News What are the potential impacts of public confidence on the economy's recovery?

[mheslep]

Debt in absolute terms by 2019 using current Obama-Reid/Pelosi Congress per CBO which works out to nearly 100% of GDP by 2019.

Numbers above match CBO report here
http://www.cbo.gov/ftpdocs/110xx/doc11014/Testimony_Frontmatter_Senate.shtml

 

[Astronuc]

Muni Threat: Cities Weigh Chapter 9
http://finance.yahoo.com/taxes/article/108866/muni-threat-cities-weigh-chapter-9

Just days after becoming controller of financially strapped Harrisburg, Pa., in January, Daniel Miller began uttering an obscure term that baffled most people who had never heard it and chilled those who had: Chapter 9.

The seldom-used part of U.S. bankruptcy law gives municipalities protection from creditors while developing a plan to pay off debts. Created in the wake of the Great Depression, Chapter 9 is widely considered a last resort and filings under it are more taboo than other parts of bankruptcy code because of the resulting uncertainty for everyone from municipal employees to bondholders.

The economic slump, however, is forcing debt-laden cities, towns and smaller taxing districts throughout the U.S. to consider using Chapter 9. As their revenue declines faster than expenses, some public entities are scrambling to keep making payments on municipal bonds. And that is causing experts to worry about the safety of securities traditionally considered low risk.

Oh well.

It's time for a national austerity program. Time to cut state and federal expenses, and probably raise taxes.

 

[mheslep]

Muni Threat: Cities Weigh Chapter 9
http://finance.yahoo.com/taxes/article/108866/muni-threat-cities-weigh-chapter-9



Oh well.

It's time for a national austerity program. Time to cut state and federal expenses, and probably raise taxes.

It's time for an austerity program, but not for everyone. Many states and municipalities are in good shape, have been prudent, including mine. North Dakota, New Mexico, Wyoming have no deficits at all. The federal government needs one, and so do many drunken sailor states and cities. I'm completely opposed to having N.D, N.M. citizens bail out everyone else.

Here's the kind of path I favor, from newly elected Gov. Christy in NJ, who's finances are a disaster.

In total, I am cutting spending in 375 different state programs, from every corner of state government.

I doubt that many will be popular. I will use my executive authority to implement them now, because I must.

Taken as a package, they will achieve the required savings and eliminate our $2 billion budget gap.

Does he plan unfair cuts to government employees? I don't think so:

]One state retiree, 49 years old, paid, over the course of his entire career, a total of $124,000 towards his retirement pension and health benefits. What will we pay him? $3.3 million in pension payments over his life and nearly $500,000 for health care benefits -- a total of $3.8m on a $120,000 investment. Is that fair?

A retired teacher paid $62,000 towards her pension and nothing, yes nothing, for full family medical, dental and vision coverage over her entire career. What will we pay her? $1.4 million in pension benefits and another $215,000 in health care benefit premiums over her lifetime. Is it “fair” for all of us and our children to have to pay for this excess?

http://www.nj.com/politics/index.ssf/2010/02/chris_christies_speech_on_budg.html

 

[Skyhunter]

It's time for an austerity program, but not for everyone. Many states and municipalities are in good shape, have been prudent, including mine. North Dakota, New Mexico, Wyoming have no deficits at all. The federal government needs one, and so do many drunken sailor states and cities. I'm completely opposed to having N.D, N.M. citizens bail out everyone else.

Why?

Every single one of those states receives a lot more federal money than they pay in taxes.

New Mexico gets better than 2 to 1. It is easy to be prudent when someone else is paying your bills.

http://www.taxfoundation.org/taxdata/show/22685.html

 

[mheslep]

Gov. Christie iinterview, excerpt on raising taxes:

Quick: Other people would say raise taxes too, bring in higher revenue and cut spending. Are you going to have to do both?

Christie: No, we're not raising taxes. That's it. Our income tax when it was established in 1977 at 2.5% top rate. Under Governor Corzine, 11% top rate on income tax.

Quick: What about property taxes?

Christie: Property taxes are the highest in the nation.

Quick: You're not raising those either?

