Seriously? California Governor Jerry Brown just signed a bill into law that gives illegal immigrants the use of public tax payer funds for college. Amazing what a crazy and backwards state California is. Giving American tax payer funds to illegal aliens rather than have it be used for our own students that need them.
The bill was passed by California Democrats in a party line vote. Typical Democrat crap.
Republican Tim Donnelly responded to the signing, "Citizens are having a hard enough time getting the classes they need now. Legally documented students from the next state over can only dream of such a benefit."
What part of "illegal" do these people not understand. They are "illegal immigrants" and using our tax payer dollars that should go to legal students!
Saturday, October 8, 2011
Tuesday, September 20, 2011
Obama twisting the truth on how much taxes the rich actually pay
Here goes President Obama twisting the facts once again. His statement that high income families pay less in taxes than middle class families is nothing short of a lie. Here are some facts about our Federal Taxes straight from the Congressional Budget Office.
According to the latest IRS figures. In 2009, taxpayers who made $1 million or more paid on average 24.4% of their income in federal income taxes. Those making $100,000 to $125,000 paid on average 9.9% in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3%. So as you can clearly see Obama's statement is not even close to being accurate at all.
The 10% of households with the highest incomes pay more than half of all federal taxes. They pay more than 70% of federal income taxes, according to the Congressional Budget Office.
According to the latest IRS figures. In 2009, taxpayers who made $1 million or more paid on average 24.4% of their income in federal income taxes. Those making $100,000 to $125,000 paid on average 9.9% in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3%. So as you can clearly see Obama's statement is not even close to being accurate at all.
The 10% of households with the highest incomes pay more than half of all federal taxes. They pay more than 70% of federal income taxes, according to the Congressional Budget Office.
Tuesday, September 13, 2011
Obama still not getting it - Wants to hike taxes to pay for his jobs bill
President Obama just doesn't get it. His lack of business background and business sense continues to show as he tries the same failing tactics to turn around the poor US economy. In a sharp challenge to the GOP, President Barack Obama proposed paying for his costly new jobs plan Monday with tax hikes that Republicans have already emphatically rejected. The reception to his new proposal was no more welcoming, setting the stage for a likely new fight with Congress.
Flanked at the White House by workers he said the legislation would help, Obama declared, "This is the bill that Congress needs to pass. No games. No politics. No delays." He sent it to Capitol Hill saying, "The only thing that's stopping it is politics."
The president's proposal drew criticism from House Speaker John Boehner, who'd previously responded in cautious but somewhat receptive tones to the $447 billion jobs plan made up of tax cuts and new spending that Obama first proposed in an address to Congress last Thursday.
"It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past. We remain eager to work together on ways to support job growth, but this proposal doesn't appear to have been offered in that bipartisan spirit," Boehner spokesman Brendan Buck said.
The biggest piece of the payment plan would raise about $400 billion by eliminating certain deductions, including on charitable contributions, that can be claimed by wealthy taxpayers. Obama has proposed that in the past — to help pay for his health care overhaul, for example — and it's been shot down by Republican lawmakers along with some Democrats.
Yet by daring Republicans anew to reject tax hikes on the rich Obama could gain a talking point as the 2012 presidential campaign moves forward, if not a legislative victory.
At a Rose Garden event Monday, Obama brandished his jobs bill in the air and surrounded himself with police officers, firefighters, teachers, construction workers and others he said would be helped by it. Adopting a newly combative tone that's been welcomed by dispirited Democrats, Obama demanded immediate action on the legislation, which the White House sent to Capitol Hill Monday afternoon.
"Instead of just talking about America's job creators, let's actually do something for America's job creators."
Flanked at the White House by workers he said the legislation would help, Obama declared, "This is the bill that Congress needs to pass. No games. No politics. No delays." He sent it to Capitol Hill saying, "The only thing that's stopping it is politics."
