Tuesday, March 13, 2012
It's ugly out there, the world is flooded with fiat currency and in debt to its eyeballs.
Global governments have done an excellent job hiding their insolvency and keeping the people they represent in the dark.
Remember, the government is technically 'the people,' so the gold at Fort Knox (if there is any) is our gold and the debt the government has accumulated, is our debt.
We find it sad that so many Americans go to the government for help after the government is the very entity that put them in a personal mess. Prior to the government entering our housing market, the max you would see for a home mortgage was 7 years, however, in order to make homes more affordable, the government started backing 30 year loans. The government's definition of affordability is you making a payment for life and not actually having ownership. Every government program designed to help has driven costs up through inflation, direct taxation, regulations, and or course the redistribution of wealth.
Recently, Lew Rockwell posted some ugly facts about Americans' personal debt. Please note that it is the Federal Reserve that sets interest rates, this is the key factor in what a debt payment will be, so the lower rates are, the more Americans are encouraged to load up. If the rates aren't low enough for you, state and local governments have special deferred payment plans and government backed loans.
The result of all this help is 16.5 trillion in official national debt, over 100 trillion in debt liabilities, and an entire class of debt slaves.
Student loan debt in the U.S. is nearing 1 trillion dollars
With government support, colleges can raise tuition to whatever they want, and they have. The only thing rising faster than college tuition is our government health care system.
Two-thirds of all college students graduate with student loan debt
Borrowing for college students is up 100% in the past 10 years
Today, 46% of all Americans carry a credit card balance month to month
Americans have 600 million active credit cards in the U.S.
Consumer debt has increased over 1,700% since we dropped the gold standard and went 100% fiat
45% of cars are now being financed for 6 years
70% of ALL car purchases in the U.S. involve an auto loan
45% of auto loans are subprime
Right now 8 million Americans are at least one mortgage payment behind
Mortgage debt as a percentage of GDP has more than tripled since 1955
So who stands to profit from all this debt?
U.S. Banks have more equity in U.S. homes than the American people do, the government has a highly motivated class of workers (need to keep making payments), and lastly, what better way for the powers that be to keep people ignorant of their government than to put them in a situation where they are literally living in a rat race.
Seriously, look around the next time you are on the freeway or at the mall, everything from cars to clothes is financed.
Fixing America's debt problem starts with each of us changing the way we think and teaching others to do the same. Instead of focusing on the quantity of life, how much stuff can we get our hands on, focus on the quality of life, the peace of mind of a real ownership society.
Future Money Trends
Janne Kytömäki, a Finnish software developer, was cruising Google’s Android Market for smartphone apps last year when he noticed something strange. Dozens of best-selling applications suddenly listed the same wrong publisher. It was as if Stephen King’s name had vanished from the covers of his books, replaced by an unknown author. Kytömäki realized the culprit was a piece of malware that was spreading quickly, and he posted his findings online.
Google responded swiftly. It flipped a little-known kill switch, reaching into more than 250,000 infected Android smartphones and forcibly removing the malicious code. “It was sort of unreal, watching something like that unfold,” says Kytömäki, who makes dice simulator apps. Kill switches are a standard part of most smartphones, tablets, and e-readers. Google, Apple , and Amazon all have the ability to reach into devices to delete illicit content or edit code without users’ permission. It’s a powerful way to stop threats that spread quickly, but it’s also a privacy and security land mine.
With the rollout of the Windows 8 operating system expected later this year, millions of desktop and laptop PCs will get kill switches for the first time. Microsoft hasn’t spoken publicly about its reasons for including this capability in Windows 8 beyond a cryptic warning that it might be compelled to use it for legal or security reasons.
As Americans ponder ways to cut defense spending, the Chinese government is ramping up its military budget dramatically. Spending on China's armed forces is being increased by 11 percent this year, on track to pass the $100 billion level for the first time in history.
While that remains far below U.S. spending levels - President Barack Obama proposes a $524 billion Pentagon budget for the coming year - it still represents a change certain to worry policymakers in Washington.
What is of particular concern is China's strategy of building up its force projection capability. For decades, Chinese strategy was to maintain a massive homeland defense force, coupled with a relatively modest arsenal of strategic nuclear weaponry.
Now, leaders in Beijing want the force projection ability to use conventional forces regionally and, perhaps, throughout the globe. China's first aircraft carrier has been built. Smaller, long-range troop carriers are planned. Clearly, the regime's goal is to be able to send Chinese troops to regions where their use is desired, and to support them with air power.
That presents a potential challenge to U.S. interests throughout Asia, and perhaps on a wider stage.
