How to ease state fiscal debt woes. LISTENING, MARK DAYTON ??

In Open Letter to Jerry Brown, in San Diego's La Prensa, comments were made by the asst. director of AFSME.  After an introduction to the demise of the California golden way of life,Willie L. Pelote, Sr., points out several great schemes to end the "deficit" without raising taxes.  I have added numbers to highlight the strategies:

   One way is for California to (1) close the loopholes in its tax code and (2) to require stricter oversight of all the state’s tax subsidy programs like the failed enterprise zone program to ensure that our tax dollars are spent wisely.
   We should also (3) repeal those tax breaks recently handed out to Comcast, Swiss pharmaceutical giant Roche, and Hollywood film studios for the ostensible purpose of creating jobs.
   This is because these companies have done nothing but ship more jobs out of California and lay off more people.
   According to an article by the San Francisco Chronicle’s Washington correspondent Carolyn Lochhead, closing California’s tax loopholes would result in annual budget surpluses for some time to come.
   If the free market is really as ideal a mechanism for creating wealth as its supporters claim, then why must taxpayers subsidize the operations of private sector companies?
   In fact, since the private sector has so far been unwilling or unable to produce the kinds of jobs we need to pull California out of recession, that is all the more reason to be vigilant with our tax dollars.
   The state should also (4) stop paying private contractors more than $34 billion a year to do jobs that civil servants can perform for roughly half the cost.
   A 2009 analysis by the State Compensation Insurance Fund and California Research Bureau found that it generally costs the state 50 percent more to hire private contractors than to have state employees perform the same work.
   Finally, since most of our tax dollars over the past two years have been spent on unpopular bailouts of the banks and financial institutions that caused the Great Recession we are all living through, this means that the budget deficits we’ve incurred at the federal and state level were brought on by Wall Street.
   California should, therefore, (5) institute a surcharge on financial service transactions like stock trades to make sure that Wall Street, not Main Street, bears the cost of cleaning up this economic mess.
   Going forward, we must be steady in our commitment to maintaining a high quality of life through quality public services provided by highly skilled, educated, and experienced civil servants while repudiating austerity measures that will transform greater swaths of the Golden State into a Third World nation.

Willie L. Pelote, Sr. is an Assistant Director of the American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO.

17 National Debt Statistics Which Prove That We Have Sold Our Children And Grandchildren Into Perpetual Debt Slavery

17 National Debt Statistics Which Prove That We Have Sold Our Children And Grandchildren Into Perpetual Debt Slavery

What we have done to future generations over the past 30 years is absolutely criminal. 30 years ago the U.S. national debt was a bit under one trillion dollars, and at that time it was considered a huge national crisis. Today, the national debt is 14 times larger and the years ahead look absolutely apocalyptic at this point. We have literally sold our children and our grandchildren into perpetual debt slavery. We have accumulated the biggest mountain of debt in the history of the world, and our children and our grandchildren will be burdened with it for the rest of their lives. All of our politicians keep talking about how it is vitally important that we do something about all of this debt "soon", but they just can't seem to stop wildly spending our money. They keep telling us that now is not the time for deficit reduction because it would harm "the economic recovery", but the "right time" for deficit reduction never seems to come along. The national debt statistics in this article are meant to shock you. Hopefully they will shock you enough to actually take action. Up to this point, the vast majority of Americans have been extremely apathetic about the horrific crime that we are committing against future generations.

How would you feel if you found out one day that your parents had run up a million dollars in debt that now you were obligated to pay off?

Would you be absolutely furious?

Of course you would be, and rightly so.

So how do you think future generations will feel about us?

We were once the wealthiest nation on the planet, but we have taken that great inheritance and we have squandered it.

Now we are handing our children and our grandchildren the largest debt the world has ever seen.

How in the world can we do that?

How can we consign our descendants to perpetual debt slavery and still feel good about ourselves?

The America that we have all been enjoying so much today is going to be wiped out by all of this debt.

We have literally stolen the future.

We just had to keep spending more and more and more and more.

The greed of this generation will be remembered for a very, very long time.

The truth is that both political parties are responsible. Both of them have voted over and over and over to keep running up these huge budget deficits.

If you have voted for big spending Democrats at any point over the past 30 years then you have contributed to the problem. If you have voted for big spending Republicans at any point over the past 30 years then you have contributed to the problem.

Now we have reached a point where a horrific financial meltdown is basically inevitable. We are living in the greatest debt bubble in the history of the world, and it is only a matter of time until it bursts.

The following are 17 national debt statistics which prove that we have sold our children and our grandchildren into perpetual debt slavery....

#1 As of December 28th, the U.S. national debt was $13,877,230,355,933.00.

#2 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.

#3 If the federal government began repaying the national debt at a rate of $10 million dollars a day it would take approximately 3,800 years to pay off the national debt.

#4 Today, the U.S. national debt is increasing by roughly 4 billion dollars every single day.

#5 The U.S. government is borrowing approximately 2.63 million more dollars every single minute.