The president's proposal drew criticism from House Speaker John Boehner, who'd previously responded in cautious but somewhat receptive tones to the $447 billion jobs plan made up of tax cuts and new spending that Obama first proposed in an address to Congress last Thursday.
"It would be fair to say this tax increase on job creators is the kind of proposal both parties have opposed in the past. We remain eager to work together on ways to support job growth, but this proposal doesn't appear to have been offered in that bipartisan spirit," Boehner spokesman Brendan Buck said.
The biggest piece of the payment plan would raise about $400 billion by eliminating certain deductions, including on charitable contributions, that can be claimed by wealthy taxpayers. Obama has proposed that in the past — to help pay for his health care overhaul, for example — and it's been shot down by Republican lawmakers along with some Democrats.
Yet by daring Republicans anew to reject tax hikes on the rich Obama could gain a talking point as the 2012 presidential campaign moves forward, if not a legislative victory.
At a Rose Garden event Monday, Obama brandished his jobs bill in the air and surrounded himself with police officers, firefighters, teachers, construction workers and others he said would be helped by it. Adopting a newly combative tone that's been welcomed by dispirited Democrats, Obama demanded immediate action on the legislation, which the White House sent to Capitol Hill Monday afternoon.
"Instead of just talking about America's job creators, let's actually do something for America's job creators."
Wednesday, September 7, 2011
Michigan toughens welfare laws, limit to 48 months
Thank you Mr Governor for helping to move this country away from the socialist/freeloading agenda!
Michigan Governor Rick Snyder on Tuesday signed into law a stricter, four-year lifetime limit on cash welfare benefits, prompting advocates for the poor to warn that tens of thousands of residents will find themselves without cash assistance on October 1.
Michigan's first-year Republican chief executive said the state will offer exemptions to the limit for those with a disability who can't work, those who care for a disabled spouse or child and those who are 65 or older and don't qualify for Social Security benefits or receive very low benefits. Some recipients who are the victims of domestic violence also may be temporarily exempted.
"We are returning cash assistance to its original intent as a transitional program to help families while they work toward self-sufficiency," Snyder said in a statement. He noted that the state still will help the poor by offering food stamps, health care coverage through Medicaid, child care and emergency services.
Then-Gov. Jennifer Granholm, a Democrat, signed a bill that created a four-year limit starting in 2007. But that law exempted many welfare recipients, including those whose caseworkers said they were making progress toward finding employment.
The 2010 election of Snyder and the simultaneous Republican takeover of the Michigan House gave the GOP a free hand to set its own course on public assistance.
The change gives Michigan the Midwest's toughest welfare time limit, according to a survey by The Detroit News. It said there are five-year limits in Illinois, Iowa, Minnesota, Missouri, Ohio and Wisconsin. Indiana has a two-year limit for adults — but none for children.
Gilda Jacobs of the Michigan League for Human Services said she expects about 41,000 people to lose their cash assistance payments on October 1 when the state's new budget year begins. That includes 29,700 children, according to the Michigan Department of Human Services.
"We're very, very concerned," Jacobs said. "As the days go by, new people will be meeting the 48-month limit. ... More will be falling off that cliff."
The new law will reduce the number of children and adults receiving cash assistance by nearly 20%, from more than 221,000 to around 180,000. Enforcing a four-year limit will save the state more than $60 million annually, according to a House Fiscal Agency analysis.
Jacobs said it's hard to see how 11,000 adults will find a job when Michigan's July unemployment rate was 10.9%, tied with South Carolina for third-highest in the nation.
"We still have to preserve a safety net for people who, through no fault of their own, can't find a job," she said, noting that most cash assistance goes to help poor residents pay their rent. "There's obviously a lot of anxiety out there. Folks aren't sure exactly what this means to them."
State officials say they're working with nonprofit organizations to direct welfare recipients to other services and provide a "soft landing" as they lose benefits. Recipients will be connected with other resources, given housing and job placement assistance for up to three months beyond October and mentored by trained job navigators.
