(via)
Failure of pension/retirement systems and social security system. #policy-mistake (via)
For the first time on record, senior citizens outnumber teens in the labor force as the Great Recession accentuates trends that make it harder for young people to find jobs and more likely for older workers to delay retirement. This historic crossover is revealed in data compiled by Bloomberg News showing that 6.6 million people over age 65 worked or looked for work in the first six months of the year, versus 5.9 million 16- to 19-year-olds. That analysis is based on federal records that started in 1948 when there were 4.4 million teens in the labor force compared with 2.9 million people over age 65. Experts say that over the past decade older workers have tended to hang on to their paychecks longer, owing to sagging stock portfolios and falling home prices. This shift toward an aging workforce has been disastrous for 16- to 19-year-olds, who face unemployment rates of 25 percent nationwide and 34 percent in California, similar to the Great Depression. “It’s killing kids,” said Andrew Sum, director of the center for Labor Market Studies at Northeastern University. “We’re tossing our future into the trash bin.”
Newsnight 26th May, Hugh Hendry ‘I would recommend you panic’
h/t creditwritedowns
It was on the radar (Greece & Co.) since early 2009. I have links from the media in my delicious account (Spiegel.de, Bloomberg, Reuters, even German Finance Ministers spoke out in early 2009 about Greece). Jeffrey Sachs is wrong.
Who should investors listen to; the markets or the Fed? One says we are in for a double dip recession, the other just raised GDP forecasts. The head of our central bank Benjamin S. Bernanke has a perfect track record for predicting economic outcomes. Unfortunately, his track record is only perfect due to its 100% inaccuracy. The Fed Chairman once assured investors that the subprime housing crisis was contained and would not bring down real estate prices or affect the overall economy. Then, after being proven completely wrong by the near collapse of the entire global economy, Mr. Bernanke moved to an emergency Federal Funds target rate of 0-25 bps and has held it there for 17 months. And even though the economy has posted three straight quarters of growth, has shown no inkling to provide American savers with a decent return on their money deposited in banks. Now we find the Federal Reserve once again proving it has an unlimited aptitude for ineptness by actuallyraising their G.D.P. forecast from a growth range of 2.8%-3.5% to 3.2-3.7%. That’s correct; Federal Reserve officials raised their U.S. growth estimates for 2010 and lowered forecasts for unemployment and inflation, according to minutes of the Federal Open Market Committee meeting on April 27-28. They left their 2011 forecast unchanged at 3.4 percent to 4.5 percent. Fed officials’ forecast for the average unemployment rate in the last quarter of 2010 fell to 9.1 percent to 9.5 percent versus 9.5 percent to 9.7 percent estimate made in January. However, contrary to the Fed’s predicted trend of improvement in employment numbers and economic data, on Thursday we saw first time claims for unemployment jump by 21,000 to 471,000 in the week ended May 15th. The four-week moving average also climbed to 453,500 last week from 450,500. Additionally, the Index of Leading Economic Indicators during the month of April saw a .1 percent decrease. That dip in the Conference Board’s outlook for the next three to six months followed a revised 1.3 percent gain in March and was the first decline for the index in a year. Meanwhile, sovereign debt contagion threatens to dismantle the Euro currency as Eurozone borrowing costs may become intractable if interest rates continue to rise. China is busy trying to pop their property bubble at the same time the Shanghai Composite Index is down 21% in 2010. Not to be outdone, Australia has collapsed their resource sector by imposing a 40% tax on the earnings of mining companies. The threat of a metastasizing government debt default crisis similar to the credit crisis of 2008 has sent crude oil prices tumbling from over $85 a barrel to $68 in a matter of weeks. Dr. Copper has plummeted from $3.60 a pound in April to $2.93 as of this writing. But none of that matters to the Fed or gives them pause to reflect on their ebullient outlook. It doesn’t take superhuman predictive powers to have the ability to look at markets. What is it that Mr. Bernanke and company look at other than the rear view mirror when making prognostications about growth, unemployment and inflation? We have given the most incredibly powers to the Federal Reserve; namely, to dictate a target rate for the cost of money. But we have allowed to be appointed at the Fed a group of individuals who not only cannot accurately assess a given series of data but also have chosen to completely ignore markets. The CRB Index is trading at its lowest level since October of 2009 and is telling investors that the global economy is in the process of slowing. But the Fed is stacked with academics that have never had to earn a living by predicting economic and market directions. Their failure to listen to the message of markets is the key reason they have such a miserable record of making accurate projections. For the betterment of the nation, the next appointment to serve at the Fed should be someone from the trading pit and not from Princeton. (via)
The stocks of US manufacturing firms are not plunging because German banks are exposed to Greek debt—they are plunging because markets fear falling AD will lead to falling orders for manufactured goods. Sure, you can always tell a disintermediation story as Bernanke did for the Great Depression, but I just don’t see how it’s plausible in this case. We don’t have 9.9% unemployment because firms can’t get financing to meet orders, we have 9.9% unemployment because their order books are half empty. We need more NGDP, banking will then take care of itself.
