






Hat tips: Left Coast Rebel and Mark Levin.







Federal Reserve Chairman Ben S. Bernanke said a default by Greece would have little impact on U.S. banks, which aren't "significantly exposed" to European nations struggling to meet debt payments.
"We have asked the banks to essentially do stress tests and ask, looking at all their positions, all their hedges, what would the effect on their capital be if -- if Greece defaulted," Bernanke said to reporters today at a press conference after a meeting of the Federal Open Market Committee. "The answer is that the effects are very small."
It’s the $616 billion question: Does the euro crisis have a hidden A.I.G.? No one seems to be sure, in large part because the world of derivatives is so murky, but the possibility that some company out there may have insured billions of dollars of European debt has added a new wrinkle to the sovereign default debate......The looming question is whether these contracts — which insure against possibilities like a Greek default — are concentrated in the hands of a few companies, and if these companies will be able to pay out billions of dollars to cover losses during a default. If there were a single company standing behind many of these contracts, that company would be akin to the American International Group of the euro crisis. The American insurer needed a $182 billion federal bailout during the financial crisis because it had insured the performance of mortgage bonds through derivatives and couldn’t pay on all of them...
...Even regulators seem unsure of whether a Greek default would reveal such concentrated risk in the hands of just a few companies. Spokeswomen for the central banks of both Europe and the United States would not say whether their researchers had studied holdings of such contracts among nonbank entities like insurance companies and hedge funds — and they would not say what would occur among large players if Greece or another European country defaulted...
Mohamed El-Erian, chief executive officer of the Pacific Investment Management Co. (PIMCO), has predicted that Greece and other similarly afflicted European economies will default on their debts... His viewpoint that default is the only option for Greece to escape its debt crisis comes shortly after the Greek government on Tuesday won a crucial vote of confidence. The vote increases the government's chances of securing additional financial aid from the European Union and the International Monetary Fund (IMF) to avoid the eurozone's first sovereign debt default.
President Barack Obama's health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid... Up to 3 million more people could qualify for Medicaid in 2014 as a result of the anomaly. That's because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility. It might be compared to allowing middle-class people to qualify for food stamps.
Medicare chief actuary Richard Foster says the situation keeps him up at night... "I don't generally comment on the pros or cons of policy, but that just doesn't make sense"...
...Governors have been clamoring for relief from Medicaid costs, complaining that federal rules drive up spending and limit state options... Medicaid is a safety net program that serves more than 50 million vulnerable Americans, from low-income children and pregnant women to Alzheimer's patients in nursing homes. It's designed as a federal-state partnership, with Washington paying close to 60 percent of the total cost.
..."The fact that this is being discovered now tells you, what else is baked into this law?" said [Former Utah governor Mike] Leavitt, who served as Health and Human Services secretary under President George H.W. Bush. "It clearly begins to reveal that the nature of the law was to put more and more people under eligibility for government insurance."
...In roughly 20 years, the typical American’s share of the national debt will more than triple unless Washington gets the nation’s fiscal house in order. Right now, the national debt averages $31,871 for each American—nearly two-thirds of the median household income of $50,255. The Heritage Budget Chart Book illustrates that without any real spending cuts or reforms, debt will surge to $103,827 per American by 2032 and keep rising.“For younger generations, the story gets worse,” says Alison Acosta Fraser, director of Heritage’s Thomas A. Roe Institute for Economic Policy Studies. “By 2044, each American’s share of the national debt will redouble to $206,771. And it keeps going up after that.”
On Friday, the BLS [Bureau of Labor Statistics] released its monthly state employment and unemployment summary. The ... chart below summarizes the results. Bottom line: lots of red, a little green and quite a bit unchanged.
I received my last unemployment check a few months ago. That's why I was a little surprised to see mail from the Pennsylvania Department of Labor & Industry on Friday. I've attached a copy of the mailing. As you can see, it says too bad your unemployment benefits have ended, but have you thought about applying for food stamps? Hey, why not, everybody's doing it. Why they even have a snappy name for the program for it - SNAP! And I bet it's a snap to qualify too.