"Michigan continues to face financial challenges, and the fiscal reality is that we cannot afford to provide lifetime cash assistance to recipients who are able to work," Health and Human Services director Maura Corrigan said in a statement. "Enforcing lifetime limits for cash assistance ensures that available funds are targeted toward those recipients who need a helping hand while they find employment."
Michigan ranked 38th in child poverty for 2009, defined as income below $21,756 for a family of two adults and two children. About 23% of Michigan's children lived in poverty in 2009, compared with 20% nationally. In 2000, only 14% of Michigan children lived in poverty. The average age of a child in a family receiving cash assistance is around 7 years old.
Snyder, a Republican, has said reducing the number of children living in poverty is a priority of his administration.
Michigan Governor Rick Snyder on Tuesday signed into law a stricter, four-year lifetime limit on cash welfare benefits, prompting advocates for the poor to warn that tens of thousands of residents will find themselves without cash assistance on October 1.
Michigan's first-year Republican chief executive said the state will offer exemptions to the limit for those with a disability who can't work, those who care for a disabled spouse or child and those who are 65 or older and don't qualify for Social Security benefits or receive very low benefits. Some recipients who are the victims of domestic violence also may be temporarily exempted.
"We are returning cash assistance to its original intent as a transitional program to help families while they work toward self-sufficiency," Snyder said in a statement. He noted that the state still will help the poor by offering food stamps, health care coverage through Medicaid, child care and emergency services.
Then-Gov. Jennifer Granholm, a Democrat, signed a bill that created a four-year limit starting in 2007. But that law exempted many welfare recipients, including those whose caseworkers said they were making progress toward finding employment.
The 2010 election of Snyder and the simultaneous Republican takeover of the Michigan House gave the GOP a free hand to set its own course on public assistance.
The change gives Michigan the Midwest's toughest welfare time limit, according to a survey by The Detroit News. It said there are five-year limits in Illinois, Iowa, Minnesota, Missouri, Ohio and Wisconsin. Indiana has a two-year limit for adults — but none for children.
Gilda Jacobs of the Michigan League for Human Services said she expects about 41,000 people to lose their cash assistance payments on October 1 when the state's new budget year begins. That includes 29,700 children, according to the Michigan Department of Human Services.
"We're very, very concerned," Jacobs said. "As the days go by, new people will be meeting the 48-month limit. ... More will be falling off that cliff."
The new law will reduce the number of children and adults receiving cash assistance by nearly 20%, from more than 221,000 to around 180,000. Enforcing a four-year limit will save the state more than $60 million annually, according to a House Fiscal Agency analysis.
Jacobs said it's hard to see how 11,000 adults will find a job when Michigan's July unemployment rate was 10.9%, tied with South Carolina for third-highest in the nation.
"We still have to preserve a safety net for people who, through no fault of their own, can't find a job," she said, noting that most cash assistance goes to help poor residents pay their rent. "There's obviously a lot of anxiety out there. Folks aren't sure exactly what this means to them."
State officials say they're working with nonprofit organizations to direct welfare recipients to other services and provide a "soft landing" as they lose benefits. Recipients will be connected with other resources, given housing and job placement assistance for up to three months beyond October and mentored by trained job navigators.
"Michigan continues to face financial challenges, and the fiscal reality is that we cannot afford to provide lifetime cash assistance to recipients who are able to work," Health and Human Services director Maura Corrigan said in a statement. "Enforcing lifetime limits for cash assistance ensures that available funds are targeted toward those recipients who need a helping hand while they find employment."
Michigan ranked 38th in child poverty for 2009, defined as income below $21,756 for a family of two adults and two children. About 23% of Michigan's children lived in poverty in 2009, compared with 20% nationally. In 2000, only 14% of Michigan children lived in poverty. The average age of a child in a family receiving cash assistance is around 7 years old.
Snyder, a Republican, has said reducing the number of children living in poverty is a priority of his administration.