TheMoneyIllusion - A slightly off-center perspective on monetary problems. (via)
Gordon Brown talking about Conservative implementing budget cuts within 50-days after the election in case they win.
I just want to remind everyone. Budget cuts within the next 9 months will be inevitable, whether you vote Labour, Conservative or Lib Dems. The markets will force it upon this nation.
As we have learned during this brief time of financial upheaval, things usually get worse till they get better.
What Brown said is lie. He is misleading the public. He still is Prime Minister, and saying such things is pure manipulative of the public, misleading, a lie.
Bond fund managers have called for steep cuts in welfare spending by highly indebted European countries to avoid a repeat of the Greek crisis. Spain, Portugal and Ireland have already been targeted by speculators. Some economists have included Britain and Italy in the European “circle of doom” countries that ring the more financially secure nations of France and Germany.
Last week the National Institute of Economic and Social Research (NIESR) said Britain was unlikely to come under the same pressure as Greece, Spain and Portugal because it was able to devalue its currency and trade its way out of recession. Britain remains the world’s sixth-largest exporter in the world. Sterling has fallen from $2 before the crisis to $1.70 early this year to $1.50 last week, giving exporters a boost as prices of their goods fall. (via Guardian May 3rd 2010)
And giving consumer a hard time on the till, especially petrol (oil), gas, travel tickets. As a world deeply intertwined, the weakness of the pound will push up the CPI and RPI. Inflation will remain at alleviated levels above 2 if not over 3% year over year.
Which implies with the current overall world outlook, the perspective shifts towards double-dip, all things considered.
Prof. Bernd Schuenemann (Prof. Dr. jur. Dr. jur. h.c. mult. Bernd Schünemann) (German Video)
He has written a book about this type of higher ‘global organised crime’. Europe and others should not wait for the US to enact more transparency, ethics and new rules of the game.
The rating agencies’ ranking of the United States is even more disconnected from reality. To believe that the US sets the benchmark for sovereign debt credit ratings is preposterous. While we have written ad nauseam about the excessive debt issuance by the United States, we found a recent update written by United States Government Accountability Office (GAO) to be particularly instructive. The update noted the US’s budget deficit equivalent to 9.9% of GDP in 2009 - the largest since 1945 - and stated that without significant policy changes the US government would soon face an “unsustainable growth in debt”. This was not news to us. It goes on to state, however, that using reasonable assumptions, “roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020.”8 This is news! In less than ten years, using reasonable assumptions, there will essentially be no money left to run the US government - 93% of all tax revenues the US government collects will go to pay social security, Medicare, Medicaid and the interest costs on their national debt. This implies no money left over for defense, homeland security, welfare, unemployment benefits, education or anything else we associate with the normal business of government. And the US government is rated AAA!? The historian Niall Ferguson recently wrote that, “US government debt is a safe haven the way Pearl Harbor was a safe haven in 1941.”9 It’s hard not to agree given the foregoing statements by the GAO. The risk inherent to investors, of course, is what happens when the bond market begins to realize and react to this new level of risk. In a speech earlier this month, Jürgen Stark, who is a member of the board of the European Central Bank, stated, “We may already have entered into the next phase of the crisis: a sovereign debt crisis following on the financial and economic crisis.”10 The activities of the IMF would confirm this statement. The question we must now ask ourselves is whether “backed by government” actually means anything anymore. (via)
It requires a new human to realize the dream of self-fulfillment in free cooperation. Like the holy Franziskus von Assisi who was parting from his civic existence once said:
You are poor but free. Be ashamed of yourself to listen to the singing birds in their cage, instead to use your wings.
German::
Um den Traum von einer menschlichen Selbstentfaltung in freier Kooperation zu verwirklichen bedarf es eines neuen Menschen der wie einst der heilige Franziskus von Assisi von seiner Bürgerlichen Existenz abschied nahm und sagte:
Ihr seid arm aber frei. Schämt euch den singenden vögeln in ihren Käfigen zuzuhören anstatt eure Flügel zu gebrauchen.