#6 On September 30th, 1980 the U.S. national debt was 907 billion dollars. Just thirty years later, the U.S. national debt is over 14 times larger.

#7 According to a recent U.S. Treasury report to Congress, the U.S. national debt will reach 19.6 trillion dollars in 2015.

#8 It is being projected that the U.S. government will be paying 900 billion dollars just in interest on the national debt by the year 2019.

#9 A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.

#10 The U.S. Congress has raised the federal debt ceiling six times in just the past three years.

#11 The 111th Congress added more to the U.S. national debt than the first 100 U.S. Congresses combined.

#12 The 111th Congress got us into so much new debt that it breaks down to $10,429.64 for each of the 308,745,538 people counted by the 2010 U.S. census.

#13 The U.S. government currently has to borrow approximately 41 cents of every single dollar that it spends.

#14 When you break down the debt that the U.S. government owes to China alone it comes to over $10,000 for every single American family.

#15 If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now. Almost unbelievably, the U.S. government will accumulate well over a trillion dollars more debt in 2011.

#16 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#17 The Congressional Budget Office is projecting that U.S. government debt held by the public will reach a staggering 716 percent of GDP by the year 2080.

But the American people don't want to hear that we have spent decades creating a horrific debt crisis that is not going to be easy to fix. They just want someone to "tweak" a few things and get us back to being the greatest economy on earth. Unfortunately, it is simply not that easy.

Just check out the chart posted below. Our debt is exploding at an almost exponential rate....

But what do you tell a nation that is completely addicted to debt?

On an individual level, it can be a lot of fun to wildly run up credit card debt, but at some point you have to stop and start paying down that debt.

Unfortunately, on a national level we can't even get our politicians to slow down the rate at which our debt is increasing.

Sadly, the chart above does not tell the real story. It is based on fraudulent government accounting. If the government used GAAP accounting (like all public companies on Wall Street must), the numbers would look much worse.

John Williams of Shadow Government Statistics says that if the federal government would have used GAAP accounting standards to calculate the federal budget deficit for 2009, it would have been approximately 8.8 trillion dollars and that there is simply no way out of all this debt....

The government’s finances not only are out of control, but the actual deficit is not containable. Put into perspective, if the government were to raise taxes so as to seize 100% of all wages, salaries and corporate profits, it still would be showing an annual deficit using GAAP accounting on a consistent basis. In like manner, given current revenues, if it stopped spending every penny (including defense and homeland security) other than for Social Security and Medicare obligations, the government still would be showing an annual deficit. Further, the U.S. has no potential way to grow out of this shortfall.

The U.S. government is essentially bankrupt at this point. It is just a matter of playing out the hand.

The rest of the world is starting to realize this, and confidence in the U.S. dollar is beginning to significantly decline.

Things did not have to turn out this way, but Americans did not listen to the warnings and so now this is where we are at as a nation.

The next time you see a small child, look into the hopeful eyes of that child and just think about what we have done to the future of all of our children.

We have obliterated the financial future of this nation. Someone should be put into prison for all this. But instead the mainstream media treats prominent politicians from both political parties like rock stars.

The mainstream media continues to perpetuate the myth that the U.S. economy is on the road to a grand recovery and that eventually we can get a handle on all this debt and that somehow everything is going to be okay.

Well, everything is not going to be okay.

All that is on the horizon is great financial pain, and the sad thing is that it could have all been avoided.

But now the game is over and the day of reckoning is coming soon.

We are going to reap what we have sown. 

CBS 60 Minutes State Budgets Day of Reckoning Pension Crisis City Municipal Governments

Steve Kroft reports on the precarious financial conditions many states are facing — including California — and what they're doing about it:

Market Oracle: Bankers Secret Meeting to Control the World ?

Bankers Secret Meeting to Control the World?

Stock-Markets / Market Manipulation Dec 16, 2010 - 08:26 AM

By: PhilStockWorld

Revisiting the massive global oil scam... Last year, Phil calculated that this $2.5 Trillion dollar operation was 50 times the size of the Bernie Madoff ponzi scheme.  "It's a number so large that, to put it in perspective, we will now begin measuring the damage done to the global economy in "Madoff Units" ($50Bn rip-offs).  That's right - $2.5Tn is 50 TIMES the amount of money that Bernie Madoff scammed from investors in his lifetime, yet it is also LESS than the MONTHLY EXCESS price the global population has to pay for a barrel of oil..." 

 

If you want to know why the powers that be hate the New York Times – read this!

"The Paper of Record," one of the few remaining news entities not controlled by Rupert Murdoch or some other Billionaire or major corporation, still has the guts to tell it like it is as they are actually pointing a finger right at the Gang of 12 (well 9 of them) and those not-so-secret meetings they have been having for years where they sit down and think of new and exciting ways to control the World. It takes a lot of guts to write an article like this, especially one which actually names ICE (I got my ass handed to me with legal BS when I dared mention them in conjunction with the word "manipulation." Fortunately they straightened me out and we now know that clearly there is no manipulation in the energy markets – can I have my Grandma back now?).