Tuesday, August 30, 2011
Barack Obama's Legacy - A Failed Recovery
There will be no significant recovery in the United States of America while Barack Obama is President. The evidence is overwhelming: everything Obama has tried to fuel a recovery (with his Democratic allies in Congress) has failed. Statistics claiming jobs saved by the stimulus package were mostly fiction, and cost American taxpayers about $275,000 each. Nearly 2-1/2 million fewer Americans have jobs than before the stimulus.
Barack Obama has been President for 30 months—2-1/2 years. He spent the first year obsessed with passing Obamacare, a program that doesn’t create jobs, but might destroy a lot of them. He “bailed out” GM, but many believe that his interference didn’t save GM; it merely cost taxpayers an extra $15-20 billion, and stole from legitimate investors to buy off the UAW. His broken campaign promises are too numerous to list. At some point, his statute of limitations on blaming Bush runs out. The latest joke is that the White House is that named the location of East Coast earthquake near DC “Bush’s Fault.”
Obama himself said, “…that after three years, if the economy wasn’t fixed he should be a one-term president.” Clearly the economic malaise started on George W. Bush’s watch. Its causes will be argued for decades, but most of them are traceable to irresponsible lending and excessive spending— both by government and the American people. The trouble that started before 2008 is directly traceable to actions (or inactions) of Bush and GOP allies in Congress. They spent America into the start of the current deficit during his eight years in the White House.
But that was then, and this is now. Since Obama took office the situation has gotten much, much worse. Obama has run up the deficit at more than twice the rate Bush did. During the first quarter of 2011, the US economy “barely grew” —at 0.4%—that was followed by second quarter’s “anemic growth” of 1%. This was during the period when the Obama recovery was supposed to be well underway. Employment data is unremittingly terrible: new jobless claims are stuck at 400,000+/- each month, with job creation well below what it takes just to absorb new workforce entrants. More Americans have been unemployed longer than ever in our history. And looking ahead, the news is not good.
This is Obama’s failed American recovery, and in the near future, Obama’s impending double-dip recession (thanks in no small part to his three consecutive years with Trillion-dollar in deficits that have inflated the national deficit to soaring heights—$14+ Trillion.) That legacy clearly belongs to President Barack Obama and with help from the Congress led by Harry Reid and Nancy Pelosi during 2008-2010. Thanks to them, our country hasn’t even had a budget since Obama took office.
Face it folks: This is Obama’s failed recovery. And if (or when) it comes to pass, this “double-dip” recession (just around the corner) is his too.
Make no mistake, there IS plenty of blame to go around. About 75% of Americans are fed up with both Obama and Congress. The conservative and liberal factions of the House and Senate behaved badly in the recent debt ceiling negotiation. President Obama wanted to stay above the fray so he provided no leadership. He didn’t even know how to bring the opposing viewpoints together. He talked about bi-partisanship and consensus, but his actions disproved his words.
Until the president saw an impending disaster, he sat on the sidelines, afraid to do anything that might hinder his reelection campaign. Then, when his intervention didn’t help, and arguably hurt the progress, he grew impatient, petulant and angry.
John Boehner, however, did an admirable job trying to build a compromise deal on the debt ceiling, and get his own Caucus to support such a plan. Except, Obama was attacked by his liberal base for even considering the “grand bargain,” so he came in and dumped another “raise taxes more” demand on Boehner. I’d have walked out too, which Boehner was right to do.
Whatever happens, this failed recovery and impending recession belong to President Barack Obama. His condescending explanations of why “we Americans” don’t get it, how “this will take a long time,” this recovery, and his “class warfare” about “millionaires and billionaires” versus the “common folk” are all wearing thin.