Christie: No. We can't. You know, we have had in the last four years under Governor Corzine, study came out, that $70 billion in wealth left the state of New Jersey. And it left it because we are the most overtaxed people in America. So there will be plenty of democrats down if Trenton saying, just raise taxes a little bit more, Governor, just a little bit to get us through this crisis. We've done enough of that already. It is time to get tough and to say no.
[...]
Christie: [...] You just have had an abundance of taxation and everybody always has that same attitude, just raise taxes this time. Well, people are now fed up. What's happening is you see an enormous flight from our state. Even if you raise tax rates, revenue continues to go down. Governor Corzine raised tax rate last year. Revenue is down by $2 billion.

http://www.state.nj.us/governor/news/news/552010/approved/20100218a.html

 

[OmCheeto]

too little taxes and too much spending.

http://www.cbo.gov/ftpdocs/110xx/doc11014/MainText_HseVersion.28.1.3.png
percentage of GDP

I'd say it's a classic example of; We have met the enemy...

And I love the fact that the difference for the average is less than 3%.

 

[OmCheeto]

I certainly am having fun with these graphs

Debt added each year since 1977
Green tick marks are party affiliation: +100 = Republican, -100 = Democrat

Here's one that goes back to 1960.

Debt added each year as a percent of GDP.

There must be something magical about that 3% mark that Obama seems to be targeting.



references:
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm"
http://www.cbo.gov/ftpdocs/110xx/doc11014/Testimony_Frontmatter_Senate.shtml"
http://www.bea.gov/national/nipaweb/DownSS2.asp?3Place=N"
http://en.wikipedia.org/wiki/List_of_Presidents_of_the_United_States"

 

[mheslep]

Why?

Every single one of those states receives a lot more federal money than they pay in taxes.

New Mexico gets better than 2 to 1. It is easy to be prudent when someone else is paying your bills.

http://www.taxfoundation.org/taxdata/show/22685.html

Three reasons:
1. Much of that money going back to the states was borrowed, recently nearly half was borrowed. It is not as if all the federal government spending in NM came from the tax payers of other broken budget states like California.
2. http://en.wikipedia.org/wiki/Moral_hazard" , i.e. having NM bail out Ca encourages Ca do more of the same, and worse, in the future.
3. It is not clear to me how much of the federal spending labelled as spent in a state such as NM actually ends up back in the hands of taxpayers of that state. Large chunks of that money are allocated, for instance, to sprawling military bases in NM, Wy, etc. Certainly some of that military base spending works its way into the local economy. However, it is unclear how much money spent from the Kirkland AFB budget to buy, say, a http://www.renewableenergyworld.com/rea/news/article/2008/06/sandia-kirtland-air-force-base-eye-30-mw-wind-farm-52590" made in NY or Fl is actually returned to NM.

 

[Ivan Seeking]

[cover] America's Back! The Comeback Country[/cover]

How America pulled itself back from the brink—and why it's destined to stay on top.

In the wake of the 2008 financial meltdown and the deep, long recession that followed, the decline of America has become the preferred intellectual preoccupation of the elite—left, right, and center. Joseph Stiglitz, the Nobel-winning economist, has argued that the Obama administration's tepid response to the recession and the financial meltdown will sandbag the U.S. recovery. Historian Niall Ferguson has made the case that high debt and profligate spending will cause the downfall of a once mighty empire. Harvard economist Ken Rogoff frets that the U.S. could become the next Greece. In January, French President Nicolas Sarkozy, once dubbed l'Americain, delivered a blistering speech at the World Economic Forum in Davos that criticized the U.S.-led model of global capitalism...

http://www.newsweek.com/id/236190

Dan Gross [Newsweek writer] explains the headline
http://www.businessinsider.com/henry-blodget-americas-back-2010-4

 

[mheslep]

[...]So what accounts for the pervasive gloom?

One or two people might be having a hard time dealing with unemployment and foreclosures:

o http://www.bls.gov/news.release/empsit.nr0.htm". 50,000 census worker hirings does not hold out much of long term improvement prospect.

o http://www.forbes.com/2010/02/26/real-estate-advisor-personal-finance-housing-defaults.html"

Edit: The interview with the author sounds much, much more reasonable than the article itself. Most of the hyperbole of the article is absent in the interview. Sounds like some heavy editing afoot.