Since the additional weeks of unemployment came from the feds (in PA, it was called Tier 1, 2 & 3 and eligibility was determined through a separate federal government department within the PA Dept. of L & I), how much do you want to bet the directive to "suggest" food stamps comes from the feds as well?I'm tempted to apply just to see if I'm eligible even though I don't want or need them, the whole thing makes me sick. I'll have to think on it, somehow I don't picture myself the next J. O'Keefe!
Challenges facing Greece:
• Debt/GDP ratio of over 150%, forecast to be 170% by 2013.
• An uncompetitive economy with only two primary economic drivers: Tourism and shipping.
• Greek government revenue declined sharply in May 2011 while government spending rose sharply, leading to a large step backward and a further widening of the deficit.• A government which is in turmoil and a population that feels betrayed by politicians and the Greek elite.
• Widespread public outrage against proposed EU/IMF austerity measures and state asset sales; 76% of Greek citizens believe government measures cannot fix the economy, 74% of Greek citizens want a renegotiation of the 2010 bailout terms.
• A culture of pervasive tax evasion which won’t change overnight
• A bloated & inefficient public sector which has run up a significant percentage of the debt that currently plagues Greece
• The last and probably most controversial bullet point – A failure of the private sector in Greece to move the country forward and to become competitive with other EU economies. Greece suffers from entrenched cultural handicaps such as the widespread practice of nepotism in corporations and small businesses. Say what you will about the United States, the great strength of American business is a culture of meritocracy which has rewarded the best and the brightest who have achieved and innovated. Young talented Greeks who do not benefit from having a wealthy pedigree aspire to work in the public sector, not the private sector. This is the polar opposite of the United States where highly skilled/talented individuals strive to remain in the private sector and to start their own businesses......EU leaders have one last chance to at least attempt to save the euro-zone by cutting Greece’s debt in half and spreading the losses around throughout all parties involved (ECB, EU, private creditors i.e. banks etc.) and creating a federal fiscal authority similar to the US Treasury. Of course, there is much more to be done but this would be a good start...
“After a year, every indicator has unfortunately worsened, despite the incredible quantity of financial assistance,” he was quoted saying...
"All of this has terrible human consequences and it's associated with a transfer of liabilities from private creditors to European taxpayers. Why? Very little is being done to deal with the excess of public debt, and the conditions for higher growth are not being put in place," he said. "Further on, if this approach is kept up, more money will be wasted to save private creditors and the risk of a disorderly restructuring of the debt will be greater."
Jerry Brown's argument for his return to the California governorship was that as a 73-year-old politician, too old to worry about his political future, he would throw caution to wind, force partisans of left and right to negotiate, and tame this state’s famously out-of-control budget.
But his first six months in office have looked nothing like this. Brown’s experience has been no match for the difficult task that confronts Democrats in Washington and around the country: how to, at a time of austerity, protect programs and secure more taxes in the face of opposition from anti-tax Republicans. Brown has made concession after concession—cutting billions, agreeing to negotiate new legal limits on spending and pensions—without securing any agreement for additional revenues, even temporary taxes that would be subject to a vote of the people. In the process, he has alienated his own party.
Brown’s story so far shows that low-key negotiation and concession does not get you much from Republicans in this era... Brown [is required] to get votes from Republicans, even though Democrats control the governorship, both houses of the legislature, and every other statewide office...
[Some] voices... suggest Brown is gutless. Republicans, ungrateful despite Brown’s concessions, say they couldn’t reach a deal with Brown because the governor did not have the courage to embrace new limits on spending and pensions that the GOP wants in the agreement—but that powerful public employee unions oppose...
Government anti-poverty programs... now serve a record one in six Americans and are continuing to expand... More than 50 million Americans are on Medicaid, the federal-state program aimed principally at the poor...