Barack Obama has been President for 30 months—2-1/2 years. He spent the first year obsessed with passing Obamacare, a program that doesn’t create jobs, but might destroy a lot of them. He “bailed out” GM, but many believe that his interference didn’t save GM; it merely cost taxpayers an extra $15-20 billion, and stole from legitimate investors to buy off the UAW. His broken campaign promises are too numerous to list. At some point, his statute of limitations on blaming Bush runs out. The latest joke is that the White House is that named the location of East Coast earthquake near DC “Bush’s Fault.”
Obama himself said, “…that after three years, if the economy wasn’t fixed he should be a one-term president.” Clearly the economic malaise started on George W. Bush’s watch. Its causes will be argued for decades, but most of them are traceable to irresponsible lending and excessive spending— both by government and the American people. The trouble that started before 2008 is directly traceable to actions (or inactions) of Bush and GOP allies in Congress. They spent America into the start of the current deficit during his eight years in the White House.
But that was then, and this is now. Since Obama took office the situation has gotten much, much worse. Obama has run up the deficit at more than twice the rate Bush did. During the first quarter of 2011, the US economy “barely grew” —at 0.4%—that was followed by second quarter’s “anemic growth” of 1%. This was during the period when the Obama recovery was supposed to be well underway. Employment data is unremittingly terrible: new jobless claims are stuck at 400,000+/- each month, with job creation well below what it takes just to absorb new workforce entrants. More Americans have been unemployed longer than ever in our history. And looking ahead, the news is not good.
This is Obama’s failed American recovery, and in the near future, Obama’s impending double-dip recession (thanks in no small part to his three consecutive years with Trillion-dollar in deficits that have inflated the national deficit to soaring heights—$14+ Trillion.) That legacy clearly belongs to President Barack Obama and with help from the Congress led by Harry Reid and Nancy Pelosi during 2008-2010. Thanks to them, our country hasn’t even had a budget since Obama took office.
Face it folks: This is Obama’s failed recovery. And if (or when) it comes to pass, this “double-dip” recession (just around the corner) is his too.
Make no mistake, there IS plenty of blame to go around. About 75% of Americans are fed up with both Obama and Congress. The conservative and liberal factions of the House and Senate behaved badly in the recent debt ceiling negotiation. President Obama wanted to stay above the fray so he provided no leadership. He didn’t even know how to bring the opposing viewpoints together. He talked about bi-partisanship and consensus, but his actions disproved his words.
Until the president saw an impending disaster, he sat on the sidelines, afraid to do anything that might hinder his reelection campaign. Then, when his intervention didn’t help, and arguably hurt the progress, he grew impatient, petulant and angry.
John Boehner, however, did an admirable job trying to build a compromise deal on the debt ceiling, and get his own Caucus to support such a plan. Except, Obama was attacked by his liberal base for even considering the “grand bargain,” so he came in and dumped another “raise taxes more” demand on Boehner. I’d have walked out too, which Boehner was right to do.
Whatever happens, this failed recovery and impending recession belong to President Barack Obama. His condescending explanations of why “we Americans” don’t get it, how “this will take a long time,” this recovery, and his “class warfare” about “millionaires and billionaires” versus the “common folk” are all wearing thin.
Sunday, August 21, 2011
The stock market is feeding the current economic fear
Instead of reflecting the current economic cloudiness, the US stock market is starting to feed economic fear. Stocks have fallen for a disheartening four weeks in a row. Some on Wall Street worry that the resulting blow to confidence, not to mention 401k statements, has set off a spiral of fear that could push prices even lower, cause people and businesses to pull back and tip the economy into a new recession.
"I'm nervous that fear will lead companies to stop hiring and people to stop spending," says Jim Paulsen, chief investment strategist of Wells Capital Management, famous for his usually bullish take on the markets.
A home sales report this past week showed that more sales than usual fell apart at the last minute, which suggests plunging stocks and dismal economic news gave buyers cold feet. At least 16% of deals were canceled ahead of closings last month.
Beth Ann Bovino, senior economist at Standard & Poor's, says that another big plunge in stocks could "push us closer to the brink." The Standard & Poor's 500 stock index ended Friday at 1,123.53, down 5% for the week. The average is down 16% during the four-week losing streak. One reason for the drop is fear that another recession, if not certain, is more likely now.