Anyway, those fools at the NY Times have thrown caution to the wind without naming specific names using the phrase "giants LIKE JPM, GS and MS" – something I have learned to do as well because, if you don’t – THEY WILL GET YOU! And what are they saying about our friendly Banksters?:

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks. The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available. Banks’ influence over this market, and over clearinghouses like the one this select group advises, has costly implications for businesses large and small,

According to the Times, the marketplace as it functions now “adds up to higher costs to all Americans,” said Gary Gensler, the chairman of the Commodity Futures Trading Commission, which regulates most derivatives. More oversight of the banks in this market is needed, he said. Big banks influence the rules governing derivatives through a variety of industry groups. The banks’ latest point of influence are clearinghouses like ICE Trust, which holds the monthly meetings with the nine bankers in New York.  

Really? Gosh, I had no idea. The ICE people told me that wasn’t true at all. I have many, many pages of correspondence to that effect… “When you limit participation in the governance of an entity to a few like-minded institutions or individuals who have an interest in keeping competitors out, you have the potential for bad things to happen. It’s antitrust 101,” said Robert E. Litan, who helped oversee the Justice Department’s Nasdaq investigation as deputy assistant attorney general. Better say goodbye to Grandma, Mr. Litan…

Critics have called these banks the “derivatives dealers club,” and they warn that the club is unlikely to give up ground easily. The Times points out "Perhaps no business in finance is as profitable today as derivatives. Not making loans. Not offering credit cards. Not advising on mergers and acquisitions. Not managing money for the wealthy."

The secrecy surrounding derivatives trading is a key factor enabling banks to make such large profits and the banks guard that secrecy very closely.  In theory, the Dodd-Frank bill will eliminate much of the abuse that is going on in the derivatives market but already, the newly-elected House and Senate Republicans are looking to turn back to clock, which is apropos because, as Barry Ritholtz points out:  it was the dreaded Commodity Futures Modernization Act that allowed the rampant shadow banking system to develop.

Source: A Secretive Banking Elite Rules Trading in Derivatives by LOUISE STORY, NY Times

Phil

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2010 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2010 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Obama's Bushism: Michael Hudson

By Michael Hudson
December 8, 2010

I almost feel naïve for being so angry at President Obama’s betrayal of his campaign promises regarding taxes. I had never harbored much hope that he actually intended to enact the reforms that his supporters expected – not after he appointed the most right-wing of the Clintonomics gang, Larry Summers, then Tim Geithner, Ben Bernanke and other Bush neoliberals.

But there is something so unfair and wrong that I could not prevent myself from waking up early Tuesday morning to think throujavascript:void(0)gh the consequences of President Obama’s sellout in the years to come. Contrary to his pretense of saving the economy, his action will intensify debt deflation and financial depression, paving the way for a long-term tax shift off wealth onto labor.

In achieving a giveaway that Democrats never would have let George Bush or other Republicans enact, Obama has laid himself open to the campaign slogan that brought down British Prime Minister Tony Blair: “You can’t believe a word he says.” He has lost support not only personally, but also – as the Republicans anticipate – for much of his party in 2012.

Yet Obama has only done what politicians do: He has delivered up his constituency to his campaign backers – the same Wall Street donors who back the Republicans. What’s the point of having a constituency, after all, if you can’t sell it?

[...]

via Obama’s Bushism | Michael Hudson

see

Wall Street’s Pentagon Papers: Biggest Financial Scam In World History – $12.3 TRILLION in taxpayers’ money by David DeGraw (must-read)

Keith Olbermann Special Comment: Obama Turned His Back On His Base + Rachel Maddow: Baseless

The Deadly, Unforeseen Consequences of Social Inequality by Murray Dobbin

Letter to President Obama On Extending Bush Tax Cuts by Ralph Nader

Bernie Sanders: There Is A WAR Being Waged Against The Working Families Of America!

