Global Economy Bursting?

[Randolph Kinney]

Indiana public schools wage unusual ad campaign

http://news.yahoo.com/indiana-public-schools-wage-unusual-ad-campaign-184331463.html

Struggling Indiana public school districts are buying billboard space, airing radio ads and even sending principals door-to-door in an unusual marketing campaign aimed at persuading parents not to move their children to private schools as the nation's largest voucher program doubles in size.

The Indiana voucher program, passed by the Legislature in 2011, is the biggest test yet of an idea sought for years by conservative Republicans, who say it offers families more choices and gives public schools greater incentive to improve.

School staff members have gone to the homes of students who switched to private schools last year or who dropped out and asked them to come back. The district is touting its magnet schools, teaching methods that include Montessori and Reggio and a performing arts and visual arts school.

 

[Randolph Kinney]

Middle Class Exit 'Lost Decade' With Little Hope

http://www.huffingtonpost.com/2012/08/22/middle-class-lost-decade_n_1822661.html?utm_hp_ref=business

Things aren't looking great for America's middle class, and they know it.

A significant share of the middle class say it will be a long time before they recover from the severe shocks of the past 10 years, dubbed "The Lost Decade" in a Pew Research Center report released Wednesday.

"The middle class has shrunk in size, it's declined in income and in wealth, and has lost a little bit of that characteristic faith in the future that defines Americans broadly, but particularly the middle class."

The consequences of a disappearing middle class could be dire. Morin noted that political scientists speculate a functioning middle class could be key to a functioning democracy.

In addition to losing a major share of America's income, the middle class saw its wealth wiped out over the last decade. A volatile stock market and a major housing bust pummeled middle-class assets, decreasing their net worth by almost 30 percent and "erasing two decades of growth," according to the report.

"The fact that for the first time since the end of World War II incomes have declined, that's amazing,” Morin said.

 

[Big ole Boy]

800 billion a year - Crooked Uncle Sam Velocity

After re-reading one of my previous posts I realized I had made a significant typo ...

...my understanding is that continuing resolutions in the budget process in lieu of a real budget has allowed baseline budgeting to rise at 7 percent annually and then along with an annual additional amount of 800 billion a year thats with a B ....


so, 2008 .... additional 800 billion a year .......

2009 ..... additional 800 billion a year .....

2010 ...additinal 800 billion a year ....

2011 .... additional 800 billion a year ....

and 2012 ..... additional 800 billion a year .....


...........................

...with this kind of additional spending ..... thats $2,667 per year we spent per person per year ...


..... or since 2008 ... we spent $13,335 per person ......... in additional stimulus to keep things

..... we could have just given this money directly to each person here in the United States

.... you often here someone say ...... it would be wrong to just hand out money at the expense of the american tax payer ...

..... but the truth is ....... the tax payer is not paying this money back and never will ....

.... the tax payer is not paying back the interest either .....

... we are just adding it to the deficit ...

.... no ...... velocity should be broken down into two parts at this point ......

.... Joe Smoe velocity ........ and Crooked Uncle Sam velocity .....

...Mr. Crooks is sky high ...... and Joe Smoes is in the toilet ....... but when you average them together ....... it still looks humane ......

 

[Randolph Kinney]

Trends in Interest Rates on National Debt Suggest Currency Crisis is Coming

http://globaleconomicanalysis.blogs...lysis+(Mish's+Global+Economic+Trend+Analysis)

 

[Randolph Kinney]

Plan B Is Considered to Curb Money Market Funds

http://dealbook.nytimes.com/2012/08...ered/?nl=todaysheadlines&emc=edit_th_20120824

Money market funds, which hold $2.6 trillion and make short-term loans to governments and banks, are usually stable. But they are vulnerable to runs. When one large fund got into trouble in 2008, mass withdrawals occurred at others. This deprived the financial system of cash at a critical time, prompting the Federal Reserve and the Treasury Department to bail out the money funds.

Ms. Schapiro, the S.E.C. chairwoman, circulated a proposal this summer that would have forced the funds to start keeping a capital buffer against losses, or to let their shares float like regular mutual funds, instead of being fixed at $1 a share.

After Ms. Schapiro determined Wednesday that she had not won backing for her plan from a majority of the five-member commission, she called for other regulators to impose reforms on the industry.

The most obvious next step would be for a council of top regulators, the so-called Financial Stability Oversight Council, to vote on designating money market funds as systemically important, which would pave the way for stricter regulations.

Alternatively, the council has the power to designate specific money funds or fund managers as systemically important. That would shift regulation of those funds to the Federal Reserve.

Any decision could take three to four months, and once approved, a fund manager could ask for a judicial review. This timing could stretch the process past the November elections, which may put new regulators into power.

Dennis Kelleher, the president of Better Markets, a lobbying group that has supported reforms, doubts the resolve of many regulators to follow through on their push for change. He says he thinks the odds of the council taking strong action “are close to zero.”

The Federal Reserve could limit the ability of banks to borrow from money market funds — this would reduce one of the riskiest holdings at many funds. The Fed could also make banks that run money market funds hold capital to protect against losses in the funds.

_____________________

Plan B is to reign money market mutual funds and what they can invest in as well as to increase cash as percent of total assets.

