Category Archives: National
“Americans’ confidence in the economy has reached a five-year weekly high, according to Gallup’s weekly tracking index.
This week’s reading matched a five-year high set the week ending Feb. 3. It comes just a week after The Conference Board’s April Consumer Confidence survey showed a huge surge to 68.1 from last month’s upwardly-revised 61.9 reading.
The current confidence score in Gallup‘s confidence reading is -8, which was a surge from -13 the previous week. The index has reached as low as -22 this year.
Monthly economic confidence in April also matched a five-year high, coming in at a marked improvement over March’s reading, which was likely low because of the budget sequester….”
“A little known rule change that allows companies to contribute fewer dollars to pension funds is signaling just how meaningless the retirement vehicle has become.
“This proves that pensions are pretty much dead,” said Greg McBride, chief economist at Bankrate.com. “The change is just another charade to mask the underfunding of pensions and increases the odds of having less money for retirement.”
“It’s not necessarily the immediate end of pensions but it’s not good for them and it’s certainly a bad sign,” McBride added.
The pension change was part of a transportation bill—called Moving Ahead for Progress in the 21st Century or MAP-21—passed by Congress last June. The change became mandatory this year.
In essence, MAP-21 lets employers put less money in their pension plans by allowing them to value their liabilities— what they have to pay out to pensioners—using a 25-year average of interest rates instead of current rates.
When interest rates are low, like now, pension plan liabilities are estimated to be higher and companies have to put in more money. When rates are higher, the liabilities are figured to be smaller and employers’ contributions are less. The 25-year average is expected to be at least 2-3 percentage points higher than rates today.
The reduced amount that companies will be putting in has to be figured out by each firm based on the higher rates. But Madison Pension Services, a consulting firm, has reported that some minimum pension contributions in 2012 were reduced by 33 percent.
Employers are not required to offer pension plans, but the government encourages them to do so by offering tax breaks….”
“We’ve made progress on a lot of things since the 1950s and so have CEOs — in their quest for more money that is.
The ratio of CEO-to-worker pay has increased 1,000 percent since 1950, according to data from Bloomberg. Today Fortune 500 CEOs make 204 times regular workers on average, Bloomberg found. The ratio is up from 120-to-1 in 2000, 42-to-1 in 1980 and 20-to-1 in 1950.
“When CEOs switched from asking the question of ‘how much is enough’ to ‘how much can I get,’ investor capital and executive talent started scrapping like hyenas for every morsel,” Roger Martin, dean of the University of Toronto’s Rotman School of Management, told Bloomberg.
The findings come just one day after the S&P 500 soared to a new record, indicating that perhaps the only ones not reaping the benefits from the companies’ historic profitability are workers. Other reports have come to similar conclusions. An analysis from the AFL-CIO, the umbrella organization for many of America’s unions, found earlier this month that CEO pay was 354 times that of the average employee….”
“Even as the U.S. economy began to rebound from the Great Recession, only the highest earning households in America actually felt the difference.
The richest 7% of American households saw their net worth grow by 28% to a whopping $3.2 million during between 2009 to 2011, according to a new study by the Pew Research Center.
In contrast, 93% of households lost money. Average household net worth for this group fell by 4% during the same period, down to about $133,800 per household. …”
“NEW YORK (AP) — A day after flight delays plagued much of the nation, air travel was smoother Tuesday, but the government warned passengers that the situation could change by the hour as thousands of air-traffic controllers are forced to take furloughs because of budget cuts.
Meanwhile, airlines and members of Congress urged the Federal Aviation Administration to find other ways to reduce spending. Airlines are worried about the long-term costs late flights will have on their budgets and on passengers.
“I just can’t imagine this stays in place for an extended period of time. It’s just such terrible policy,”US Airways CEO Doug Parker said. “We can handle it for a little while, but it can’t continue.”
The delays are the most visible effect yet of Congress and the White House’s failure to agree on a long-term deficit-reduction plan.
Transportation Secretary Ray LaHood said no one should be surprised, noting that he warned about the potential for problems two months ago.
His solution: Blame Congress for the larger budget cuts that affected all of government, including a $600 million hit to the Federal Aviation Administration.
“This has nothing to do with politics,” LaHood said. “This is very bad policy that Congress passed, and they should fix it.”
Critics of the FAA insist the agency could reduce its budget in other ways that would not inconvenience travelers….”
“The U.S. economy and the stock market are not the same thing.