Chris Hedges: The Road to Modern Feudalism

Ireland's "String and Sealing-Wax Fix"; Irish PM Loses Confidence of Own Party; European Sovereign Default Risk Hits All Time High Posted: 23 Nov 2010 11:12 AM PST [Good links - I don't agree with cutting the minimum wage, though.] News in Europe regarding Ireland, Spain, and Portugal is ominous. Credit Default Swaps (CDS) are soaring in Spain and Portugal. European sovereign risk jumped to an all-time high. Lloyds TSB says "Ireland’s debt woes may spread because investors have lost confidence in policy makers". Members of his own party are calling on Irish Prime Minister Brian Cowen to resign. The quote of the day goes to Bill Blain, a strategist at Matrix Corporate Capital LLP in London who said "“Bailouts are nothing but a short-term string-and-sealing-wax fix”. With that let's take a look at some specific news. Zero Confidence in Irish Solution Lloyds says Ireland’s Woes May Spread on ‘Zero Confidence’ “The markets currently have virtually zero confidence that the bailout in Ireland will solve the European crisis even though fiscal austerity measures in both Portugal and Spain have been severe and prima facie, sufficient to ease market concerns,” Charles Diebel and David Page, fixed-income strategists in London, wrote in an investor note today. “With markets effectively in a position to dictate policy, the risk is that the credibility crisis shifts to more sizeable European Union countries and thereby poses a greater risk to the system as a whole,” they wrote. That may also raise “valid questions about the prescriptive policy measures being sufficient to deal with issues of such magnitude.” Credit Default Swaps Soar in Spain, Portugal In spite of the Irish bailout, Spain, Portugal Bank Debt Risk Soars as Traders Look South The cost of insuring Spanish and Portuguese subordinated bank bonds soared as traders of credit-default swaps turned their focus to southern Europe following Ireland’s bailout. Swaps on Portugal’s Banco Espirito Santo SA rose to a record while contracts on Banco Bilbao Vizcaya Argentaria SA, Spain’s second-biggest lender, climbed to the highest in more than five months. The benchmark gauge of European sovereign risk also jumped to an all-time high, while two indexes tied to bank debt surged the most since June. Ireland’s rescue “achieves completely the opposite of what it allegedly tries to achieve, namely to calm markets,” Tim Brunne, at UniCredit SpA said in a report. “Instead, the credit profile of both the sovereign and the impaired financial institutions has been weakened,” the Munich-based strategist wrote. “The disentanglement of the sovereign and the financial sector solvency issue is the pivotal factor to manage the European periphery’s debt problems.” “Bailouts are nothing but a short-term string-and-sealing- wax fix,” Bill Blain, a strategist at Matrix Corporate Capital LLP in London, wrote in a client note. “We into the next stage of the euro sovereign crisis. It’s now a struggle between the political will of the Brussels elites to maintain the euro as is, versus the markets betting they can’t.” Irish Prime Minister Brian Cowen Loses Confidence of His Own Party Members of his Fianna Fail Party may ask Cowen to Resign. Irish Prime Minister Brian Cowen may be asked to resign by some members of his Fianna Fail party as the parliament prepares to pass the country’s 2011 budget, a lawmaker in the party said. “Tonight I’ll be telling him that I’ve lost confidence in you, the public has lost confidence in you and for the sake of the country and the party, give us an indication when you will resign and let us select somebody to lead us into the next election,” Noel O’Flynn told Bloomberg News in Dublin today. “Several members will stand up and ask him to go after the budget” on Dec. 7. Cowen’s position is weakening as he opens formal negotiations with the European Union and the International Monetary Fund over a rescue package to help stabilize the country’s banking system. Fianna Fail lawmakers will meet tonight, a day after the Green Party, Cowen’s junior coalition partners, called for a January election, saying he “misled’ voters over the past two weeks. Ireland Borrowing Costs 5%, Same as Greece Dutch Finance Minister says Ireland to Borrow From EU at Same Rate as Greece Ireland will pay about the same interest rate on emergency loans from the European Union as Greece, Dutch Finance Minister Jan Kees de Jager said. “We agreed that it will take place at about the same conditions and pricing as with Greece,” De Jager said in an interview at the ministry in The Hague yesterday. Ireland will have to pay interest of “about” five percent on the emergency loans, he said. Dilution Concerns Plague Bank of Ireland Over bailout dilution concerns, shares of Bank of Ireland Plunge 31 Percent Bank of Ireland Plc, Ireland’s largest bank, fell to a 20-month low on concern that shareholders will be diluted in any government bailout. Bank of Ireland slid 31 percent to 27 cents at 12:45 p.m. in Dublin trading after dropping 19 percent yesterday. Allied Irish Banks Plc, the country’s second-largest lender, fell 19 percent to 33 cents and Irish Life & Permanent Plc, which has avoided a bailout so far, fell 4.8 percent to 80 cents. “That the banks will be obliged to raise further capital now looks assured,” Emer Lang, an analyst with Dublin-based securities firm Davy, wrote in a note today. “The timing of any increase will hinge on the balance struck between ‘immediate’ additional capital injections and ‘top-ups’.” Rescue Package Set at $114 Billion, 85 Billion Euros The cost of the bailout keeps going up. The original estimate was for a $50 billion bailout. Now, Ireland Said to Need 85 Billion Euros for Rescue European Union officials estimate that a rescue package for Ireland may amount to about 85 billion euros ($114 billion), according to two officials familiar with the talks. The European Commission cited the figure as a preliminary estimate on a conference call of euro-region finance ministers on Nov. 21, said the people, who spoke on condition of anonymity because the talks were private. Of the total, 35 billion euros would be earmarked for banks and 50 billion euros to help finance the Irish government. Contagion is spreading through the euro region as Ireland hammers out an aid package with the EU and the International Monetary Fund to rescue its banking system. Spanish bonds tumbled, pushing the extra yield that investors demand to hold its 10-year debt over German bunds to a euro-era record of 236 basis points. Irish bonds also dropped today. A tip of the hat to Bloomberg for every one of the above links. Ireland at Crossroads Here are my thoughts expressed in Irish PM Dissolves Government; Spanish Banks Face Debt Challenge; Greece May "Shut-Down"; Meaning of "Guarantee"; Should Ireland Ditch the Euro? Ireland is at a major crossroads. The fact that Irish Prime Minister Brian Cowen is willing to step down helps. I agree that Ireland certainly needs reforms. Lowering the minimum wage will help create jobs. So will reducing benefits. Both need to happen regardless of what labour parties might think. However the biggest job creation effort will come from Ireland telling the ECB and IMF to stuff it. There is no reason Irish citizens should have to pay back the foolish guarantees made by Brian Cowen. Cowen will be gone soon enough, and the next PM can and should have different thoughts about the meaning of "guarantee". German Chancellor Angela Merkel last month called for bondholders to foot more of the bill of European bailouts. I agree. It's time to hold her to her word. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com