 

[CRGreathouse]

Versions of graphs already posted

mheslep, do you have one that shows debt as a percentage of GDP?

OmCheeto, do you have one that shows which party controlled Congress?

 

[mheslep]

mheslep, do you have one that shows debt as a percentage of GDP?...

http://www.cbo.gov/ftpdocs/110xx/doc11014/Testimony_Frontmatter_Senate.shtml

Those accumulating deficits will push federal debt held by the public to significantly higher levels. At the end of 2009, debt held by the public was $7.5 trillion, or 53 percent of GDP; by the end of 2020, debt is projected to climb to $15 trillion, or 67 percent of GDP. With such a large increase in debt, plus an expected increase in interest rates as the economic recovery strengthens, interest payments on the debt are poised to skyrocket.

While the CBO has the debt up 2.3X in absolute terms from 2008 ($6T) to 2019 (14.2T) in accordance with the graph I referenced in https://www.physicsforums.com/showpost.php?p=2586793&postcount=241", they also forecast GDP will increase $14T to $22T, resulting in this

http://www.cbo.gov/ftpdocs/110xx/doc11014/MainText_HseVersion.28.1.2.png

I'm good with plotting debt as a % GDP for the past. The problem with using the ratio into the future is the mismatch in uncertainties. The spending on entitlements is very likely to occur in my view, as spending is under the control of the government. GDP, on the other hand, is not under the control of the government.

 

[Ivan Seeking]

I'm good with plotting debt as a % GDP for the past. The problem with using the ratio into the future is the mismatch in uncertainties. The spending on entitlements is very likely to occur in my view, as spending is under the control of the government. GDP, on the other hand, is not under the control of the government.

That may be, but but the CBO was clearly comfortable making the prediction of 60+%. At the end of WWII, we stood at 122%. So much for the "never been here before" nonsense from the right.

 

[OmCheeto]

mheslep, do you have one that shows debt as a percentage of GDP?

OmCheeto, do you have one that shows which party controlled Congress?

Gulp. mheslep beat me to the graph competition...

http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm"
Orange(congress) and green(president) low are Democrat, high is Republican.

There seems to be no correspondence between added debt load and congressional control.

I'm afraid I'm either a paranoid schizophrenic, ie, the Republicrats have been controlling my mind for the past 50 years, or, we just live in a very dynamic world.

I still think we are our own worst enemy. Who can't afford an additional 3%?

As as moderate democrat, I do give kudos to the Pubs for not letting us become France.

Can't believe I said that. We do like your statue, we do like your statue. :)

 

[CRGreathouse]

Thank you both, OmCheeto and mheslep; these graphs were helpful for me.

I still think we are our own worst enemy. Who can't afford an additional 3%?

Once there was concern that there would not be enough low-risk paper around if the US government paid down its debt. I don't think that's a problem at present.

So assuming it is not (a proposition I would be glad to hear arguments on, either way), why would it be beneficial except in the short term for the US government to run large debts? I understand the "we must stop the Axis powers"-type emergency spending, as well as the Keynesian "we must pump money into the sagging economy"-type spending. But supposing that neither applies (surely not the former, and with good fortune not the latter, at least soon enough), I don't see why debt would be preferred.

 

[mheslep]

That may be, but but the CBO was clearly comfortable making the prediction of 60+%. ...

Yes. <shrug>

 

[Ivan Seeking]

Today the Dow is at 11,100+. As the crisis unfolded, we dropped from I think about 14,400, to 6500, with the low in March of '09. The market has recovered about 60% of the losses. Does anyone know how much wealth has been created by the market since we hit bottom, in dollars?

 

[mheslep]

Today the Dow is at 11,100+. As the crisis unfolded, we dropped from I think about 14,400, to 6500, with the low in March of '09. The market has recovered about 60% of the losses. Does anyone know how much wealth has been created by the market since we hit bottom, in dollars?

http://www.wilshire.com/Indexes/Broad/Wilshire5000/Characteristics.html" , world wide market capitalization of all publicly traded companies was ~$50 trillion in 2007, probably peaked at $55-60 trillion in 2008.

