Feeds:
Posts
Comments

Posts Tagged ‘economic crisis’

Report: Obama to Increase 10-Year Deficit Estimate $9 Trillion

Posted in Board Of Intellectual Capital, Economy, tagged , , , on August 24, 2009| Leave a Comment »

Who among you thinks that this could possibly have a happy ending?

Here is an article from Fox News.

“So much for the crystal ball.

In a report next week, the Obama administration will increase its 10-year budget deficit projection to roughly $9 trillion, an increase of about $2 trillion from the previous projection, an official at the Office of Management and Budget told FOX News.

The 2010-2019 cumulative deficit projection replaces the administration’s previous estimate of $7.108 trillion.

The official said the prolonged recession and the ensuing decline in federal revenue prompted a recalibration of the deficit numbers. The numbers also reflect a projection that post-recession economic growth may not be as robust as after previous recessions, the official said.

Budget projections are rarely static. As economic conditions change, so do the estimates.

The White House also plans to announce this year’s federal deficit will end up about $262 billion less than officials had predicted earlier this year — in part because the administration has provided less aid than expected to Wall Street.

The federal deficit this year will total $1.58 trillion, a senior White House official told the Associated Press late Wednesday. That’s three times more red ink than last year. The official spoke on the condition of anonymity to discuss the report before its release next Tuesday while President Obama will be on vacation in Massachusetts.

The nonpartisan Congressional Budget Office is expected to release its mid-session review the same day. It estimated in June a one-year deficit of $1.825 trillion.

The report for the budget year that ends Sept. 30 also will predict Washington to spend $3.653 trillion this year, the official said. Revenue, however, would reach only $2.074 trillion.

“Whether it’s $1.6 trillion or $1.8 trillion, it’s pretty bad,” said Robert Bixby, executive director of the bipartisan fiscal watchdog The Concord Coalition. “I hope no one tries to spin that as good news.”

The midsummer report was supposed to have been released in mid-July, but was delayed, leading to speculation the White House was delaying the bad news until Congress left on an August recess. Other administrations delayed releasing their versions of this report during their first year.

Obama’s budget had included a $250 billion placeholder for a second bailout of the nation’s troubled banks, but he did not ask Congress for it amid concerns the administration was spending too heavily. The administration also had anticipated more banks failing, but the survival of most banks saved billions for Washington.”

Read the full article here.

Read Full Post »

So What’s the Real Unemployment Rate?

Posted in Board Of Intellectual Capital, tagged , , , on August 10, 2009| Leave a Comment »

Here is a good article from The Campaign Spot.

“Hmm. In June, the Bureau of Labor Statistics said the civilian labor force was 154,926,000 people.

In July, 796,000 of those were taken out of their definition of the workforce, and thus their unemployment calculations for this month, because they have stopped looking for work “because they believe no jobs are available for them.” Ten percent of the June workforce would be 15.4 million, 1 percent would be 1.5 million, and so 796,000 is roughly one half of one percent.

In other words, BLS took .5 percent of what you and I would consider unemployed and took them out of their total. And with that, unemployment went down one tenth of one percent.

Of course, if you take the July number of unemployed, 14.5 million, and add that 796,000 of discouraged workers, you get a total of 15,296,000.

In a work force of July’s number of 154,504,000, that’s an unemployment rate of 9.9 percent.

In a work force of June’s number of 154,926,000, that’s an unemployment rate of 9.8 percent.

UPDATE: Apparently we’re in the Economy of the Beast, with 6.66 million lost jobs over 19 months of contraction.

ANOTHER UPDATE: A few folks with serious reading-comprehension issues are interpreting this post as accusing the Bureau of Labor Statistics of “fudging” the unemployment numbers. No, BLS has always taken the “discouraged workers” out of their workforce pool, and I never suggested that they did not. It’s just that the number of them in this recession means the BLS definition of “unemployed” is working out in an extremely convenient manner for the Obama administration. Roughly 800,000 people who want jobs and can’t find any disappeared off the books.

The unemployment rate declined from month to month, even though the total number of Americans employed with a job decreased. If you don’t find that a signal that the happy headlines are misleading, I don’t know what else to tell you.”

Read the full article here.

Read Full Post »

The Fed Buys 47% of Last Week’s Treasury Notes

Posted in Board Of Intellectual Capital, boic, Economy, Gerbsman Partners, Market research, tagged , , , , on August 7, 2009| Leave a Comment »

Here is an excellent article from Chris Martensson.