Fiscal Crisis (CONT'D): Shamus Cooke's analysis and solution (blunt and good)

Who's Behind The Deficit Crisis 

By Shamus Cooke

22 November, 2010
Countercurrents.org 

From the U.S. to Europe media and politicians are singing the same tune: "budget deficits must be drastically reduced -- by cutting social programs -- so that global bond investors do not threaten the economy." 

Not since the "war on terror" was announced has government policy been so shrouded in confusion and unanswered questions. In the same way we are not to ask how U.S. foreign policy has angered millions in the Middle East, we must remain equally silent about questioning the recent history behind the current "deficit crisis.”    

When speaking about the U.S. deficit crisis, the media and politicians focus exclusively on Social Security and Medicare, while ignoring the far more important causes resulting from engaging in multiple wars, running a huge defense budget, bestowing extremely generous tax breaks on the rich and allowing corporate taxes to steadily decline. Then, in addition to these factors, the corporate-based Economist broke ranks and told the truth about how the debt exploded as a result of the expensive bank bailouts near the start of the recession: 

"Having spent a fortune bailing out their banks, Western governments [U.S. and Europe] will have to pay a price in terms of higher taxes to meet the interest on that debt. In the case of countries (like Britain and America) that have trade as well as budget deficits, those higher taxes will be needed to meet the claims of foreign creditors." (May 23, 2009).

But who exactly are the bondholders that working people must sacrifice their social programs for? The media would like us to focus exclusive attention on China, and other "foreign" investors. But, as usual, the enemy is closer to home.  

The biggest holder of U.S. debt is the U.S. Federal Reserve. The amount of money the Federal Reserve "loaned" to the U.S. government has skyrocketed during the Great Recession, due in no small part to the multiple bank/corporate bailouts of AIG, Bear Stearns, and other entities.  To this day, the amount of money the Fed has squandered on guaranteeing the bad loans of Wall Street banks remains a state secret, although rumored to be in the trillions of dollars.  

The second largest holder of U.S. debt is a mixed group of U.S. corporate entities, super rich individuals, and other forms of rich investor groups. This group has grown in size since the start of the recession, when they fled from the risky stock market for safer investments in U.S. Treasury debt. The New York Times explains: 

"Bond traders surfed the global liquidity wave, buying up government debt all over the world in the view that, just as most big banks were too big to fail, so were sovereign economies, no matter how crushing their fiscal picture." (December 14, 2009). 

In short, the wealthy people who owned the banks and were bailed out by the U.S. government, used much of their bailout money to buy U.S. Treasury bills (U.S. debt), and are now demanding that their taxpayer-funded investment be made safe by slashing social programs.    

To accomplish this, Social Security and Medicare are being targeted by President Obama's Deficit Commission. Former Federal Reserve chairman Alan Greenspan recently said that the recommendations from Obama's deficit commission were inevitable: 

"The only question is, is it before or after a bond market crisis? Because there's no alternative.” (Rueters, November 14, 2010). 

There is indeed an alternative; many in fact. The most obvious one is that taxes be drastically raised on the wealthy bond holders and other rich individuals. It is extremely revealing that no one in the federal government is discussing this option, as President Obama has quickly surrendered on his promise to undo the Bush tax cuts for the wealthy.  [Italics mine: vas]

The entire discussion over the U.S. deficit reveals that the priorities of President Obama and the Democrats are the same as those of President Bush and the Republicans: the very wealthy first and working people last.  

Unless labor and community groups massively mobilize working people in fighting for a pro-worker solution to the deficit crisis, austerity measures-- like reducing Social Security and Medicare -- will be forced upon us.  

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org ).  He can be reached at shamuscooke@gmail.com 

http://www.economist.com/node/13653915?story_id=13653915 
http://www.nytimes.com/2009/12/14/business/global/14deficits.html 
http://news.yahoo.com/s/nm/us_usa_economy_greenspan

Read and watch the video (43 sec.)

