Baby Boomers of Mass Destruction
August 11th, 2010Via: Bloomberg:
Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.
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How can the fiscal gap be so enormous?
Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today’s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.
This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.
Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: “Something that can’t go on, will stop.” True enough. Uncle Sam’s Ponzi scheme will stop. But it will stop too late.
And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.
Berkeley: Sensor Package Models Building Interiors
August 11th, 2010Shrink it down so that it fits on the remote controlled cyborg beetle.
Uhh, yeah.
Via: ABC:
Researchers at UC Berkeley have developed a laser backpack that scans its surroundings and creates an instant 3D model.
It can make video games more realistic and buildings more energy efficient. They are driving to discover a model of the whole world.
“Here’s a model of two floors of Corey Hall,” says Professor Zakhor. “This is the fourth floor and this is the third floor.”
It is the first model of an existing building, generated automatically, without human intervention. It is the work of a Cal Berkeley team led by Professor Avideh Zakhor.
Grad student Nicholas Corso dons a backpack brimming with lasers and cameras. As he hikes the hall, the lasers scan everything from floor to ceiling and the cameras capture a panorama.
“The idea,” explains Professor Zakhor, “is that you wear a backpack, you walk inside the building. You’re done. You push a button and out comes this model.”
The model is textured (covered) with the photographs.
Dollar Hits 15-Year Low vs Yen After Fed Move
August 11th, 2010Via: Reuters:
The dollar fell to a 15-year low against the yen on Wednesday as steps taken by the Federal Reserve to revive a faltering U.S. economy pushed U.S. Treasury yields lower.
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The dollar dropped to 84.72 yen JPY= on trading platform EBS, after taking out option barriers at 85.00 and 84.75, in a move fuelled by U.S. two-year Treasury yields hitting a record low.
Californians’ Income Falls for First Time Since WWII
August 11th, 2010Via: Sacramento Bee:
Government statisticians have put a number on Californians’ paycheck pain last year: about $40 billion.
The federal Bureau of Economic Analysis said personal incomes of Golden State workers fell by that amount in 2009 compared with the previous year – the state’s first year-to-year decline since World War II. In the Sacramento region, income was off about $800 million.
White House Press Secretary: Leftwing Critics of Obama ‘Ought to Be Drug Tested’
August 11th, 2010Via: Guardian:
The Obama administration’s most public face, White House press secretary Robert Gibbs, has tried to climb down from angry remarks he aimed at leftwing critics, calling them “crazy”.
In an interview with The Hill newspaper in Washington DC, Gibbs revealed frustration at attacks on the administration from liberal Democrats and others on the left, in terms likely to make relations even worse:
“I hear these people saying he’s like George Bush. Those people ought to be drug tested,” Gibbs said. “I mean, it’s crazy.”
The press secretary dismissed the “professional left” in terms very similar to those used by their opponents on the ideological right, saying, “They will be satisfied when we have Canadian healthcare and we’ve eliminated the Pentagon. That’s not reality.”
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More: Robert Gibbs Attacks the Fringe Losers of the Left
Via: Salon:
You may think that the reason you’re dissatisfied with the Obama administration is because of substantive objections to their policies: that they’ve done so little about crisis-level unemployment, foreclosures and widespread economic misery. Or because of the White House’s apparently endless devotion to Wall Street. Or because the President has escalated a miserable, pointless and unwinnable war that is entering its ninth year. Or because he has claimed the power to imprison people for life with no charges and to assassinate American citizens without due process, intensified the secrecy weapons and immunity instruments abused by his predecessor, and found all new ways of denying habeas corpus. Or because he granted full-scale legal immunity to those who committed serious crimes in the last administration. Or because he’s failed to fulfill — or affirmatively broken — promises ranging from transparency to gay rights.
But Robert Gibbs — in one of the most petulant, self-pitying outbursts seen from a top political official in recent memory, half derived from a paranoid Richard Nixon rant and the other half from a Sean Hannity/Sarah Palin caricature of The Far Left — is here to tell you that the real reason you’re dissatisfied with the President is because you’re a fringe, ideological, Leftist extremist ingrate who needs drug counseling…
Fed to Buy More of Its Own Debt
August 11th, 2010*chortle*
Via: Bloomberg:
Federal Reserve officials decided to reinvest principal payments on mortgage holdings into long-term Treasury securities, making their first attempt to bolster growth since March 2009 to keep the slowing U.S. economy from relapsing into recession.
“The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement in Washington. “To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level.” The Fed retained a commitment to keep its benchmark interest rate close to zero for an “extended period.”
With growth weakening in the second quarter and company job gains in July falling short of estimates, today’s step signals that risks of a downturn have increased enough for the Fed to delay its exit from unprecedented stimulus. Chairman Ben S. Bernanke told Congress last month that the Fed was “prepared to take further policy actions as needed.”
The Fed said it will “continue to roll over the Federal Reserve’s holdings of Treasury securities as they mature.” The reinvestment policy applies to agency debt and agency mortgage- backed securities held by the central bank.
