monetary stimulus working. I simply can’t see him trying it."
--Steve Keen http://www.debtdeflation.com
NDD, you need to hit the reply link so the comments stay threaded. Yes I know this isn't very good and I'm putting it off to the update. I've had to delay the update due to other issues, so in the meantime have to live with the crappy "reply" links.
the videos on Bear raids (naked shorts) and hedge funds:
part I (from above)
part II
part III
This is actually a very good series. I think next Friday I'll put these into the Friday Night videos and in the interim, if anyone else sees very good expose videos around fraud, naked shorts, the SEC, corruption, etc. let me know so I can add them as a "theme" video post next Friday.
Wish you would've mentioned there were two more after that!
Anyway, "naked shorting" when used in conjunction with rumors that a company has financial problems is called a "bear raid". Back in July of last year, I speculated that Fannie and Freddie were the victims of the biggest "bear raid" in history.
Something happened the last few days of June. Part 2 of the video series mentions the last Friday of June as the day that the July round of naked shorting began. The next day the IMF released its report that the US financial system was weeks or months away from collapse. Over that same weekend, anonymous posters on European-based web sites (conveniently out of enforcement range of US authorities) began spreading rumors about Fannie and Freddie.
Midtowng had a post here (mirrored in a highly recc'd diary at DK) on the Armageddonish warnings that came out that weekend.
Somebody had inside information perhaps on the IMF report, and used it as cover for the biggest Bear Raid of all time.
Aside from the event itself, the fact that the SEC was put to sleep by Bush and Cox, and never even in 2008 was roused to action, is infuriating.
I wouldn't have known that judging from the raw numbers being presented. It's a good reason for EP to exist.
I was looking for funny stuff and came across this video claiming the crash of Bear Sterns was Naked Shorts.
It has a lot of graphs and it does assuredly look funky but this is one view, versus knowing many derivatives were fiction money built on houses of sand.
I thought about this post and how by focusing in on one area of expertise, one knows it well, seemingly those cannot see the big picture, the relative scale and interplay of events.
here and here.
Here's the link chain: the American Enterprize Institute, which has been at war with New Deal programs since its inception, writes a new version of its same old tripe, which then gets regurgitated in full by the WaPo Op-Ed page, which itself has been on a dishonest jihad against Social Security for a number of years. From there it goes to the blog you linked to, and thence to your post.
Here's a quick summary of Bruce Webb's counterpunch, but really you should read both pieces in their entirety:
Moral of this story: when any issue re Social Security pops up, the very first thing to do is to click on over to Bruce Webb at Angry Bear for the Truth.
Unless Goldman Sachs can prove it is libel, I don't see how they can sue him and he should countersue.
As far as I know the blogs are free speech but might also be like press too.
One thing is certain, Goldman Sachs just helped a whole blogger world read this guy's site!
What do you make of this bit of heavy handedness?
I don't think there are a lot of fans of GS commenting here but where does one draw the line in comments? And what is your liability if I go further in my comments here than GS thinks you should allow me? Fer crissakes, who was the candidate last election, Goldman Sachs UA (uber alles)?
Yeah, it's going to be a huge problem but mostly because of the Blue Dogs and New Democrats, of which Obama is a self proclaimed member. Sadly, the movement conservatives have always been about destroying all of the social safety nets established in the New Deal and Obama provides the perfect political cover to accomplish that goal. He does appear to be a trojan horse (along with Rahm Emmanuel) and the corporate elites must be tickled pink at what they bought.
I keep thinking that this will not end well, and it doesn't matter whether there is a true populist uprising or not.
Having said that, it should be stated, for the record, that the biggest problem about Social Security at this moment, is that the government is losing its cash cow NOW rather in 2017, when it was forecast that payroll tax receipts would begin to fall short of benefits outlays. Even then, the Social Security Trust Fund is projected to remain solvent until at least 2040 UNLESS the government were to default on all of the Treasury Bonds it had swapped for borrowing of the surplus receipts since 1985!
Bruce Webb at Angry Bear has devoted much of the past two years to dispelling the myths of the "impending doom of Social Security". The fiscal hawks use very clever tactics in trumpeting "common sense" alarm about our "entitlement" programs. If you are not sure about what is happening with Social Security then Bruce's series of reports (I think there are more than 60 now) are a must read before making final judgement.