Georgetown U.’s Adam Levitin has become something of a rock star during the foreclosure fraud crisis. He had some of the best and most biting commentary in the Senate Banking Committee hearings on the issue, and he also appeared today at the House Financial Services Committee hearings. And under questioning from Rep. Brad Miller (D-NC), he let loose, and said what everyone has been thinking about the foreclosure crisis. First off, he lamented the fact that we have been holding hearings like this since 2007. “Every year we have another set of hearings, and you can add 2 million foreclosures” to the bottom line. Nothing gets fixed, despite all kinds of documented evidence that the banks and servicers have committed fraud. Levitin’s position is that the servicers should be banned from the loan modification business entirely, because they don’t have any interest in it except as a profit-maximization scheme, and they have massive conflicts of interest that cut against doing right by the borrowers (and even the investors for whom they work). But this was the key moment. Levitin said that we don’t have the full data sets from the servicers, or any comprehensive data to see whether there is a full-on crisis of unclear title and improper mortgage assignment. In other words, we don’t quite know the full extent of the problem. Levitin said, essentially, “The federal regulators don’t want to get info from servicers, because then they’d have to do something about it.” They don’t want to recognize the scope of the problem because it would require them to act. And Levitin in particular singled out the Treasury Department. “The prime directive coming out of Treasury is ‘protect the banks’ and don’t force them to recognize their losses.” That says it in a nutshell, and it was said in open testimony in Congress. I’ll have video of this sometime today. It was a remarkable moment. I don’t see how you can argue with Levitin’s assessment. It’s why most experts are looking to the 50-state Attorneys General investigation to perhaps get to the bottom of the level of fraud. The New York Times downplayed the risk of a quite resolution to that investigation today, as I expected.

The banks, who have been subjected to bad publicity, have played down the investigation and want to see it end as quickly as possible. The state attorneys general, however, say that there is an opportunity to fundamentally change the way banks deal with defaulting borrowers so that more people can stay in their homes by modifying their mortgages, and that they will take the time needed. “The large banks say they are doing everything they can to avoid foreclosure, but that is not the reality on the ground,” said Patrick Madigan, an assistant attorney general in Iowa who is a lead figure in the investigation. “The question is, Why?” Mr. Madigan mentioned some theories, saying any or all could be true: “Is it the fact that the current servicing system was not designed to do large numbers of loan modifications, is it being understaffed, incompetence or the servicers having the wrong financial incentives?”

However, the banks may want to simply buy their way out of the problem with the AGs by setting up a compensation fund. That would be the wrong move. The investigation must dig into every single nook and cranny to expose the fraud, and then radically change the way the modification process works. Criminal and civil penalties should not be out of the question, as well. The banks simply aren’t going to change unless forced to, as Levitin says in this article. And the federal regulators have no interest in doing that at the moment, as Levitin said today in Congress. Maybe we should be asking about their incentives. …just as an aside, take a look at the numbers in this Congressional Research Service survey:

A far greater threat to the broader financial system is the possibility that investors will force financial institutions to buy back hundreds of billions of dollars in soured mortgages, according to a Congressional Research Service report prepared for Thursday’s hearing and obtained by The New York Times. Loan buybacks could shift $425 billion in losses on mortgage-backed securities from the investors that owned them to the banks that helped originate or assemble the securities, according to the report, far more than most estimates floated on Wall Street.

This is why the banks are fighting tooth and nail. It may be the reason for Treasury as well. UPDATE: If you want to check out Julia Gordon’s testimony today before the committee, which was also excellent, here it is. Lots of great stuff in there.

TAGS: FORECLOSURES, FORECLOSURE FRAUD, TREASURY DEPARTMENT, LOAN MODIFICATIONS, REGULATORY AGENCIES,REPURCHASES, STATE AG INVESTIGATION, ADAM LEVITIN

Levitin Addresses Elephant in the Room: Regulators Don’t Want to Fix the Foreclosure Crisis By Susie Madrak RELATED POSTS Recapping Yesterday’s Senate Banking Hearing on Foreclosure Fraud November 17, 2010 As Foreclosure Crisis Deepens, Another Servicer Scam Exposed November 10, 2010 Foreclosure Fraud Hearings Update: Just 21 Second-Lien Mods in HAMP November 18, 2010 State Foreclosure Fraud Investigation Includes 49 Attorneys General (Now 50) October 13, 2010 As Bank-Imposed Foreclosure Suspensions Continue, Criminal Investigations Offer Leverage for Loan Mod Deal October 13, 2010

6 Million Benefit-Paying Jobs Vanish in One Year! (Mish Shedlock)

Perhaps I should start a seperate economics (hick!) blog ??

Well, no not really, but the hits just keep on a coming and some stuff is just too precious NOT to post. I don't politically always agree with Mish Shedlock 100% but his data is more than always impressive.

In light of the coming prescribed cuts in social security, consider these following FACTS !!

(and thanks Mish. More great ammo. Ain't that economic stimulus propoganda just stunning?)

6 Million Benefit-Paying Jobs Vanish in One Year!

Posted: 17 Nov 2010 02:05 AM PST

Analysis of weekly unemployment data and covered employees shows that 5,977,844 benefit-paying jobs have been lost in the last year.

click on chart for sharper image

The above chart is from reader Tim Wallace. I added the date and numeric annotations. Thanks Tim!