The stock market is currently sitting near all-time highs. Meanwhile, the U.S. economy remains anemic with the unemployment rate painfully high.
Generally speaking, the stock market represents large corporations who can borrow cheaply from the bond markets and take advantage of low overseas tax rates.
Yet small business can do neither of those things. They are also America’s most important job creators.
The lead economists of the National Federation of Independent Business (NFIB), which produces the widely-followed small business optimism report, recently gave a presentation at the Richmond Fed’s Credit Market Symposium titled “One Country, Two Economies.”
In it, they lay out the state of small business, which is much weaker than what is being seen in the stock market.
“A couple of updates …
From Goldman Sachs economist Alec Phillips: The Federal Budget Deficit: Shrinking Faster:
The federal deficit continues to shrink. Through the first six months of the fiscal year, revenues have come in higher than expected, while spending has come in lower than expected. As a result we are lowering our deficit forecast for the current and next two fiscal years.
Earlier this year we lowered our FY2013 deficit forecast from $900bn (5.6% of GDP) to $850bn (5.3%). In light of recent trends, we are lowering it again to $775bn (4.8%). Spending in the fiscal year to date is lower than a year ago and the nominal growth rate is lower than it has been in decades. Revenues have also exceeded expectations, with a 12% gain fiscal year to date. What is more notable is that the strength in revenues preceded the payroll tax hike at the start of the year, and the spending decline does not seem to reflect sequestration, which has just started to take effect.
We expect the improvement to continue for the next few years….”
“The premium in America has shifted from truth to self-serving distortion, and from trust to manipulation.
The premium we place on truth and trustworthiness is self-evident. Truth is uniquely productive feedback from the real world. Truth (including factual data) is indispensable, for it alone enables us to correct errors, learn from mistakes and improve our effectiveness and communication.
We pay a premium for trust because the cost of dishonesty and artifice is steep.Would you pay more to buy a used car from someone you trust? If you place no premium on trustworthiness, then you buy the “great deal” used car you found online: oops, the “new” battery was spray-painted black, the crankcase leaks, the engine is shot and doesn’t pass smog, and the certificate of ownership is forged.
The premium on truth and trust is eroding under the constant onslaught of officially manipulated data and markets, and a vast array of distortions and propaganda designed to serve the interests of ruling Elites and key constituencies.
We all know the negative premium placed on fact: telling the truth will get you fired. And not just in the corporate world: politicians from the President on down all worship at the altar of the carefully distorted unemployment rate.
The officially sanctioned lying and manipulation are now shameless. Never mind that millions of people have become statistical phantoms (i.e. not in the workforce) to generate that low rate, and college graduates working 3 hours a day (if they’re called in at all) are gleefully counted as employed, as if there is no difference between a full-time job and a marginal one.
President Obama is touting rising auto sales as proof of the “recovery” (and implicitly, of his wise stewardship), studiously avoiding the fact that these stupendous auto sales are the result of offering low-interest rate auto loans to marginal borrowers with near-zero collateral (i.e. skin in the game).
How did blowing a credit bubble and securitizing the debt turn out last time?
Never mind: here we go again. Via Doug Nolan at Prudent Bear:
Springleaf Finance Corp., the lender to borrowers with poor or limited credit, sold $604 million of bonds last month backed by personal loans secured by household goods from furniture to electronics, its first such deal. Demand for riskier asset-backed bonds has grown as the Federal Reserve holds its benchmark interest rate at almost zero for a fifth year. Sales of securities linked to subprime auto loans doubled to $4 billion in January from a year earlier.
Manipulation and carefully crafted distortion erode trust, not just in the individuals employed to repeat the lies but in the institutions that issue them. The ruthless pursuit of self-interest is now the norm; truth is a terribly risky disruptor that must be hidden, masked or countered with plausible lies.
As a nation, we’re like the obese person who looks at himself in the mirror and sees his body as normal–the distortion of truth is so complete that we literally no longer recognize reality. Untruth no longer arouses any moral indignation; we are either too jaded to care, or our moral compass now spins aimlessly from one manipulation to the next.
There can be no trust if there is no truth. How can we trust people who lie to us constantly, who issue one self-serving justification after another for their own parasitic predation? We cannot. How can we trust institutions whose credibility now rests on the continuation of lies that are so embedded in our financial sector and State that their collapse will bring down the entire house-of-cards debtocracy? We cannot.