In conclusion, I am not arguing with midtowng's report. I only caution that, on a current accounts basis the CBO projections are alarming, but mostly due to their impact on the current projected budget deficit. It does not mean that Social Security is "insolvent" or even "underfunded". The truth is it has been "SURPLUS FUNDED" for almost 25 years and the various administrations have pissed that away in their annual expenditures, year after year after year, all along issuing Treasury Bonds, with the full faith backing of the US Government, as collateral. If the US Government wants to default on these "full faith" obligations and place Social Security and its recipients in jeopardy then fine. But just admit that is what is happening and refrain from all of this fiscal responsibility bullshit.
I leave you with these excerpts from a Time article earlier this week.
I noticed that there are the massive "tea bagging" parties going on but behind the scenes are our classic corporate, "attack social safety nets" neocon types.
But what the people are outraged about is very real and I think odds are those who are "conservative" are thumping hard on the same thing we are...but the problem is the message on what's going on, the details get buried to promote "alternative" agendas.
This is amazingly bad news and I really fear that team Obama is going to lead the charge to attack what is left of the social safety nets.
Just read that the "Stimulus" will only help out with 40% of the budget shortfalls in state/city social services and the are cutting them like mad.
Most interesting that the Federal Government is not getting a "downgrade", have to agree.
I hope you come back and post about how it went. I'm in a rural area, so all of my outrage has to be typed.
Or more the real economy struggling against it's oppressors.
There is credibility to the claims of an export collapse (with which I agree, because they are also confirmed by the container shipping numbers coming out of the West Coast ports; and because it is an admission).
But do you think China's claims of continued growth of 6%+ are also credible? I see shrinking trade and a shrinking surplus as almost necessarily requiring a shrinking Chinese GDP as well.
In China, there's no penal distinction when it comes to white collar crime: all get executed. In China white collar banking crimes are punishable by death. Also, only Party members are allowed to be senior bank operations managers.
Our problem here is that crooks can buy their way out of harm's way. They stash funds and retire off to...wherever.
The Chinese see these as crimes against the socius.
'China is essentially the mother of all hedge funds."--JV
Well, I call them the company store in a coal mining town...the ultimate pay day lender.;-)
I hate to say it, but there may be some credibility behind these claims.The latest info on international trade has the deficit shrinking to - $26 billion from the previous - $36 billion.
And while companies like Dollar Tree are reporting sales, they are all reporting that folks are still not buying that much.. If the news that we're now saving north of 2% of our income versus nothing before, and that we used to spend spend spend, well it has to come from somewhere and once more that is spending. Consumers are weary, they see friends losing jobs or worse..homes.
A month or so back, there was the big toy expo. It was reported that almost a third of manufacturers who either were job shops for foreign firms like Mattel or they themselves produced their own brands, had gone out of business. A lot of Asian companies are not getting the prices they used to fetch. If you look at Import Export prices released this past week, you'll see a continuation of the decline. Given that oil, while itself seeing a descent into hell, has stabalized somewhat, so you have to figure that a good chunk is products being sent here.
China is essentially the mother of all hedge funds. On one end of it's portfolio is its sales of goods serving as volitile cashflow instruments. At the other end is their more "boring" part, their holdings in bonds. Now perhaps one of the reasons you hear Beijing squeling about a reserve currency because the boring side is starting to look less calmer, which is a big no no for them. There has to be a balance for them, and I think they're losing in their "volitile" portfolio because of a drop in demand and are not liking the possibility that their "hedge" is also looking like that as well.
are Maria Cantwell, Microsoft's personal representative and Diane Feinstein, Silicon valley's personal representative.
I was wondering about Dorgan and it's good to know he is trying. I was very surprised to see him endorse Obama in the first place.
Who is not there I'm also surprised about, i.e. Jon Tester, Robert Byrd, and Obama's biggest cheerleader, Claire McCaskill.
I was also very surprised by McCaskill's Obamamania for her policy positions are so Progressive/Populist.
I wish they had done this in the primaries and stuck to policy positions.
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