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- I.M.F. Warns Wealthiest Nations About Their Debt
- The Most Important Chart of this Century
- Economics Focus: It Wasn't Us
Economy
I.M.F. Warns Wealthiest Nations About Their Debt (jdargis)
In a speech at the China Development Forum in Beijing, the I.M.F. official, John Lipsky, who is the deputy managing director, offered a grim prognosis for the world’s wealthiest nations, which are at a level of indebtedness not seen since the aftermath of World War II.
For the United States, “a higher public savings rate will be required to ensure long-term fiscal sustainability,” Mr. Lipsky said.
The Most Important Chart of this Century (Hucklejohn)
Last year we spent just under $400 billion on interest on our current debt, plus we spend another $1.5 Trillion buying down rates via Freddie, Fannie, and Quantitative Easing. That’s $1.9 Trillion spent on interest, most of which wound up in the hands of the central banks and their surrogates. Compared to our $2.2 Trillion in income, interest expense last year nearly took it all. That means that nearly all your productive effort used to pay Federal taxes last year were transferred to the central banks.
Economics Focus: It Wasn't Us (jdargis)
Mr. Greenspan’s analysis of the fragilities within finance, and his specific proposals, echo today’s policy consensus. The one area where he differs from the reform consensus is over the wisdom of a “systemic regulator”. Today’s policymakers see such a regulator, which would monitor the health of the financial system and sniff out incipient problems, as an important improvement. Mr Greenspan says it is impossible to anticipate crises and regards such a regulator as “ill-advised”.
Please send article submissions to: dd@chrismartenson.com
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"The Senate budget committee has taken the first step toward passing half of the state’s massive burden for teacher pensions onto local governments, as part of the budget it voted to send to the Senate floor on Monday.
The Budget and Taxation Committee approved language Friday that would begin moving the pension obligations to local governments next year. Nothing would change in the fiscal 2011 budget now being reviewed, but the move could shift nearly $338 million to counties within five years. The state now pays for all teacher pensions.
All told, the committee reduced nearly $120 million from Gov. Martin O’Malley’s proposed budget. Over the next five years, however, the changes are expected to cut about $1 billion in state spending obligations. That could likely cut in half long-term budget deficits of over $2 billion that the budget staff is projecting."
"BEIJING (AP) -- China's commerce minister warned the United States on Sunday against imposing trade sanctions over Beijing's currency controls, and said his country was likely to report a trade deficit in March."
"Asked what measures China would adopt if the Treasury Department declared it a currency manipulator, Chinese Commerce Minister Chen Deming said China would not sit idly by and reiterated Premier Wen Jiabao's statement a week ago denying that the yuan was undervalued.
"If (the Treasury Department's) reply is accompanied by trade sanctions and trade measures, we will not ignore it," Chen said. "If it is followed by any international legal lawsuit against China, we will take them on.""
"What We're Looking At
All this week, NPR will be looking at the nation's looming pension crisis."
Playing Catch Up
This table shows how many years it would take for each state to make good on its pension promises if it spent all its tax revenue on pensions -- and nothing else.
How many years would it take for each state to make good on its pension promises if it spent all its tax revenue on pensions, and nothing else? In 2007, every state had some catching up to do. Since then, pension assets for some funds may have recovered, but liabilities have also grown. -->
"Audio for this story from Weekend Edition Sunday will be available at approx. 12:00 p.m. ET"
"The small town of Westfall in Pike County this month quietly became the first municipality in Pennsylvania to declare bankruptcy.
It might not be the last.
"A train wreck is coming, and, because of my position, I think it's my duty to alert people," said George Cornelius, secretary of the state Department of Economic and Community Development. "Some of these municipalities may get into a situation where they have no choice; bankruptcy is the only option left."
Cash-strapped municipalities suffering from the industrial decline, population loss and overwhelming tax increases common in the Rust Belt face a "downward spiral," Cornelius said. He wouldn't single out cities but said a major reason is that Pennsylvania is bloated with local governments and many resist cutting costs through government consolidation with neighbors."
"LOS ANGELES -- Shomari Jennings was willing to pay the $70 ticket he received for driving without a seatbelt, but not the slew of tacked-on fees and penalties that ballooned the cost more than tenfold.
Every $10 of his base fine triggered a $26 "penalty assessment" for courthouse construction, a DNA identification program, emergency medical services and other programs. Other fees ranged from $1 to $35.
"It's the new tax," Jennings, 30, complained while waiting in traffic court to contest a staggering bill compounded by a $500 fine for missing a court date.
And motorists can only expect more of the same as cash-strapped cities and states consider measures ranging from expansion of red-light camera systems to charging drivers for cleanup after accidents."
"Virginia businesses will see at least a $32 per employee increase in the tax they pay to fund unemployment benefits in 2010, part of an effort to replenish the state’s bankrupted benefit trust fund.