...More than 40 million people get food stamps, an increase of nearly 50% during the economic downturn, according to government data through May. The program has grown steadily for three years...
...Close to 10 million receive unemployment insurance, nearly four times the number from 2007. Benefits have been extended by Congress eight times beyond the basic 26-week program, enabling the long-term unemployed to get up to 99 weeks of benefits. Caseloads peaked at nearly 12 million in January — "the highest numbers on record," says Christine Riordan of the National Employment Law Project, which advocates for low-wage workers.
More than 4.4 million people are on welfare, an 18% increase during the recession...
One of the few undisputed triumphs of American government of the past 20 years – the sweeping welfare reform programme that sent millions of dole claimants back to work – has been plunged into jeopardy by billions of dollars in state handouts included in the president’s controversial economic stimulus package...
...Robert Rector, a prominent welfare researcher who was one of the architects of Clinton's 1996 reform bill, warned last week that Obama’s stimulus plan was a “welfare spendathon” that would amount to the largest one-year increase in government handouts in American history... Despite dire warnings that reduced benefits for single mothers and deadlines on entitlement would create a social calamity – one liberal senator warned at the time that children would be “sleeping on grates” – the 1996 reforms cut welfare rolls from more than 5m families in 1995 to below 2m a decade later without a discernible increase in hardship.
One study found that a 50 percent increase in the value of AFDC and foodstamp payments led to a 43 percent increase in the number of out-of-wedlock births....Out-of-wedlock births are strongly related to welfare dependency. A 1 percent increase in the welfare dependent population in a state increases the number of births to single mothers by about 0.5 percent...
...Welfare dependency reduces employment. A 1 percent increase in the dependent population increases the number who are not employed by about 0.1 percent... An increase in welfare benefits reduces employment by increasing the number of welfare dependents. An increase in AFDC benefits by 1 percent of average income increases the number who are not employed by about 0.5.
"[R]esearch strongly suggests both that young adults and teens raised in single-parent homes are more likely to commit crimes, and that communities with high rates of family fragmentation (especially unwed childbearing) suffer higher crime rates as a result."
In The Atlantic Monthly, Barbara Dafoe Whitehead noted that the "relationship [between single-parent families and crime] is so strong that controlling for family configuration erases the relationship between race and crime and between low income and crime. This conclusion shows up time and again in the literature. The nation's mayors, as well as police officers, social workers, probation officers, and court officials, consistently point to family break up as the most important source of rising rates of crime."Just in time for the end of QE2, when the US needs every possible foreign buyer of US debt to step up to the plate, we get confirmation that yet another major foreign central bank has decided to not only not add to its US debt holdings, but to actively sell US Treasurys... The WSJ reports that "Russia will likely continue lowering its U.S. debt holdings as Washington struggles to contain a budget deficit and bolster a tepid economic recovery..."Well, with Russia out, at least we have China and Japan continuing to buy US debt.... Oh wait, China is contemplating dumping two thirds of its debt you say? And the biggest buyer of Japanese bonds is now in the process of selling Japanese bonds in the open market for the first time (so not really in the market of US bonds)...
Well, surely US households will step up to the plate. After all they all have so much "cash on the sidelines" courtesy of the RecoveryTM ©® that they can't wait to dump it all into paper yielding less than 3% a year, and has negative real rates of return. Wait, what's that: according to the Fed, in Q1 US "households" sold $1.1 trillion annualized in Treasurys to the Fed?
So, let's get this straight: China, Japan, and now very much openly Russia, the three countries with the largest financial reserves in the world, are threatening, if not already dumping US bonds, just in time for US households to sell their holdings of US paper to Brian Sack. And this is happening 2 weeks before QE2 ends... Um... Are we and Bill Gross (and certainly not Morgan Stanley) the only ones to see a problem with this?