Yes, U.S. military spending needs to be more efficient. But given the new strategy adopted by Beijing, it also needs to craft responses to a new catalogue of threats, and that could be more difficult to do if reductions go too far. Lawmakers should keep that in mind when discussing potential budget cuts.
Minot Daily News
How would you feel if you worked for a state or local government for 20 or 30 years only to have your pension slashed dramatically or taken away entirely? Well, this exact scenario is playing out from coast to coast and in the years ahead millions of elderly Americans are going to be affected by broken promises and vanishing pensions. In the old days, things were much different. You would get hired by a big company or a government institution and you knew that the retirement benefits that they were promising you would be there when you retired in a few decades. Unfortunately, we have now arrived at a time when government institutions and big companies have promised far more than they are able to deliver, and "pension reform" has become one of the hot button issues all over the nation. Many Americans that have been basing their financial futures on their pensions are waking up one day and finding that their pensions are either gone or have been cut back dramatically. According to Northwestern University Professor John Rauh, the latest estimate of the total amount of unfunded pension and healthcare obligations for state and local governments across the United States is 4.4 trillion dollars. America is continually becoming a poorer nation and all of that money is simply not going to magically materialize somehow. So where is that 4.4 trillion dollars going to come from? Well, either pension benefits are going to have to be cut a lot more all over America or taxes will need to be raised dramatically. Either way, we are all going to feel the pain of these broken promises.
There simply is not enough money out there to keep all of the pension commitments that have been made. Something has got to give. In the end, millions of elderly Americans will likely be plunged into poverty as pensions disappear.
Some local governments around the nation are already declaring bankruptcy and are either eliminating pensions or are cutting them very deeply. Just check out what just happened in Central Falls, Rhode Island....
For years, city officials promised robust union contracts and pensions without raising revenue to pay for them. Last August, the math caught up with them. Central Falls was broke, its pension fund short $46 million. It declared bankruptcy."My daughters grew up here, went to school here. It's all gone," said Mike Geoffroy, a retired firefighter.He said he could not make the payments on his house after his pension was cut by $1,100 a month.
When will the math catch up with the city where you are living?
For years and years most of our state and local politicians have been ignoring this problem. But eventually a day comes when you simply cannot ignore it any longer.
Check out what Pensacola Mayor Ashton Hayward said about the situation in his city recently....
"When our annual pension liability is more than our yearly property tax revenues, we have to do something"
Keep in mind that taxpayers don't get any new services for money spent on pensions. It is money that goes straight into the pockets of retired workers. State and local governments are desperately trying to pay retired workers what they are owed and fund ongoing government functions at the same time, but many have reached the breaking point.
All over the country, state and local governments are going broke. The following is from a recent article by Duff McDonald....
Alabama's Jefferson County has actually gone bankrupt. Stockton, California is all but ready to do the same. And all you have to do is look to Detroit—or any of the nearby auto towns named after a Buick model of one sort or another—and you see fiscal crisis playing out right now. Look in your own backyard—or at the potholes on your neighborhood roads—and you will likely find the same.
Things are so bad in Stockton, California that they are actually skipping debt payments....
The city of 290,000 that rode the wave of the housing boom in the late 1990s and early 2000s now finds itself littered with foreclosed homes, saddled with pension, health care and other obligations it can't afford, and unable to pay its bills.The City Council voted last month to suspend $2 million in bond payments and begin negotiations with bond holders, creditors and unions.
And did you notice what is being blamed for the financial problems in Stockton?
Pension and healthcare benefits.
Sadly, we are seeing pension nightmares erupt all over the nation right now.
For example, check out what is happening to the Public School Employees' Retirement System and State Employees' Retirement System in Pennsylvania....
PSERS had an accrued unfunded liability of nearly $26.5 billion, the amount of money the fund is short to cover existing retirement benefits. That hole is expected to grow to $43 billion by 2019. SERS is $12.5 billion in the red, and that shortfall is expected to climb to nearly $18 billion by 2018. Unless the stock market makes giant sustained gains, taxpayers will have to refill those funds.
That doesn't sound good at all.
In California, the Orange County Employees Retirement System is estimated to have a 10 billion dollar unfunded pension liability.
How in the world can a single county be facing a 10 billion dollar hole?
This is madness.
The state of Illinois is facing an unfunded pension liability of more than 77 billion dollars. Considering the fact that the state of Illinois is flat broke and on the verge of default, it is inevitable that a lot of those pension obligations will never be paid.
In fact, there are going to be a whole lot of broken promises all over the country.
Pension consultant Girard Miller told California's Little Hoover Commission that state and local government bodies in the state of California have $325 billionin combined unfunded pension liabilities.