“And now it turns out that 47% (!) of the bonds that were taken by the primary dealers in that auction have been quietly bought by the Fed and permanently secreted to its balance sheet.

They didn’t even wait a full week!  A more honest and open approach would have been for the Fed to simply buy them outright at the auction but this way, using “primary dealers” and “POMOs” and all these other extra steps the basic fact that the Fed is openly monetizing US government debt is effectively hidden from a not-too-terribly inquisitive US press and public.

The speed of the shell game is accelerating.

This immediate repurchase of newly auction bonds by the Fed tells us that demand for these bonds is not nearly as high as advertised, and that things are not quite as strong as represented.

And oh, by the way, don’t expect any stock market weakness while so many billions are being shoveled out the Fed and into the pockets of the primary dealers.  They’ll have to do something with all that freshly minted  cash…..”

Read the full article here.

Read Full Post »

Biggest tax revenue drop since 1932

Posted in Board Of Intellectual Capital, boic, tagged , , , , , on August 4, 2009| Leave a Comment »

I have been saying for some time that current deficit projections, even the more realistic Congressional Budget Office projections, are understated owing to overly optimistic forecasts of tax revenue. Now, the data is coming in and it is very bad. California state tax collections will likely be even worse.

Here is an Yahoo article further explaining my point.

“WASHINGTON – The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression.

“Our tax system is already inadequate to support the promises our government has made,” said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.

“This just adds to the problem.”

While much of Washington is focused on how to pay for new programs such as overhauling health care — at a cost of $1 trillion over the next decade — existing programs are feeling the pinch, too.

Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining.

The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies’ spending by 11 percent in 2010 and military spending by 4 percent.

For this report, the AP analyzed annual tax receipts dating back to the inception of the federal income tax in 1913. Tax receipts for the 2009 budget year were available through June. They were compared to the same period last year. The budget year runs from October to September, meaning there will be three more months of receipts this year.”

Read the full Yahoo article here.


Read Full Post »

U.S. Recession Worst Since Great Depression, Revised Data Show

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, Investments, tagged , , , , on August 3, 2009| Leave a Comment »

Here is a goo Bloomberg article.

“Aug. 1 (Bloomberg) — The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.

The world’s largest economy contracted 1.9 percent from the fourth quarter of 2007 to the last three months of 2008, compared with the 0.8 percent drop previously on the books, the Commerce Department said yesterday in Washington. Gross domestic product has shrunk 3.9 percent in the past year, the report said, indicating the worst slump since the Great Depression.

Updated statistics also showed that Americans earned more over the last 10 years and socked away a larger share of that cash in savings. The report signals the process of repairing tattered balance sheets following the biggest drop in household wealth on record may be further along than anticipated.

“The current downturn beginning in 2008 is more pronounced,” Steven Landefeld, director of the Commerce Department’s Bureau of Economic Analysis, said in a press briefing this week. The revisions were in line with past experience in which initial figures tended to underestimate the severity of contractions during their early stages, he said.

Consumer spending, which accounts for 70 percent of the economy, decreased 1.8 percent in last year’s fourth quarter from the same period in 2007, exceeding the prior estimate of a 1.5 percent drop. Purchases also began sinking sooner than previously projected, registering their first decline at the start of 2008 rather than in the second half.

Treasuries, Stocks

Treasuries gained after the GDP report, while stocks closed little changed. Benchmark 10-year note yields dropped to 3.48 percent by the close in New York, from 3.61 percent late the day before. The Standard & Poor’s 500 Stock Index closed at 987.48.

Residential construction fell 21 percent during the period, almost 2 percentage points more than previously reported, aggravating what was already the worst slump since the Great Depression.

The Commerce Department also reported yesterday that the economy contracted at a 1 percent annual rate from April through June after shrinking at a 6.4 percent pace in the first quarter, the most since 1982. The decline in the first three months of the year was previously reported as 5.5 percent.

Recession’s Start

The National Bureau of Economic Research, the arbiter of U.S. business cycles, last year determined the recession started in December 2007. The private group is based in Cambridge, Massachusetts,

Yesterday’s updates are part of comprehensive revisions that take place about every five years and are more extensive than the changes announced at this time each year. Figures as far back as 1929 can be revised.

Over the most recent period, the third quarter of 2008 underwent one of the biggest changes, going from a 0.5 percent decrease in GDP to a 2.7 percent drop. The new reading better illustrates the effect the September collapse of Lehman Brothers Holdings Inc. had on the economy and credit markets.”

Read the full article here.

Read Full Post »

« Newer Posts - Older Posts »