Despite our nation’s staggering $14.4 trillion debt, the Obama Administration and the Democratic leadership in the Congress want to raise our nation’s debt limit without any spending cuts or reforms.
We believe that this is a fiscally irresponsible position that would place America on the Road to Ruin. At the same time, we believe that the current debate over raising the debt limit provides a historic opportunity to focus public attention, and then public policy, on a path to a balanced budget and paying down our debt.
We believe the Republican Study Committee’s “Cut, Cap, Balance” plan for substantial spending cuts in FY 2012, a statutory spending cap, and the passage of a Balanced Budget Amendment to the Constitution is the minimum necessary precondition to raising the debt limit. The ultimate goal is to get us back to a point where increases in the debt limit are no longer necessary.
If you agree, take the Cut, Cap, Balance Pledge!
Turns out the American people are a lot smarter than the Democrats thought.The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 23% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -19......Twenty-seven percent (27%) of Likely U.S. Voters now say the country is heading in the right direction... That's down one point from last week. In April, prior to the killing of Osama bin Laden, the number who felt the country was heading in the right direction fell into the low 20s, the lowest findings of the Obama presidency, but the figure climbed back up to 29% in early to mid-May. The number who believe the country is on the right course has ranged from a low of 21% to a high of 35% since January 2009.
...Leading up to President Obama's inauguration, the number of voters who felt the country was heading in the right direction remained below 20%. The week of his inauguration in January 2009, voter confidence rose to 27% and climbed into the low to mid-30s until mid-May of that year. Since then, belief that the country is heading in the right direction has trended lower.
The US economy is literally on the ledge of a cliff.
Today, the Federal Government accounts for 35% of incomes and salaries in the US. That’s over one third of all income in the US coming from the Government’s ability to dole out funds.
What supports this largess?Money printing and our ongoing debt-orgy. And today, these are one and the same. The US Federal Reserve and Treasury have enacted policies so insane that the US Federal Reserve is now the single largest holder of US Debt with a balance sheet of $2.8 trillion.
Let’s give that number some perspective. Germany, the world’s FOURTH largest economy is only $3.3 trillion in size. At $2.8 trillion the Fed’s balance sheet is larger than the economies of France, the UK, and Brazil.
Why is the Fed’s balance sheet so huge? Because US Treasuries are so unattractive to foreign Governments that the Fed has had to pick up the slack and buy our debt (usually within a week or two of it being issued).
Let me rephrase that: the US Fed is now printing money so it can buy US Debt because other investors are no longer interested in buying it.
This is just one of the various schemes Washington is employing to maintain its fiscal insanity. Another is the active raiding of pension funds to buy new US Debt (YES, the Treasury is doing this).
So... the US Government is now paying over 1/3rd of US incomes… and it’s financing this by having the Fed buy new debt from the Treasury.
Do you think this entire system might end up collapsing in a horrific manner?
Unless Barack Obama is summarily voted out of office in 2012, I fear this Republic will not survive.
What's fascinating about this graph is that you can see we appear to have been in a normal, run-of-the-mill recession until the Obama "Stimulus" package kicked in 2009. After that point, the endless printing of money, the attendant stealth inflation, and the suppression of free enterprise by swarms of new government bureaucrats all conspired to crush the private sector.In its 22-year history—a period that has spanned three recessions, a global financial crisis, massive U.S. auto bankruptcies, and the departure of Isuzu, a founding partner, from the operation—SIA has rolled out more than 3 millionvehicles and has never resorted to layoffs. Instead, it's given workers a wage increase every year of its operation. Staffers also enjoy premium-free health care, abundant overtime ($15,000 each, on average, in 2010), paid volunteer time, financial counseling, and the ability to earn a Purdue University degree on-site—all in a state that has lost 46,000 auto jobs and suffered multiple plant foreclosures in the past decade.