The premium in America has shifted from truth to self-serving distortion, and from trust to manipulation. This spiritual and moral rot will end gloriously, have no doubt, for the stock market’s permanent ascendancy dissolves all other narratives. ….”
“As reported in my new book, “Completely Predictable,” the combined spending of federal, state and local governments per American household actually exceeded the median household income for 2010, which is the latest year for which all relevant government data are available.
In fiscal 2010, according to numbers published by the Census Bureau and the Office of Management and Budget (OMB), net spending by all levels of government in the United States was $5,942,988,401,000. That equaled $50,074 for each one of the 118,682,000 households in the country.
In that same year, according to the Census Bureau, the median household income was $49,445.
That means total net government spending per household ($50,074) exceeded median household income (49,445) by $629.
Government in the United States, of course, has not always spent more per year than the median household earns. As recently as 2000, the relationship between government spending and household income was dramatically different.
Data from the Census Bureau and the OMB show that in that year net spending by all levels of government was $3,239,913,876,000. That equaled $29,941 for each of the nation’s then 108,209,000 households. In 2000, the median household income was $41,990.
Thus, between 2000 and 2010, government in this country went from spending $12,049 less than the median household income to spending $629 more.
This is how I derived these startling numbers…”
“The number of Americans getting some type of disability check from the federal government is soaring.
Since 2003, there’s been a 29% jump in Americans with little or no work experience getting disability payments, according to the Social Security Administration. Over the same time, there’s been a 44% increase in disability claims by people formerly in the workplace.
Disability claims among veterans are up 28% since 2008, according to the Department of Veterans Affairs.
All told, the federal government spent nearly $250 billion in 2011 paying more than 23 million Americans some type of disability claim. That’s about 7% of the overall population, and 16% of the workforce.
Those numbers don’t even include people out on worker compensation claims — which are mostly paid for by private companies. Five states also offer short term disability, and there are nearly 1 million workers receiving private disability insurance.
But the Social Security-administered program that pays disability claims will likely run out of money by 2016, forcing politicians to either cut Social Security benefits, raise taxes or, most likely, dip into general Social Security funds for the money.
The recession: The economic downturn in 2008 and early 2009 is thought to be the major reason for the jump in disability payments to people who were formerly working….”
“Policy makers on the Federal Reserve’s interest-rate setting panel have for the first time identified high student debt burdens as a risk to economic growth, adding to a growing chorus of government officials concerned about households’ education borrowings.
At $1.1 trillion, according to the Consumer Financial Protection Bureau, outstanding student loan debt is the largest consumer debt class after home mortgages. Financial regulators, the U.S. Treasury and the New York Fed have all warned about the possible danger student loans pose to financial stability and the broader economy.
But prior to its March meeting, the Federal Open Market Committee, which sets interest rates that affect trillions of dollars of loans and securities, had never before mentioned student loans as a possible downside risk to the economy, according to a review of past meeting minutes.
According to newly released minutes from the March meeting, some members of the panel mentioned “the high level of student debt” as a risk to aggregate household spending over the next three years.
“There is increasing consensus that student loan debt is having a broader impact on the economy than we think,” Rohit Chopra, the CFPB official responsible for the student loan marketplace, said in an interview.
The committee’s mention of student debt burdens is likely to further discussion in Washington over what, if anything, policy makers should do to rein in what has been diagnosed as a growing problem….”
What does it day about our society when we trade stocks that go higher by putting debtors in prison? Certainly not all of these people are cheaters of not paying their debts…..fun times indeud.
“(MoneyWatch) Thousands of Americans are sent to jail not for committing a crime, but because they can’t afford to pay for traffic tickets, medical bills and court fees.
If that sounds like a debtors’ prison, a legal relic which was abolished in this country in the 1830s, that’s because it is. And courts and judges in states across the land are violating the Constitution by incarcerating people for being unable to pay such debts.
Ask Jack Dawley, 55, an unemployed man in Ohio who between 2007 and 2012 spent a total of 16 days in jail in a Huron County lock-up for failing to pay roughly $1,500 in legal fines he’d incurred in the 1990s. The fines stemmed from Dawley’s convictions for driving under the influence and other offenses. After his release from a Wisconsin correctional facility, Dawley, who admits he had struggled with drugs and alcohol, got clean. But if he put his substance problems behind him, Dawley’s couldn’t outrun his debts.