Covered Employment Stats of Merit

• Covered employment is back to 2004 levels.
• Close to 6 million benefits paying jobs have vanished in a year.
• Over 8 million benefits paying jobs have vanished since the 2008 peak.

What is a Covered Employee?

The exact meaning of "covered employee" varies slightly state to state, but not by much. In simple terms it means one is eligible for unemployment insurance benefits.

Most states exclude the self-employed, commission based employment such as real estate agents, those in student training programs, academic and hospital internships, employment by churches or religious organizations, and rehabilitation programs.

Self-employed individuals must pay into unemployment insurance programs, however, the self-employed are not eligible for benefits anywhere.

Nearly 6 Million Jobs Vanish

By the above intrepretation, it is safe to conclude that 5,977,844 jobs totally vanished (not just benefit paying jobs).

The only way that cannot be true is if there was a sudden shocking increase in the number of real estate agents, church hiring, or close to 6 million people all of a sudden decided to go into business for themselves.

All of those possibilities are highly unlikely to say the least.

Tim Wallace writes ....

The ANNUAL ADDITIVE TREND from 2004 to 2008 of 1.9 million is now a net loss of 8 million the past two years

Year....Covered...........Number added from previous year

2004....126,276,670....Data from hard copy sheets

2005....127,622,590....1,345,920

2006....130,605,286....2,982,696

2007....132,623,886....2,018,600

2008....133,902,387....1,278,501 average added per yr = 1,906,429

2009....131,823,421....-2,078,966

2010....125,845,577....-5,977,844

Did the stimulus SAVE or CREATE any jobs, or did we lose over 8 million jobs in two years in spite of record amounts of stimulus?

Download data including the covered column is found on the US Department of Labor website, Weekly Claims Data.

Was there a Massive Surge in Retirees?

click on chart for sharper image

There was no massive surge in retirees so that cannot account for the loss of benefits-paying jobs.

Retiree Data

• In October of 2006 there were 30,908,097 retirees.
  
• In October of 2007 there were 31,467,071 retirees, an increase of 558,974.
  
• In October of 2008 there were 32,222,895 retirees, an increase of 755,824.
  
• In October of 2009 there were 33,366,881 retirees, an increase of 1,143,986.
• In October of 2010 there were 34,463,650 retirees, an increase of 1,096,769.

Information on retirees is from the Social Security Administration. It undercounts retirees not in the system so actual numbers would be somewhat higher.

The number of retirees is certainly increasing which suggests the number of jobs needed to keep the unemployment rate steady is dropping. It also helps explain a falling participation rate (although not at the rate that it is falling).

That aside, the growth in the number of retirees cannot begin to explain the massive loss of benefits-paying jobs.

The increase in retirees from 2008 to 2010 is only 2,240,755 total. Civilian population growth was rose by 1,980,000 just last year.

Population Changes

I recently discussed population changes in my post In Search of 1.1 Million Jobs Claimed by Obama; Where the Hell are They?

Let's take another look at the BLS October Jobs Report.

Scroll down to page 5: HOUSEHOLD DATA Summary table A. Household data, seasonally adjusted.

click on chart for sharper image

The first item of interest is the Civilian Noninstitutional Population(i.e the population aged 16 and up not in school, prison, or other institutions).

In the last year, the table shows Civilian Noninstitutional Population rose by 1,980,000 an average gain of 165,000 potential workers a month.

Expected Increase In Workforce

In the last year the Civilian Noninstitutional Population rose by 1,980,000. There were 1,096,769 retirees. That mean the labor force should have increased by 883,231 workers. Instead the BLS reports the labor force increased by 50,000 workers (second line in table A above).

The rest supposedly dropped out of the workforce.

Hard Facts

Please remember the numbers in Table A are from phone surveys, seasonally adjusted, and arguably quite error prone.

On the other hand, the covered employees chart was produced from actual jobs data from the states.

Hard data says the US lost 5,977,844 benefits-paying jobs in a year, and 8,056,810 benefits-paying jobs in 2 years when we should have gained close to a million jobs a year or so based on population growth, even factoring in the number of retirees.

6 Million Benefits-Paying Jobs Vanish and Unemployment Rate Drops!

In spite of losing nearly 6 million benefits-paying jobs in the last year (and not gaining another 800,00 to a million more based on population growth minus retirees), the unemployment rate in October of 2009 was 10.1% and it is nowsupposedly a half-point lower at 9.6%.

Is this a crock or what?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Fiscal Crisis (CONT'D): Mish's analysis (blunt and good)

UK Wants to "Help" Ireland

Please consider Ireland May Be Next Greece as Europe’s Economic Superstar Fades

“Ireland is our closest neighbor, and it’s in Britain’s national interest that the Irish economy is successful and we have a stable banking system,” says George Osborne, the U.K. chancellor. “So Britain stands ready to support Ireland in the steps that it needs to take to bring about that stability.”

