- 1. The doc fix: this is childish stuff, blaming the health reform for costs that will happen whether or not the reform happens.
- 2. Alleged “double-counting” of Medicare savings; actually, there’s no double-counting involved. Savings are savings. .
- 3. “Appropriations” — that’s administrative costs, of which the great bulk would be incurred even without the bill.
- 4. Social Security taxes — I think they mean Medicare, but anyway, additional tax revenue does reduce the deficit, regardless of what trust fund it’s allocated to.
- 5. CLASS Act: this will reduce the deficit over the next 10 years, but will have some long-run costs. But if you’re going to talk long run, you should do it everywhere – and health reform gets better, not worse, over time. In fact, the main reason repeal costs more than the original estimate of savings is that moving the window forward a year makes the benefits of reform bigger.
Europe unveils sweeping plans to govern reckless banks – Brussels has called for sweeping powers for regulators to seize failing EU banks, sack board members, and impose haircuts on senior bank debt, aiming to ensure that taxpayers are never again held hostage by high finance. The European Commission’s "Framework for Bank Recovery and Resolution" draws on Scandinavia’s hard-line approach during their banking crises in the early 1990s. The goal is to end the pattern of moral hazard and mispricing of risk that generated Europe’s debt woes. "Banks will fail in the future and must be able to do so without bringing down the whole financial system," said Michel Barnier, the internal market commissioner Mr Barnier’s consultation paper will lead to a "legislative proposal for a harmonized EU regime" as soon as this summer, with an insolvency structure in place by 2012.
Is There Enough Oil to Pay Our Debt? – Whether you’re a taxpayer in the UK, Ireland or the US, it must already be pretty clear that you’re on the hook for a lot of IOUs borrowed from your future. What’s not clear is exactly how your government is going to pay that debt back.History would suggest that the yield on a ten-year US Treasury bond should be close to double what it is, given the size of Washington’s borrowing program. The reason it’s not is that creditors and debtors both share a common belief that a powerful economic recovery lies just around the corner—one so powerful, in fact, that tax revenues will suddenly fill government coffers and let bondholders be paid the huge sums they are owed while at the same time sparing taxpayers an otherwise draconian fate. The only problem is that the economic growth everyone is counting on is powered by oil. And as you’ve probably noticed, that’s getting more and more expensive to burn. So consider just how sustainable economic growth would be in a world of oil prices of $100 to $225 per barrel. Because those are the price parameters we’d be facing in the unlikely event that we actually see the kind of economic growth that bond markets and public treasuries around the world are so desperately depending on.
Brazil Moves To Curb Rising Currency – Brazil has made a fresh attempt to keep the lid on its rising currency with new curbs on speculative trading designed to discourage ramping of the real against the dollar. The move is Brazil’s third since October aimed at discouraging “hot money” from chasing the real higher and so undermining the nation’s competitiveness in the face of a weak dollar. Brazil was the first country last year to highlight the dangers of “currency wars” and Mr Mantega made it clear on Wednesday that the nation was equally alive to the problem this year. “We’re not going to allow our American friends to melt the dollar,” he said, believing that the US’s $600bn (£388bn) injection into its economy was an unfair attempt to boost exports. Brazil will force lenders to maintain the reserve deposits in cash – on which they will not earn interest. Aldo Mendes, the central bank’s director of monetary policy, said the new curbs had the potential to trim short positions in the dollar to $10bn from last month’s $16.8bn.
Portuguese, Spanish Bonds Decline Amid Debt-Auction Speculation – The extra yield investors demand to hold Portuguese securities rather than benchmark German bunds widened to the most in a month as the IGCP debt office announced the sale of 2014 and 2020 debt, scheduled for Jan. 12. Belgian bonds tumbled after the nation’s political leaders failed to restart seven- party negotiations to form a government. German bunds rose. “The underlying story behind this slide in Portuguese government bonds is supply-related,” said David Schnautz, a fixed-income strategist at Commerzbank AG in London, who said he had heard speculation about the Portuguese sale before it was announced. “Next week we will keep on running at full steam in the primary market with supply from Spain and Italy,” he said.
Economy Needs To Create 235K Jobs A Month To Return To Pre-Depression Levels By End Of Obama Second Term – When we last ran this number, the economy needed to create 232,400 jobs per month to get to the same unemployment rate as last seen in December 2007, just before the depression started, courtesy of today’s massive disappointment we can now increase the creation requirement to 235,120. As a reminder this is the number of jobs per month that need to be created between December 2010 and November 2016, or the end of Obama’s now improbable second term, for jobs to recover their losses when taking into account the natural growth of the labor force of 90,000 people per month. Also, when ignoring the demographic shift, or just accounting for the absolute number in jobs without accounting for the labor force growth which is so wrong only the BLS looks at that number, the breakeven has been pushed back from June 2013 to July 2013. Economic collapse you can finally believe in.
Why the World Is Financially Doomed in Four Charts – Though the complexities may appear endless, the global economy’s coming implosion is really fairly easy to understand: here are four charts which do the heavy lifting. It boils down to these basics:
- 1. When money is dear and difficult to borrow, then productivity and capital accumulation are encouraged, speculation, malinvestment and debt-based consumption are discouraged.
- 2. When money is "free" (zero-interest rate policy) and liquidity is unlimited, then the opposite conditions hold: speculation in risk assets, malinvestment and debt-based consumption are all encouraged, and productivity and capital accumulation are heavily discouraged.
- 3. When debts exceed the value of the underlying assets, the only way out of the Tyranny of Debt is to write off the debt on both the borrower and lender’s balance sheets, wiping out their capital via liquidation and bankruptcy.
- 4. The "extend and pretend" policy pursued by all major nations is simply transferring the impaired debt from private hands to the taxpayers (public debt), crippling the economy with higher taxes and higher debt service.
TheBurningPlatform: Jobs-Spin Baby Spin – Here is the blaring headline on Marketwatch: Jobless rate falls to 9.4% Looks fantastic. Except it is more government bullshit. According to your government the number of unemployed plunged from 15 million to 14.5 million. Sounds AWESOME!!!! But wait, let’s look at the details. It seems that 434,000 Americans decided to leave the workforce in December according to the BLS. Give me a fucking break. The economy is a shambles, people are desperate for money, and 434,000 decided to sit back and take it easy? The number of people who want a job went up by 223,000, but somehow the government decides they shouldn’t be considered unemployed. Orwell is spinning wildly in his grave. The employment to population ratio dropped again and is now the lowest since 1983.