Struggling to find a job and dealing with the effects of a back injury, he fell behind on repayments to the municipal court in Norwalk, Ohio. He was arrested six years ago and sent to jail for not paying his original court fines. Although Dawley was put on a monthly payment plan, during his latest stint behind bars in 2012 the court ordered him to pay off his entire remaining debt.
” I called my brother, and they told him I have to pay off the whole fine in order for me to get out,” he said. “That was $900. So I sat my whole 10 days [in jail.]”
Such stories are by no means unusual. Rather, they reflect a justice system that in effect criminalizes poverty. “It’s a growing problem nationally, particularly because of the economic crisis,” said Inimai Chettiar, director of the justice program at New York University School of Law’s Brennan Center for Justice.
Roughly a third of U.S. states today jail people for not paying off their debts, from court-related fines and fees to credit card and car loans, according to the American Civil Liberties Union. Such practices contravene a 1983 United States Supreme Court ruling that they violate the Constitutions’s Equal Protection Clause….”
“When it comes to motivation and performance, few focus on what they’re doing or how to improve it. They might respond to specific feedback from a boss, but rarely examine what motivates them to do their best at their job or in life.
Luckily, there’s a large body of research focusing on how people can get the most out of themselves, and how managers can unlock employee potential.
“Confidence among U.S. consumers fell to a six-week low and claims for jobless benefits rose more than forecast, highlighting the risks to the economy posed by federal government budget cuts.
The Bloomberg Consumer Comfort Index dropped to minus 34.4 in the week ended March from minus 33.9 as Americans’ views of the economy deteriorated to the lowest point since early February. Applications for unemployment insurancebenefits rose by 16,000 to 357,000 last week, the Labor Department said.
The figures represent a blemish for an economy that has shown signs of strengthening on the heels of a housing marketrebound and a pickup in manufacturing. Federal Reserve policy makers are concerned the automatic reductions in government spending that began this month may impede the progress of the expansion after a fourth-quarter slowdown.
“There will be some impact from the sequester, and certainly the second quarter should look somewhat softer than the first quarter,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank Securities in New York. At the same time, “it’s domestic growth that’s driving the economy — it’s housing, it’s consumer spending, it’s business consumption.”
Stocks rose, sending the Standard & Poor’s 500 Index above its record closing level, as the reopening of banks in Cyprus helped ease concern about Europe’s debt crisis. The S&P 500 climbed 0.2 percent to 1,566.18 at 12:14 p.m. in New York.
“Next time you find yourself staring at an empty savings account, feel free to blame the era you live in.
Middle-income households would havesaved roughly $1,400 more a year by 2005if their incomes had grown at the same rate as the top 10 percent of earners from 1980 to 2008, a new paper finds.
By comparing the income data of top-earning households with everyone except the poorest 10 percent, University of Chicago professors Marianne Bertrand and Adair Morse discovered that the growing levels of U.S. income inequality had caused about a 3 percent decrease in middle-income household savings by the mid-2000s. Altogether, the U.S. personal savings rate for all Americans declined from around 10 percent of disposable income in the early 1980s to just 1.5 percent in 2005, the researchers write….”
“After U.S. and allied warplanes destroyed a key bridge carrying 15 oil and gas pipelines in northern Iraq during the 2003 conflict there, officials in Washington and Baghdad made its postwar reconstruction a top priority. But instead of spending two months to rebuild the span over the Tigris River at an estimated cost of $5 million, they decided for security reasons to bury the pipelines beneath it, at an estimated cost more than five times greater.
What ultimately happened there tells the story — in a microcosm — of a substantial chunk of the massive nine-year U.S. effort to reconstruct Iraq, the second-largest such endeavor in history (only the U.S. investment in Afghanistan has been larger).
Studies conducted before the digging of the new pipelines started showed that the soil was too sandy, but neither the Army Corps of Engineers overseeing the effort nor the main contractor at the site, Kellogg Brown and Root (KBR), heeded the warning. As a result, “tens of millions of dollars [were] wasted on churning sand” without making any headway, as Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr., described it in his recently published final report on the U.S. occupation.
By the time the digging effort was halted, and the old bridge and piping repaired — more than three years later — the bill had reached more than $100 million. “Because of the nature of the original contract, the government was unable to recover any of the money wasted on this project,” Bowen said. More than $1.5 billion in oil revenues may have been lost as a result of the delays. KBR did not respond to a request for comment.