The run of bad economic news started last month when the government said the economy grew much more weakly in the first half of this year than thought. Growth, at a paltry annual rate of 0.8%, was the slowest since the Great Recession ended in June 2009.
The economic weakness has made investors more likely to sell stocks at the first hint that things are getting worse. And last week, they got signs aplenty. A regional survey by the Federal Reserve said manufacturing had slowed in the mid-Atlantic states by the most in more than two years. Existing home sales fell in July for third time in four months. Another report showed that exports from Japan, the world's third-biggest economy, had slumped for the fifth straight month. Japan is still reeling from the effects of an earthquake and tsunami in March.
The housing market, which usually helps lead an economic recovery, keeps getting worse. The plunging stock market and scary economic news won't make it any better.
"What you're seeing with the economy, on the job front, it's scaring a lot of people," says Brian Fine, a loan manager at Mortgage Master in Rockville, Md. He says the housing market will languish until buyers and sellers feel more secure about the economy.
"People are really motivated by larger economic trends. It's all about if you feel confident enough to buy a home right now," he says.
The news from Europe got worse, too. Its economy has slowed considerably — even in Germany, which has been its greatest source of strength. Fear spread that European banks, already ailing because they hold bonds of countries that are struggling with debt, were having trouble getting short-term loans to pay for day-to-day activities.
Some Wall Street analysts say reports of trouble were exaggerated, but that didn't seem to matter. For investors, the prospect of banks scrambling for cash dredged up bad memories of the global credit freeze that hit in the fall of 2008, and they sold stocks.
"A negative feedback loop ... appears to be in the making," two economists at Morgan Stanley wrote Thursday in a widely cited report that itself seemed to beget more fear and selling. It warned that the US was "dangerously close" to recession.
Stock investors aren't the only ones worried. Martin Fridson, global chief credit strategist at BNP Paribas Investment Partners, notes that investors in bonds issued by the riskiest American companies are dumping them, too. These investors fear that in a recession companies might not be able to pay interest on these so-called junk bonds.
The selling has forced up the average interest rate on the bonds to 8.3%. If investors had faith in the economy, the rate would be 4.6%, Fridson says. "I'm nervous. I think there's a very material risk of falling into recession."
Investors are responding to the risk by putting their money where they feel safe. Demand for the 10 yr Treasury note was so high last week that the yield dipped below 2% for the first time in half a century. And the price of gold has set one record after another. It topped $1,800 an ounce last week.
Although unemployment remains stubbornly high, at 9.1%, there are signs that the economy, while not strong, is still growing. Retail sales grew in July at the fastest pace since March. Employers added 117,000 jobs last month, but far better than the hundreds of thousands of jobs lost each month during the Great Recession. Factory production rose in July because automakers made more cars.
And Wall Street analysts who analyze companies and advise investors when to buy and sell don't seem to be worried. As stocks were falling Friday, research firm FactSet released figures that showed just how much more optimistic these analysts are than the average investor.
Stocks are priced at roughly 11 times their expected earnings per share over the next year. That's a steep discount compared with the market's long-term average of 15 times. Translation: If you believe the US will avoid recession and companies will generate profits as high as the analysts think they will, the S&P should be trading at 1,560 — just below the S&P's record high of 1,565 in October 2007.
Of course, if the economy is weak and earnings don't come in as expected, it could turn out that stocks were trading today at 15 times the next year's earnings. That's what many of today's sellers seem be expecting.
And skeptics note that analysts are notoriously bullish, and tend to overestimate profits as the economy slows. Wells Capital's Paulsen thinks stocks should be trading higher, though he suggests investors will pay a steep price if he's wrong.
"If we have a recession, we'll probably break 1,000" on the S&P index, he says.