That comes to about $22,000 for every single working adult in the state of California.
So where is all of that money going to come from?
But at least most state and local government employees are still covered by pension plans, even if they are failing.
In the private sector, pension plans are vanishing at lightning speed.
According to the Boston College Center for Retirement Research, the percentage of workers in America covered by a traditional pension plan fell from 62 percent in 1983 to 17 percent in 2007.
That isn't just a trend.
That is a tidal wave.
And many of the private pension plans that still exist are massively underfunded. For example, Verizon's pension plan is underfunded by 3.4 billion dollars.
So what should Americans do in light of all this?
Well, the number one thing to realize is that the pension plan you have been counting on could disappear at any time.
We live in an economic environment that is extremely unstable, and about the only thing you can count on in this environment is rapid and dramatic change.
Do not plan your financial future around a pension plan. If you do, you are likely to be bitterly disappointed.
Americans that plan to retire in the coming years should do their best to try to fund their own retirements.
Unfortunately, most Americans are not putting away much of anything for retirement. As I have written about previously, one study found that American workers are $6.6 trillion short of what they need to retire comfortably.
Over the next 20 years approximately 10,000 Baby Boomers will be retiring every single day.
A lot of them are going to be blindsided by empty pension funds and broken promises.
We are facing a retirement crisis of unprecedented magnitude, and there is not much hope in sight.
And if there is a maor stock market crash, things are going to be much, much worse.
Most pension funds and retirement plans are heavily invested in the stock market. If we were to see a major financial crisis like we saw back in 2008 it would be absolutely devastating. Millions of Americans could see their retirement plans wiped out in short order.
Once again, please do not place your faith in the system.
If you do, you are likely to end up holding a bag of broken promises.
A gigantic tsunami of unfunded pension obligations is coming. A lot of state and local governments are going to go broke. A lot of promises are going to be broken.
If you hope to retire any time soon, you better plan on being able to take care of yourself.
Property taxes collected in Cook County rose twice as fast as inflation in the first decade of this century — and the boost was particularly high in the suburbs.
That's the somewhat surprising but sadly believable conclusion of a provocative new report released today by a pair of libertarian think tanks and Cook County Treasurer Maria Pappas.
The report, prepared by the Heartland Institute and released with the backing of the Illinois Policy Institute, found that, overall, property taxes collected by all governments in Cook County rose from $7.89 billion in 2000 to $11.69 billion in 2010. That's a 48 percent hike, more than twice the 22.5 percent increase in the local consumer price index, according to Heartland.
Taxes within Chicago proper, mostly for the city and the Board of Education, grew at a lesser rate, 44 percent, the study found. But suburban school districts collectively increased their levy by 58.4 percent, townships 62.7 percent, non-Chicago municipalities 75.4 percent and suburban fire districts a cool 84.7 percent.
Such increases are "unsustainable," are costing the Chicago region jobs and threaten "financial collapse" unless reversed, said Ted Dabrowski, vice president of policy for the Illinois Policy Institute.
Warned report author John Nothdurft of Heartland, "The property tax burden will skyrocket in the next decade, despite stagnant or declining home prices, because of growing public pension and benefit obligations."
Cook County itself held its levy flat but increased sales and other taxes.
Pension costs indeed are a big part of the reason for the spending hike. Benefit levels often are set not in local negotiations but by state law.
But another fair chunk of the increase came from tax-increment financing districts in the city — arguably a sign that the districts have succeeded in their goal to boost economic development and the tax base, though local governments surely ate up the resulting revenues.
In another oddity, Mr. Nothdurft and others said much of the increase in levies had been approved by suburban votes in various bond referendums. That would seem in opposition to the normal conservative argument that small, locally focused governments are held more accountable and control their costs better than giant governments such as the city of Chicago and Cook County.
But those at the press conference argued that, in fact, suburban governments draw much less media scrutiny than does Chicago City Hall, so suburban voters are ill-informed at election time, at least relatively.
"The suburbs are operating under the radar screen," said Better Government Association chief Andy Shaw, who also spoke at the press conference unveiling the report.
"The (suburban) voters don't understand what they are voting on," Treasurer Pappas said.
Ms. Pappas took the occasion to urge consolidation of the county's hundreds of governments, suggesting that could save big money. "It would be foolish not to favor consolidation."
But a couple of weeks ago, Ms. Pappas failed to back a measure to merge the county recorder of deeds office into the county clerk's office, a step the Civic Federation said could save $1 million a year. The proposal failed by one vote.
Ms. Pappas said she favors a wider merger, involving the various county units that administer the property tax system.