 

[Astronuc]

One of every five men 25 to 54 isn't working.

http://finance.yahoo.com/career-work/article/109471/meet-the-unemployable-man

Even more alarming, the jobs that many of these men, or those like them, once had in construction, factories and offices aren't coming back. "A good guess…is that when the economy recovers five years from now, one in six men who are 25 to 54 will not be working," Lawrence Summers, the president's economic adviser, said the other day.

This is not one of the many things that can be blamed on subprime lending, inept regulators or Goldman Sachs. "The Great Recession has reinforced prevailing labor market trends that were under way long before the recession," David Autor, a Massachusetts Institute of Technology economist, observed in a recent paper commissioned by two Democratic-leaning think tanks, the Center for American Progress and the Hamilton Project.
. . . .

But then, the economic base of US consumerism is and has been steadily eroding.


http://www.nytimes.com/2010/05/07/business/07evict.html

Nearly four million households nationwide are severely delinquent on their mortgages, the biggest backlog since the housing crisis began. As more and more of the homes edge toward repossession — a record quarter of a million were seized by lenders in the first three months of this year — agents like Mr. Laubinger are trying to coax people out.

 

[OmCheeto]

But at least the graph is still going in the right direction:

[PLAIN]http://my.barackobama.com/page/smartproxy/www.barackobama.com/images/issues/economy/chart-480w-jobs-20100507.jpg

Haha! I just did the math. If the graph continues linearly, we'll have zero unemployment by October of next year.

Ah! Hahahahaha!

I think i have too much fun with graphs.

Someone might want to check my math and numbers.
These are just rough guestimates, so NO nit-picking!
Jan 2, 2009 -> 750,000 job losses a month, unemployment at 12.8 million
Apr 2, 2010 -> 290,000 job gains a month
m=2284
b=-750,000
y=mx+b, where y is employment change per month and x is days since Jan 2, 2009

 

[OmCheeto]

On the other hand, the 18% gain in my stocks as of last Monday, is all gone.

Mon Tue Wed Thur Fri

At this rate, my entire portfolio will be at zero in 27 days.

Graphs suck...

 

[Astronuc]

Unemployment Pushes Workers Into Early Retirement
http://www.npr.org/templates/story/story.php?storyId=126314707

For some older Americans who lost jobs in the Great Recession, Social Security is filling the void left when unemployment benefits run out.

The Social Security Administration had predicted there would be a 15 percent increase in retirement applications last year as baby boomers reached retirement age. Instead, the increase was 20 percent.

"That's a significant amount," says Jason Fichtner, chief economist at the Social Security Administration.

Filing For Early Retirement

Fichtner says you might expect fewer people to retire early after the beating so many 401(k)s took when the markets crashed.

"But we also see that there are those people who at age 62 or 63 might have lost their jobs and find it harder to find new employment and decide to take retirement benefits earlier," says Fichtner. "On net, there seems to be more people filing for early benefits than delaying."
. . . .

A financial advisor informed me that she and others are expecting another dip or crash in five years. I would expect it sooner. The only reason that the economy 'recovered' is the Federal spending. Take away the $1.6 trillion deficit, and there is no recovery. Chronic deficit spending is not a viable plan.

For Baby Boomers, The Job Market's Even Worse
http://www.npr.org/templates/story/story.php?storyId=126426518

May 2, 2010 During this recession, the unemployment rate hit the highest level ever recorded in the post-World War II era for workers 55 and older. Many are giving up, declaring themselves retired and collecting Social Security. That could make things tough for the federal budget.
. . . .
For many baby boomers, the labor market remains especially tough. In this recession, the unemployment rate for people 55 and older hit 7.2 percent, the highest level ever recorded in the post-World War II era for workers in this age group.

Although the jobless rate is lower for older workers than the overall population, the duration of unemployment is much longer. Among unemployed people over age 55, the average length of time out of work exceeds 35 weeks. For unemployed workers who are 25 to 54 years old, the time out of work averages just over 30 weeks.