The state fund ran out of money in October after a year of rising unemployment and layoffs, officials said. That forced the state to borrow an estimated $1.26 billion from the federal government to continue paying unemployment benefits. The trust fund started 2009 with a $546.7 million balance and ended with an estimated $178.5 million deficit.
“We paid a whopping amount more in benefits last year, with more than 500,000 new applications for unemployment benefits compared to about 320,000 in 2008,” said Don Lillywhite, of the Virginia Employment Commission. “Depending on the experience rating — how many claims have been made against an employer averaged over the past four years — the taxes could be from $46.40 per employee to $534.”"
"As local lawmakers brace for yet another round of budget cuts to make up for chronic shortfalls trickling down from Sacramento, some are pointing to burgeoning public pension liabilities as a looming financial disaster.
Over the past decade, California's unfunded public pension and health care liability has soared from zero to nearly $60 billion, and experts warn that unless costs are cut and policies change, that number could increase dramatically in coming years."
"California's fund, for example, had assets equal to 118 percent of its liabilities in 1999. In 2008, however, its assets equaled only 89 percent of its liabilities, according to a February study by the Pew Center on the States.
To keep that number from rising, the state must contribute approximately $12.4 billion a year to its retirement fund. "
"The following outlines some of the biggest changes:
INDIVIDUAL MANDATE: The Senate bill requires all Americans to get health insurance or pay a penalty. Under the reconciliation bill, individuals who don’t purchase insurance would be subject to a fine of $325 in 2015 and $695 in 2016, compared with $495 and $750 in the original Senate bill. Individuals may be subject to a charge equal to as much as 2.5 percent of their income in 2016, if the total is greater than the flat payment, a change from 2 percent in the Senate version. "
"Washington Crossing Historic Park in suburban Philadelphia, where Washington and his troops launched their 1776 Christmas night attack across the Delaware River on Hessian troops in Trenton, N.J., has been closed — a casualty of Pennsylvania's spending cuts."
""It's possible that there are nations that won't be able to deal with their debt," said Koehler, who headed the IMF until stepping down in 2004 to run for the largely ceremonial post of German President.
"That's why it's time to start thinking the unthinkable," Koehler added. "We need an orderly insolvency process not only for companies but also for nations."
There was a risk of chaos if a nation were to become insolvent. "That's why we needed an orderly process -- so that everyone knows what the rules are.""
Some homeowners facing the prospect of repeated foreclosures
German C-Banker: Greece Should Consider Insolvency
Vacant office buildings dot Portland suburban areas
Climbing costs 'not feasible' with Modesto's money woes
State budget's balancing tool: fee increases (Virginia)
Credit Suisse restricts bankers' travel to Germany (1,100 tax evasion probes)
US states sue EPA to stop greenhouse gas rules (At least 15 U.S. states)
Hucklejohn excellent link, The most Important Chart of this century thank you, as Davos says Nathan's Econ Edge seems to be right on the raw nerve of the stark truth all the time. This is another excellent and sobering wake-up call. Good post, good read. I'd like to quote the whole article, but read it yourselves.
Exponential hockey sticks all over the place, and all on govt data !!!
"....In just the month of February [2010] , for example, our nation took in $107 billion, but spent $328 billion, a $221 billion shortfall. That one month shortfall exceeds all the combined shortfalls of the entire Nixon Administration – one month."
or
"This is like an individual earning $5,000 but spending $15,000 a month. Would you lend your money to such an individual?"
Why that's more than I spend on trimming my moustach.
Groucho
I think the "The Most Important Chart of this Century" should be included in Monday's daily digest also, very good read.
I think the "The Most Important Chart of this Century" should be included in Monday's daily digest also, very good read.
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Hello Saxplayer, just to let you know,
The german C banker Thilo Sarrazin, correctly quoted with saying: "greece should consider insolvency " is notoriously famous in germany for making politically incorrect statements.
While i think a democracy has to be able to accept characters like Mr. Sarrazin, his incorrectness at times perfectly disturbs the ever so smooth partypolitic-democracy-apparatschiks, who hate nothing more than beeing disturbed in their righteousness, one should know that there are´nt too many people in germany who would give Mr. Sarrazin any credit or take him serious.
kind regards from germany and many thanks for the superb work you are doing.
Michael
PS: How is the "famous alto break" coming along though?
In case you missed it yesterday, point-by point rebuttal on "The Story of Stuff"
http://www.youtube.com/watch?v=c5uJgG05xUY
In case you missed it yesterday, point-by point rebuttal on "The Story of Stuff"
http://www.youtube.com/watch?v=c5uJgG05xUY
Wow, that's even funnier than the original... :) Man, we are surrounded by crackpots and that's not a joke
Samuel