The episode is, in short, emblematic of the contracting abuses and mismanagement that wasted at least $8 billion of the $60 billion spent by Washington on Iraq’s post-war recovery, under the guidance of what Bowen describes in his report as “adhocracy” largely controlled by the U.S. military — a structure that never “coalesced into a coherent whole” and often failed to achieve its aims.
With the U.S. military now gone from Iraq and the 10th anniversary of the invasion only days away, Bowen’s retrospective summary of his audits offers useful insights into how well the U.S. government managed its occupation and the legacy it left behind. The mostly downbeat tone is set early, when the report summarizes final interviews Bowen conducted with 44 top U.S. and Iraq officials, who addressed the simple question of whether the decade-long project left Iraq in better shape.
Most of the Americans he spoke to were rueful, noting multiple miscalculations, poor planning, disorganization in Washington, and inadequate consultation with Iraqis. James Jeffrey, the U.S. ambassador in Iraq from 2010 to 2012, told Bowen that “the U.S. reconstruction money used to build up Iraq was not effective … We didn’t get much in return.”
Only retired Army Gen. David Petraeus, who commanded U.S. forces in Iraq before shifting to Afghanistan and then briefly directing the CIA, was ebullient, claiming the effort had brought “colossal benefits to Iraq.”
Virtually every senior Iraqi, in sharp contrast, said the decade-long U.S. occupation was beset by huge misspending and waste, and had accomplished little. The biggest footprint Americans left behind, most of these Iraqi officials said, was more corruption and widespread money-laundering. Such a huge investment “could have brought great change in Iraq,” Prime Minister Nuri al-Maliki said, but the gains were often “lost.”
Billions here, billions there
The bill for Iraq is hard to divide into neat categories, but in rough terms: Washington spent more than $15 billion to try and improve Iraq’s power and water supply, revive its schools, and repair its roads and housing; it spent another $9 billion on health care, law enforcement, and humanitarian assistance; it spent $20 billion training and re-equipping Iraqi security forces; it spent roughly $8 billion to enhance the rule of law and battle narcotics; and it spent $5 billion helping to prop up the economy….”
People are going to do what they must to survive….
“Sequestration Slashes Scholarships for Children of Iraq and Afghanistan War Casualties and Military Members
On the 10-year anniversary of the start of the Iraq War, scholarships for children of troops who died fighting in that conflict are being cut by thousands of dollars, thanks to sequestration.
The awards, called the Iraq and Afghanistan War Grants, go to undergraduate students whose moms or dads died “as a result of military service performed in Iraq or Afghanistan after the events of 9/11,” according to the Department of Education.
Awards that have already been established are safe, but as of March 1, the dollar amount for each new grant is being reduced by 37.8 percent from what a student would have received last year.
That means young adults will receive up to $2,133.81 less if they apply for a grant for the first time this year.
The Iraq War officially ended in December 2011, but these grants are not only for children of recent casualties. Children whose parents were killed in earlier years of the wars when they were very young are now old enough to go to college and could be eligible for the grants….”
“Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.
New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.
Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008.
The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study’s 23-year history.
The same forces are weighing on corporate balance sheets. Based on another recent report, the Society of Actuaries said that rising life expectancies could add as much as $97 billion to corporate pension liabilities in coming years, an increase of up to 5%.
While Americans are living longer, the extended life spans will make it tougher for workers trying to stretch retirement savings and put additional strains on pension plans….”
“WASHINGTON—The Pentagon is preparing to strengthen its missile defense systems on the West Coast in response to increased threats from North Korea and rising tensions on the Korean peninsula.
The U.S. plans to boost its ground-based missile interceptors in Alaska and California by one-third, adding 14 additional systems to the 30 already in place on the West Coast, a senior defense official said Friday. Interceptors are vehicles that are launched to intercept intercontinental missiles in flight.
The expansion in the system was due to be announced by Defense Secretary Chuck Hagel at a news conference Friday.
The decision comes as North Korea has issued a series of threats to attack the U.S. and South Korea over new international sanctions and joint military exercises in the region.
Earlier this month, North Korea threatened to launch a pre-emptive nuclear strike on the U.S. and South Korea. While American officials don’t believe North Korea is capable of launching a long-range attack, the threat is seen as a concerning sign of the nation’s state of mind.
Pentagon officials signaled the possible expansion days earlier. “North Korea’s shrill public pronouncements underscore the need for the U.S. to continue to take prudent steps to defeat any future North Korean ICBM,” James Miller, undersecretary of defense for policy, said in a speech last week at the Atlantic Council….”