The Illinois Policy Institute last week issued a report on state government that among other things urged the state to balance its budget by no longer picking up the cost of teacher retirement in the suburbs and no longer giving municipalities a cut of state income tax proceeds.
Doing both could deprive local governments in the county of hundreds of millions of dollars a year, perhaps pushing property taxes even higher. But the institute says the shift will pressure them to "tighten their belts."
Read more: http://www.chicagobusiness.com/article/20120312/BLOGS02/120319986/cook-county-property-taxes-soared-at-twice-inflation-rate-in-a-decade#ixzz1p0ZT3tPN
In a well received speech at the annual British Venture Capital and Private Equity Association's annual chairman's dinner, Mr Tyrie said the current lull in the single currency's crisis, after last week's Greek bond swap, should be used to engineer a permanent exit for Greece.
The economic and political challenges facing the country if it stays in the eurozone would be too great to be sustainable, he argued.
Mr Tyrie also said increasing the size and fire power of the IMF was essential. But he also warned the body should avoid getting too close to the eurozone in future but should instead "get tough" with the single currency bloc.
Speaking to some of the most powerful investment groups in the UK and Europe, Mr Tyrie said the IMF should not deal with the countries in the eurozone as "partners" but should approach them from "the other side of the table" given it was the "only fire brigade in town".
Mr Tyrie also urged the UK and others to stick with the principles of free trade having come through the worst of the crisis without "beggar thy neighbour" devaluations.
He said maintaining the support of free trade was one of the biggest challenges that the world faced. However, he warned that the UK would not return to any degree of economic normality until the country had seen a return to the full functioning of the banking industry.
The Federal Reserve released its "worst-case scenario" bank stress test criteria Monday and said it will release full results Thursday at 4:30 p.m. ET.
The Fed will look at how the nation's 19 largest banks would survive a world with a 13 percent jobless rate, a 50-percent drop in stocks, a 21-percent decline in housing prices and a significant contraction of other major world economies.
The Fed conducts the tests on banks every year, but this is the first time since 2009 that it will release its results to the public. In 2009 the Fed found billions in insufficient funds on bank balance sheets.
The tests are designed to make sure banks have enough cash and cash-like securities to withstand catastrophic losses in a financial crisis.
The Fed wants banks to be strong enough to keep lending money to Americans and businesses.
The Fed can stop banks from paying stock dividends or buying back their own stock if they fail the test.
The Associated Press contributed to this report
Tuesday: “Israel and militants in Gaza agreed to cease hostilities Tuesday after Egypt brokered a “mutual truce” following four days of bloodletting which left 25 Gazans dead,” reports Agence France Presse. “Under the agreement, which came into force at 1:00am (2300 GMT on Monday), both Israel and militants from Islamic Jihad — responsible for the lion’s share of rockets targeting southern Israel — agreed to hold their fire, an Egyptian intelligence official told AFP. Israeli officials and Islamic Jihad both confirmed that a deal was in place.” The Jerusalem Post is reporting that 7 “projectiles” were fired at Israel after the cease-fire went into effect. Please pray that the cease-fire will hold and these radical Islamic terrorism will stop.
“Data from the most recent bout of escalation in southern Israel which ended on Tuesday morning when an Egypt brokered ceasefire came into effect revealed that some 222 rockets were fired from the Gaza Strip over the last four days, the Iron Dome system logged 56 successful interceptions and the IDF carried out 37 strikes within the Gaza Strip,” reports Ynet News. Here is an interesting breakdown of the month-by-month numbers of rocket attacks against southern Israel over the past year. Israel saw a record number of tourists coming in February. What will March numbers look like?
Monday: “The current round of fighting between the IDF and Gaza terrorists is increasingly appearing to be unprecedented in terms of the number of rockets directed at Israel, military officials say,” reports Ynet News. “The IDF has registered some 200 rocket launches from Gaza and is characterizing the attacks as a dramatic development in terms of the quantity and rate of the fire. ’In the first three days of the current round of fighting we’ve sustained a larger quantity of rockets than the quantity fired at Israel in the two previous rounds, in August and October, which were longer,’ an army official said. More than 50 of the rockets fired in recent days were medium-range missiles and most attacks were carried out by the Islamic Jihad, the army said. The IDF said that at this time there is no indication of attempts to target central Israel with long-range rockets.” The Israeli Air Force continues to retaliate, and Prime Minister Netanyahu vowed Monday to escalate attacks in Gaza if rocket attacks don’t stop. For the first time in the new round of fighting, Netanyahu hinted at a possible ground war. ”The IDF is ready to expand its operations and continue them as necessary.” Notably, the U.N. has not yet denounced the Palestinians for these 200+ terrorist attacks against Israel’s civilian population.