The Irish underestimated the severity of the losses for the past two years. In September, the government said that the bank bailout may cost as much as 50 billion euros. NAMA says it will absorb an estimated 73 billion euros of loans from the banks at a discount of about half of their value.

The figures sound small relative to the U.S. rescue of its banking system, except that Ireland’s population hovers at 4.4 million, according to the World Bank; the bailout so far equals 30 percent of the country’s 158 billion-euro gross domestic product. EU officials say Ireland’s emergency aid package may tally $136 billion, roughly the same amount given to Greece in May.

While the U.S. economy was driven off a cliff by the reckless securitizing of subprime mortgages and Greece collapsed under the burden of misrepresented government spending, the Irish traveled a simpler road to ruin: by taking out enormous, unregulated loans. Ireland’s economy has contracted for three consecutive years, and the Irish Central Bank governor has declared his country’s fiscal deterioration “worse than almost any other country.”

Today, according to former Central Bank of Ireland economist David McWilliams, the average Irish family owes 132,000 euros to banks.

Many Irish people won’t be able to pay off their debts in their lifetime, and almost all commercial developers are broke.

New Buzzword "Namatized"

NAMA stands for National Asset Management Agency, Ireland’s “bad bank.” Bloomberg notes that NAMA was created by the Irish government in 2009 to help stanch a crisis within the Irish banking system that has pushed the country to the edge of insolvency.

NAMA clearly did not work. I am saddened to report Irish citizens have been "Namatized", a fitting tribute to the fools in Irish government that authorized the nonsensical guarantee of Irish bank debts.

How Bankers Ruined Ireland

Please consider Why the Irish Crisis is Going Global for a nice synopsis of how bankers ruined a once thriving Ireland.

On the surface, it's reminiscent of the problem Greece had with its unmanageable federal debt early this year, which shook world markets, ended a global rally in stocks and ultimately led to a $146 billion bailout by the European Union and the International Monetary Fund. Greece spent more money than it took in for years, papered over the gap, and essentially became insolvent when it could no longer borrow the money needed to finance its debt.

Ireland is on the brink of insolvency too, which has helped drive down the S&P 500 stock index by nearly 4 percent over the last few days. But unlike Greece, Ireland is a relatively wealthy country, with per capita GDP of nearly $38,000. That's 21 percent higher than per capita GDP in Greece, and in the top third for European countries. Low corporate tax rates and a skilled workforce have made Ireland a haven for some of the world's biggest companies. And its public debt, about 65 percent of GDP, is far below Greece's crushing load, which is 126 percent of GDP. Ireland's debt levels are even lower than those in France, Germany and the United Kingdom.

But Ireland has one huge problem that may soon make it a supplicant to its European brethren: A failed banking sector that Ireland's government can no longer rescue on its own. Ireland is in the midst of a real estate bust that could trump even the ruinous downturns that turned parts of southern California and Nevada into suburban ghost towns, with home-grown banks stoking it all. Now, those banks are trying to manage catastrophic losses. The Irish government has effectively nationalized the nation's biggest banks by guaranteeing their debt, which would be akin to the U.S. government taking over Citigroup, Bank of America, J.P. Morgan Chase and Wells Fargo.

That means the Irish government is also on the hook for the losses those banks endure--which have risen far beyond initial estimates, and may have a lot farther to go. So far, the Irish government is obligated to cover losses amounting to 175 percent of Irish GDP, which is becoming an unsustainable burden. "If the Irish banks go down, the Irish government also goes down," says economist Jacob Kirkegaard of the Peterson Institute for International Economics.

Rat's Ass Perspective on "Help" from UK, EU, and IMF

Finally, I would like to repeat something I said in European Banks have $650 billion Exposure to Ireland; Germany’s Economy Minister says "EU Cannot Throw Money from Helicopters"

Rat's Ass Perspective

The other countries in the EU do not give a rat's ass about Ireland. All they really cares about is $650 billion in loans on the books of UK, German, French, Italian, and Spanish banks.

The US is of course the third most interested party and will no doubt apply pressure on the IMF to apply pressure on Ireland to accept some sort of bailout.

Ireland is sitting on a pile of cash. That cash will last much longer if Ireland defaults and that I believe is just what Ireland should do.

The IMF may be prepared to "Help" but I repeatedly ask and answer whether or not it can do any such thing in IMF Ready to "Help" Ireland; Can the IMF "Help" Anyone?

The short answer is for Ireland to tell the EU and IMF to "Stuff It".

Every country for itself. There is simply no reason for Irish citizens to bailout UK, German, French, and US banks.

Postponed is Not Solved

Bailout "help" will do nothing but overburden Ireland while making its problems worse down the road. Resentment will build up and hopefully Irish voters will do the same thing Icelandic voters did: throw the bums out and tear up the agreement.

Meanwhile, Spain is waiting in the on-deck circle. The proverbial s* hits the fan when Spain comes up to bat.

Mike "Mish" Shedlock

http://globaleconomicanalysis.blogspot.com