...To score a cherished "associate" position at the factory—there's a 10-1 ratio of applicants to openings—would-be employees are expected to put in long hours learning and practicing SIA's low-impact manufacturing. That means scrutinizing every byproduct, from welding slag to plastic wrap, for savings. And obsessively slicing seconds off assembly procedures. And a willingness to work whole months of six-day shifts, and likely years on the graveyard shift, while resisting the siren call of unionization. (The United Auto Workers has failed three times to organize the plant's workers.)...
We still have no definitive plan for the debt limit coming from the Obama Administration, regardless of the “negotiations” being led by Vice President Joe Biden...
...When President Obama stood with German leader Angela Merkel and stated that he was not concerned about a double dip recession, that made me think the statement would be similar to General George Custer stating to the Troopers of the 7th Calvary at Little Big Horn, “Hey, nothing to worry about.”
One needs only to look at the economic indicators of job growth, quite anemic to say the least, and the fact that the Dow Jones had its sixth straight week of negative slide. These are the first six straight weeks since 2002.
This month the Federal Reserve’s Quantitative Easing (QE II) will come to an end. It means that the federal government has been monetarizing our debt by buying its own treasury bonds, printing more money, and lowering interest rates to rock bottom, yet these steps have not produced any sustainable improvements.
We could seriously be on the verge of an inflationary fiscal environment. And if anyone from the Obama Administration recommends increased Keynesian style stimulus spending, well, let us go back and look at how many stimulus packages Japan initiated.
We are so not out of the woods, and last year’s “Summer of Recovery,” has now turned into the possibility of a dubious and dastardly double dip recession.
It's very reassuring to see the president cracking jokes about his anemic economic record. Jobless Americans will surely be rolling in the aisles of unemployment offices nationwide, thankful in the knowledge we have such a steady hand in the White House.President Obama's Council on Jobs and Competitiveness met today in Durham, NC at Cree Inc., a company that manufactures energy-efficient LED lighting. One of the Council's recommendations to President Obama was to streamline the federal permit process for construction and infrastructure projects. It was explained to Obama that the permitting process can delay projects for "months to years ... and in many cases even cause projects to be abandoned ... I'm sure that when you implemented the Recovery Act your staff briefed you on many of these challenges." At this point, Obama smiled and interjected, "Shovel-ready was not as ... uh .. shovel-ready as we expected." The Council, led by GE's Jeffrey Immelt, erupted in laughter.
Erupted in laughter. We'll see who's laughing come November 2012.
After he was done yukking it up, Obama flew our our dime down to Miami for a trio of fundraisers...
In an exclusive interview with TODAY’s Ann Curry that will air on Tuesday’s show, President Barack Obama said that if he were Democratic Congressman Anthony Weiner right now, he would resign in the wake of the scandal in which Weiner admitted to sending explicit photos of himself to women online.
“I can tell you that if it was me, I would resign,’’ Obama told Curry.
Weiner has been the talk of the nation since he was caught sending lewd photos of himself to various women on multiple social media platforms, prompting the head of the Democratic National Party to call for him to step down and House Democratic leader Nancy Pelosi to demand an ethics committee investigation.
“When you get to the point where, because of various personal distractions, you can't serve as effectively as you need to, at the time when people are worrying about jobs, and their mortgages, and paying the bills — then you should probably step back,’’ Obama said... [adding] that what Weiner did was “highly inappropriate’’ and that he has “embarrassed himself” and his wife and family, but said it will ultimately come down to a decision by Weiner and his constituents as to whether he will continue in office.
While the President understands why the scandal has generated so much attention, he told Curry that it was behind joblessness, the economy and Afghanistan on his radar right now... “I am absolutely confident that we can move forward on a plan that gets our debt under control, gets our deficit under control, but also makes sure that we're making the investments in the future that are going to help us put people back to work.’’
The main driver behind long-term deficits is government spending'not low revenues.While revenue will surpass its historical average of 18.0 percent of GDP by 2021, spending will shoot past its historical average of 20.3 percent, reaching 26.4 percent in the same year.
More spending and higher taxes.