Plan B should be the federal reserve will step in and buy assets of money market mutual funds directly so that instant liquidity is provided when there is a run on the funds for redemption. Otherwise, the banks will be in trouble again when the panic hits the market.

 

[Randolph Kinney]

America's True Crisis

http://english.caixin.com/2012-08-22/100427051_all.html

Total U.S. government spending in 2011 – the local, state and federal levels combined – was 34 percent of GDP and a deficit of 9.5 percent. The current debt levels are 103 percent of GDP for the federal government and 25 percent for local and state governments.

The U.S. national debt has been rising at 9.3 percent per year since 2000 and, excluding the debt held by government accounts like social security trust fund, 10.8 percent per annum. In the past decade, the federal government's debt has increased by 156 percent. The U.S. government forecast is for gross debt to rise at 5.7 percent over the next four years. The U.S. economy may be stuck around 2 percent growth rate for the next decade. If so, government revenue would be less than expected and the debt may continue its past trend.

In a decade, total government debt would surpass 200 percent of GDP, similar to Japan today. While Japan's high level of government debt is entirely funded by domestic savings, the same cannot be said about the United States. The United States imports 4 percent of GDP in capital per year. When its government debt reaches 200 percent of GDP, foreign capital is likely to panic. A currency-come-debt crisis is likely to follow.

______________

The current projection is that the federal debt will = $20 Trillion in 2016, just 3.5 years away. What happens if the interest rate for borrowing rises?

 

[Randolph Kinney]

America’s Descent into Poverty

http://www.infowars.com/americas-descent-into-poverty/

The United States has collapsed economically, socially, politically, legally, constitutionally, and environmentally.

Economically, America has descended into poverty. As Peter Edelman says, “Low-wage work is pandemic.” Today in “freedom and democracy” America, “the world’s only superpower,” one fourth of the work force is employed in jobs that pay less than $22,000, the poverty line for a family of four. Some of these lowly-paid persons are young college graduates, burdened by education loans, who share housing with three or four others in the same desperate situation. Other of these persons are single parents only one medical problem or lost job away from homelessness.

Others might be Ph.D.s teaching at universities as adjunct professors for $10,000 per year or less. Education is still touted as the way out of poverty, but increasingly is a path into poverty or into enlistments into the military services.

Edelman, who studies these issues, reports that 20.5 million Americans have incomes less than $9,500 per year, which is half of the poverty definition for a family of three.

There are six million Americans whose only income is food stamps. That means that there are six million Americans who live on the streets or under bridges or in the homes of relatives or friends. Hard-hearted Republicans continue to rail at welfare, but Edelman says, “basically welfare is gone.”

Considering the prices of rent, electricity, water, bread and fast food, one person cannot live in the US on $6,333.33 per year.

 

[Randolph Kinney]

Bernanke's official denial on bank carry trades and the tax on savers - translated

"Banks are involved in a huge carry trade on US treasuries, with the Fed's approval. The Fed understands low interest rates are a tax on savers and a brutal punishment to those on fixed income. However, we don't care. The Fed encourages the carry trade to help bail out banks still in trouble over bad real estate loans, and still hiding other losses off their balance sheets. We are beholden to the banks and operate our monetary policy for them whenever they get in trouble."

 

[Randolph Kinney]

Trading caps and gowns for mops

http://www.marketwatch.com/story/tr...for-mops-2012-08-22?link=MW_story_latest_news

After four years of college, many graduates are ending up in jobs that only require the ability to operate a cash register with a smile.

After commencement, a growing number young people say they have no choice but to take low-skilled jobs, according to a survey released this week.

And while 63% of “Generation Y” workers — those age 18 to 29 — have a bachelor’s degree, the majority of the jobs taken by graduates don’t require one, according to an online survey of 500,000 young workers carried out between July 2011 and July 2012 by PayScale.com, a company that collects data on salaries.

Another survey by Rutgers University came to the same conclusion: Half of graduates in the past five years say their jobs didn’t require a four-year degree and only 20% said their first job was on their career path. “Our society’s most talented people are unable to find a job that gives them a decent income,” says Cliff Zukin, a professor of political science and public policy at Rutgers.

The jobs that once went to recent college graduates are now more often going to older Americans. Over the past year, workers over 55 accounted for 58% of employment growth, says Dean Baker, a co-director of the Center for Economic and Policy Research, a nonprofit think tank in Washington, D.C. Why? Employers think older workers are a safer bet and more likely to stay, he says. Unemployment hovered at 6.2% in July for workers over 55, according to the Labor Department, but was more than double that rate — 12.7% — for those ages 18 to 29.

As a result, college graduates are finding themselves locked into lower-paid jobs. “The shaky economy has forced many of them into a world of underemployment,” says Katie Bardaro, lead economist for PayScale. The starting salary for a graduate is $27,000, 10% less than five years ago, the Rutger’s study found. “Unlike those who graduated five years ago,” Zukin says, “the long-term expectations of this generation are not being met.”

Graduates must either face years of underemployment or go back to graduate school, experts say.

 

[Randolph Kinney]

The sales volume of gasoline has dropped to 1998 levels but notice the price per gallon.

Also note the falling volume after 2011 as price rose.

The difference between the recession of 2001 and 2009 is volume sales continued to rise during the 2011 recession.