 

[russ_watters]

A financial advisor informed me that she and others are expecting another dip or crash in five years. I would expect it sooner. The only reason that the economy 'recovered' is the Federal spending. Take away the $1.6 trillion deficit, and there is no recovery. Chronic deficit spending is not a viable plan.

You guys are talking about different things. The country tends to have recessions every 6-10 years except in the case of a double-dip recession, which follows closely after the previous recession and is closely related to it. Your advisor is talking about the next recession in the cycle, you're talking about a double-dip.

I would tend to agree that a double-dip is a significant possibility. Logic would dictate that the current level of deficit spending can't be sustained, but fiscal policy isn't necessarily based on logic, so it is tough to know for sure if we'll see major drops in federal aid in the next year. If we do see a drop in federal aid, I think there is a decent probability of a double-dip. If federal aid keeps getting boosted/extended, we'll just see a worse recession when the next one comes in 5-9 years. That's 5-9 instead of 6-10 because we've probably been out of official "recession" for about a year unless the definition gets changed again. Either way, the NBER hasn't made its announcement yet.

 

[Astronuc]

You guys are talking about different things. The country tends to have recessions every 6-10 years except in the case of a double-dip recession, which follows closely after the previous recession and is closely related to it. Your advisor is talking about the next recession in the cycle, you're talking about a double-dip.

I would tend to agree that a double-dip is a significant possibility. Logic would dictate that the current level of deficit spending can't be sustained, but fiscal policy isn't necessarily based on logic, so it is tough to know for sure if we'll see major drops in federal aid in the next year. If we do see a drop in federal aid, I think there is a decent probability of a double-dip. If federal aid keeps getting boosted/extended, we'll just see a worse recession when the next one comes in 5-9 years. That's 5-9 instead of 6-10 because we've probably been out of official "recession" for about a year unless the definition gets changed again. Either way, the NBER hasn't made its announcement yet.

I believe she was referring to the second dip of the current economic cycle, i.e., double dip, or dip related to the recent down turn. I'm not sure the economy has 'recovered'. More likely it temporarily stopped plummeting.

I don't think the NBER or any other federal institution is going to say - Ah, we're going to have another downturn (or severe downturn). They would be blamed for a self-fulfilling prophesy. I'm sure those involved would rather wait and let it happen, and then claim, as wallstreeters (e.g., Jimmy Cayne) recently did, it was those 'market forces'.

Cayne Blames Market Forces for Bear Stearns Collapse
http://www.businessweek.com/news/2010-05-05/cayne-blames-market-forces-for-bear-stearns-collapse-update2-.html

 

[OmCheeto]

Today the Dow is at 11,100+. As the crisis unfolded, we dropped from I think about 14,400, to 6500, with the low in March of '09. The market has recovered about 60% of the losses. Does anyone know how much wealth has been created by the market since we hit bottom, in dollars?

And today it sits at 10,380.
I was curious when the http://www.investopedia.com/terms/p/profittaking.asp" was going to start.
Still though, there are a lot of bargains out there.
I'm still bullish.

Cayne Blames Market Forces for Bear Stearns Collapse
http://www.businessweek.com/news/2010-05-05/cayne-blames-market-forces-for-bear-stearns-collapse-update2-.html

Can anyone explain the following to me:

Alan Schwartz, who succeeded Cayne as CEO and negotiated Bear Stearns’s fire sale to JPMorgan, agreed with Cayne that there were “some very unnatural trades” by investors betting against the firm. When Bear Stearns’s shares were trading for about $75, there were requests for options to buy them at $20, Cayne told the commission.

Does this mean that "those with best perception" knew the stock wasn't worth $75?

And is there a listing of "requests for options to buy" somewhere? That would really come in handy knowing what insiders think stock prices should be.

Versus the computers of course:

http://cnmnewsnetwork.com/112459/accenture-stock-nyse-acn-01-glitch-and-canceled-trades/"
Accenture Stock: NYSE:.ACN $.01 Glitch and Canceled Trades.
Yesterday we reported about an unprecedented 1,000 point drop in the stock market. The cause was a trading error that sent the whole system in a tail spin. Because of the glitch, Accenture stock dropped to less than a penny a share.