The central bank left the overnight interbank lending rate target unchanged in a range of zero to 0.25 percent, where it’s been since December 2008. High unemployment, low inflation and stable price expectations “are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” the Fed said, repeating language from every policy meeting since March 2009.
Student-Loan Debt Surpasses Credit Cards
August 11th, 2010Bubble, bubble, toil and trouble: Look at overall inflation vs. college education inflation.
Via: Wall Street Journal:
Consumers now owe more on their student loans than their credit cards.
Americans owe some $826.5 billion in revolving credit, according to June 2010 figures from the Federal Reserve. (Most of revolving credit is credit-card debt.) Student loans outstanding today — both federal and private — total some $829.785 billion, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.
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But student loan debt, in many ways, is different than credit-card debt. These loans typically can’t be discharged in bankruptcy.
Elizabeth Warren Uncovered What the Government Did to ‘Rescue’ AIG, and It Ain’t Pretty
August 10th, 2010Unless the AIG imbroglio is untangled, the rest of this is nonsense.
Here’s another one for your voluminous Captain Obvious file.
Via: Alternet:
The government’s $182 billion bailout of insurance giant AIG should be seen as the Rosetta Stone for understanding the financial crisis and its costly aftermath. The story of American International Group explains the larger catastrophe not because this was the biggest corporate bailout in history but because AIG’s collapse and subsequent rescue involved nearly all the critical elements, including delusion and deception. These financial dealings are monstrously complicated, but this account focuses on something mere mortals can understand—moral confusion in high places, and the failure of governing institutions to fulfill their obligations to the public.
Three governmental investigative bodies have now pored through the AIG wreckage and turned up disturbing facts—the House Committee on Oversight and Reform; the Financial Crisis Inquiry Commission, which will make its report at year’s end; and the Congressional Oversight Panel (COP), which issued its report on AIG in June.
The five-member COP, chaired by Harvard professor Elizabeth Warren, has produced the most devastating and comprehensive account so far. Unanimously adopted by its bipartisan members, it provides alarming insights that should be fodder for the larger debate many citizens long to hear—why Washington rushed to forgive the very interests that produced this mess, while innocent others were made to suffer the consequences. The Congressional panel’s critique helps explain why bankers and their Washington allies do not want Elizabeth Warren to chair the new Consumer Financial Protection Bureau.
The report concludes that the Federal Reserve Board’s intimate relations with the leading powers of Wall Street—the same banks that benefited most from the government’s massive bailout—influenced its strategic decisions on AIG. The panel accuses the Fed and the Treasury Department of brushing aside alternative approaches that would have saved tens of billions in public funds by making these same banks “share the pain.”
Bailing out AIG effectively meant rescuing Goldman Sachs, Morgan Stanley, Bank of America and Merrill Lynch (as well as a dozens of European banks) from huge losses. Those financial institutions played the derivatives game with AIG, the esoteric practice of placing financial bets on future events. AIG lost its bets, which led to its collapse. But other gamblers—the counterparties in AIG’s derivative deals—were made whole on their bets, paid off 100 cents on the dollar. Taxpayers got stuck with the bill.
‘Buy and Bail’
August 10th, 2010Via: Bloomberg:
Harvey Collier, a mortgage broker in Fort Lauderdale, Florida, says he gets as many as 10 calls a month from people planning to default on their loans. The twist: They first want financing to buy another home.
Real estate professionals call it “buy and bail,” acquiring a new house before the buyer’s credit rating is ruined by walking away from the old one because it’s “underwater,” or worth less than the mortgage. It’s an attempt to escape payments on a home whose value may never recover while securing a new property, often at a lower price with a more affordable loan.
The practice, which constitutes fraud if borrowers lie on loan applications, is continuing even after Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, beefed up standards to prevent it, according to brokers such as Collier and Meg Burns, senior associate director for congressional affairs and communications at the Federal Housing Finance Agency. Whether driven by greed or desperation, the persistency of buy and bail underscores the lingering impact of the worst housing crash since the Great Depression.
“People were holding on, hoping the market would turn around,” Collier, who won’t work with applicants who intend to go into foreclosure, said in a telephone interview. “But now they’re giving up because there’s no light at the end of the tunnel in places like Florida.”
Google Raided by Korea Police in Probe of Street View
August 10th, 2010Via: Bloomberg:
South Korean police raided Google Inc.’s Seoul office as part of an investigation into possible breaches of privacy laws resulting from the company’s collection of data for its Street View mapping service.
Law-enforcement officials confiscated materials from Google in a raid today and will ask the company to surrender all data that may have been collected illegally from late last year until May, the Korean National Police Agency said in a statement. Google said it will cooperate with the investigation.
The Korean authorities follow investigations in Europe and the U.S. over Google’s data collection. The probes began after the company said in May that it had mistakenly gathered wireless Internet data while photographing residential streets worldwide.
“We will cooperate with the investigation and answer any questions they have,” Google said in an e-mail.