How much less? One-one hundredth of a penny. That means that a relatively small investment in the company at the time of the drop would yield millions of profit.

$1800 invested would have yielded $720,000,000.
In just a few minutes.

My commodities brokerage buddy said Thursday afternoon that the "fat finger" incident might taint the average persons perception of the market, and he predicted the market would go down again on Friday because of it.
He also mentioned that the 1000 drop corresponded to a financial loss greater than the debt of the nation of Greece.
I found that somewhat amusing, if not totally ironic, given the live coverage analysis of the cause.

 

[russ_watters]

I believe she was referring to the second dip of the current economic cycle, i.e., double dip, or dip related to the recent down turn. I'm not sure the economy has 'recovered'. More likely it temporarily stopped plummeting.

I'm just saying, a "second dip" comes a lot sooner than 5 years later.

From the wiki on it:

A W-shaped recession or "double dip" recession, occurs when the economy has a recession, emerges from the recession with a short period of growth, but quickly falls back into recession.

The Early 1980s recession in the United States is cited as an example of a W-shaped recession. The National Bureau of Economic Research considers two recessions to have occurred in the early 1980s.[4] The economy fell into recession from January 1980 to July 1980, shrinking at an 8 percent annual rate from April to June of 1980. The economy then entered a quick period of growth, and in the first three months of 1981 grew at an 8.4 percent annual rate. As the Federal Reserve under Paul Volcker raised interest rates to fight inflation, the economy dipped back into recession (hence, the "double dip") from July 1981 to November 1982. The economy then entered a period of mostly robust growth for the rest of the decade.

http://en.wikipedia.org/wiki/Recession_shapes#W-shaped_recession

So using the older definition of "recession" being two consecutive quarters of negative GDP growth, there was a 12 month growth period between the two dips of this archetypical example.

In my previous post I said "...unless the definition gets changed again..." because it seems like the definition is shifting to be one of a misery index based definition instead of a GDP based definition, which can shift the start date in one direction or the other depending on what the leading or lagging indicators do. Because unemployment is (usually) a lagging indicator and remains high even as the GDP is growing, the NBER may choose to say we're still in a recession, particularly if we have a second "dip". To the average American, the economy still "feels" bad and it doesn't make a lot of sense to people to say the economy is in an expansion period when they still think it feels like a "recession" - even if that's just because they don't understand the definition.

I don't think the NBER or any other federal institution is going to say - Ah, we're going to have another downturn (or severe downturn). They would be blamed for a self-fulfilling prophesy.

That's not what I meant. I meant by the standard definition, we've been out of the recession for something like a year, but the NBER may be holding back on its announcement that the recession is over because either they are waiting for another dip or because they are shifting the definition.

No, the NBER doesn't make predictions, only judgements about where we've been (on this issue anyway).

 

[Astronuc]

Ordinarily I would agree Russ, but we are in extraordinary times where the US government has undertaken a massive intervention, and just this weekend, the EU has undertaken a similar massive intervention. I these two interventions as simply shifting responsibility for debt, which could blow up in the next few years unless appropriate measures, e.g., reduced borrowing, increased taxation, etc are implemented.

EU creates $1 trillion package to save euro
http://news.yahoo.com/s/ap/20100510/ap_on_bi_ge/eu_europe_financial_crisis

Greek Debt Woes Ripple Outward, From Asia to U.S.
http://www.nytimes.com/2010/05/09/business/global/09ripple.html

Markets Welcome E.U. Rescue Package
http://www.nytimes.com/2010/05/11/business/global/11euro.html

This action introduces yet another nonlinearity and obfuscates the effect/responsibility of 'market forces', which now include actions of regulators.

And why should we trust those who are responsible for 'regulation of commerce'?

Congressional Hypocrites Were Betting Against Stocks As Country Collapsed
http://finance.yahoo.com/tech-ticker/article/477789/Congressional-Hypocrites-Were-Betting-Against-Stocks-As-Country-Collapsed
Provided by The Business Inisder, May 4, 2010:

Remember all that scorn in Congress about evil shortsellers betting against America and bringing the country down?

Well, it turns out Congress-people did it, too. And they used derivatives to do it, which they now say they abhor.

(For the record, we have no problem with shortselling or derivatives, and we find the routine scapegoating of both after market crashes ludicrous. But if you're going to complain about how awful shortselling is and how evil and venal people are for doing it, you should probably abstain from the practice yourself.

And, yes, most of the folks here were just betting against stocks, not actually selling stocks short. But it's the same idea. To use their own tortured, populist logic, they were betting against the country and their 401k-holding constituents!)

Jason Zweig, Tom McGinty, and Brody Mullins in the WSJ:

Congress Refuses to Outlaw Insider Trading For Lawmakers
http://finance.yahoo.com/tech-ticker/article/478701/Congress-Refuses-to-Outlaw-Insider-Trading-For-Lawmakers

Even a cynic can find Washington's hypocrisy shocking at times. The Wall Street Journal reports today a House bill that would force lawmakers to make greater disclosures on financial transactions and disallow them from trading on nonpublic information is going nowhere fast.

That's right. Members of Congress are currently allowed to profit on insider trading!

The bill, which has been languishing in the House for four years, would require elected officials "to make their financial transactions public within 90 days of a purchase or sale" and "prohibit lawmakers from trading in financial markets based on nonpublic information they learn on the job," the WSJ reports.

Those responsible for 'regulating the game' are in the game for personal benefit.

I'd like to see public disclosure of Congress people who benefitted from betting against the markets.

 

[mheslep]

Government owned Fannie Mae announced today it will need another http://money.cnn.com/2010/05/10/news/economy/fannie_earnings/" in bailout, to follow last week's Freddie Mac announcement of another $10 billion. The total now since the federal government seized the quasi-governmental pair is $145 billion, and will continue to grow as far as I can tell.

During the recent Goldman Sachs show trials in Congress the NYT and Washington Post carried the story day after day on the front page, though Goldman now owes the government ~nothing. On today's Fannie announcement the front page of at least WaPo contains no mention of the continued bailout. It is no surprise then that the phttp://banking.senate.gov/public/_files/ChairmansMark31510AYO10306_xmlFinancialReformLegislationBill.pdf" contains no reference what so ever on Fannie/Freddie, despite numerous Republican calls to include a resolution plan.

 

[Astronuc]

Interesting thought.

In Greek Crisis, Some See Parallels to U.S. Debt Woes
http://www.nytimes.com/2010/05/12/business/economy/12leonhardt.html

. . . Yet in the back of your mind comes a nagging question: how different, really, is the United States?

The numbers on our federal debt are becoming frighteningly familiar. The debt is projected to equal 140 percent of gross domestic product within two decades. Add in the budget troubles of state governments, and the true shortfall grows even larger. Greece’s debt, by comparison, equals about 115 percent of its G.D.P. today.

The United States will probably not face the same kind of crisis as Greece, for all sorts of reasons. But the basic problem is the same. Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.
. . . .

At present, there does not appear to be any plans to eliminate the chronic deficits and reduce the debt. That would require significant cuts in spending and/or significant increases in taxation. It would help if the US reduced it's trade deficit(s).

Instead, the can is kicked down the road.

 

[mheslep]

Interesting thought.

In Greek Crisis, Some See Parallels to U.S. Debt Woes
http://www.nytimes.com/2010/05/12/business/economy/12leonhardt.html

At present, there does not appear to be any plans to eliminate the chronic deficits and reduce the debt. That would require significant cuts in spending and/or significant increases in taxation. It would help if the US reduced it's trade deficit(s).

The latter is essentially unrelated to the former government spending deficit problem. Not that it's a recommended way to go but profligate government money printing and spending tends to deflate the currency, increasing exports which reduces trade deficits. Germany, for instance, enjoys these benefits now, thanks to drunken spending by its southern neighbors which depresses the Euro below where it would be, which is one reason Germany is a top exporter (1st or 2nd?). If Germany fell back to the DM it would quickly collapse its exports by making them much more expensive.