Investors will be on edge this week as they scrutinize new data on the economy. On Tuesday, new home sales for July are released, followed on Thursday by a weekly report on how many people are joining the unemployment line. On Friday, the government will give its second estimate of how fast the economy grew from April through June.
The most anticipated event, though, is a speech the same day by Federal Reserve Chairman Ben Bernanke at a retreat in Jackson Hole, Wyoming sponsored by the Federal Reserve Bank of Kansas City. The Fed pledged earlier this month to keep interest rates low through mid-2013. Investors hope Bernanke will announce, or at least preview, further steps to help the economy. But economists say it is unlikely Bernanke will unveil anything ambitious.
With all the high emotion surrounding stocks, economist Joel Naroff cautions investors not to read too much into the recent swings. He says that stocks have a habit of running from one extreme to the other, including this spring, when he thought they were far too high. He thinks stocks may be fairly valued now.
They reflect an "economy that is growing but not growing at any great pace," he says. "It is not in recession."
"I'm nervous that fear will lead companies to stop hiring and people to stop spending," says Jim Paulsen, chief investment strategist of Wells Capital Management, famous for his usually bullish take on the markets.
A home sales report this past week showed that more sales than usual fell apart at the last minute, which suggests plunging stocks and dismal economic news gave buyers cold feet. At least 16% of deals were canceled ahead of closings last month.
Beth Ann Bovino, senior economist at Standard & Poor's, says that another big plunge in stocks could "push us closer to the brink." The Standard & Poor's 500 stock index ended Friday at 1,123.53, down 5% for the week. The average is down 16% during the four-week losing streak. One reason for the drop is fear that another recession, if not certain, is more likely now.
The run of bad economic news started last month when the government said the economy grew much more weakly in the first half of this year than thought. Growth, at a paltry annual rate of 0.8%, was the slowest since the Great Recession ended in June 2009.
The economic weakness has made investors more likely to sell stocks at the first hint that things are getting worse. And last week, they got signs aplenty. A regional survey by the Federal Reserve said manufacturing had slowed in the mid-Atlantic states by the most in more than two years. Existing home sales fell in July for third time in four months. Another report showed that exports from Japan, the world's third-biggest economy, had slumped for the fifth straight month. Japan is still reeling from the effects of an earthquake and tsunami in March.
The housing market, which usually helps lead an economic recovery, keeps getting worse. The plunging stock market and scary economic news won't make it any better.
"What you're seeing with the economy, on the job front, it's scaring a lot of people," says Brian Fine, a loan manager at Mortgage Master in Rockville, Md. He says the housing market will languish until buyers and sellers feel more secure about the economy.
"People are really motivated by larger economic trends. It's all about if you feel confident enough to buy a home right now," he says.
The news from Europe got worse, too. Its economy has slowed considerably — even in Germany, which has been its greatest source of strength. Fear spread that European banks, already ailing because they hold bonds of countries that are struggling with debt, were having trouble getting short-term loans to pay for day-to-day activities.
Some Wall Street analysts say reports of trouble were exaggerated, but that didn't seem to matter. For investors, the prospect of banks scrambling for cash dredged up bad memories of the global credit freeze that hit in the fall of 2008, and they sold stocks.
"A negative feedback loop ... appears to be in the making," two economists at Morgan Stanley wrote Thursday in a widely cited report that itself seemed to beget more fear and selling. It warned that the US was "dangerously close" to recession.
Stock investors aren't the only ones worried. Martin Fridson, global chief credit strategist at BNP Paribas Investment Partners, notes that investors in bonds issued by the riskiest American companies are dumping them, too. These investors fear that in a recession companies might not be able to pay interest on these so-called junk bonds.
The selling has forced up the average interest rate on the bonds to 8.3%. If investors had faith in the economy, the rate would be 4.6%, Fridson says. "I'm nervous. I think there's a very material risk of falling into recession."
Investors are responding to the risk by putting their money where they feel safe. Demand for the 10 yr Treasury note was so high last week that the yield dipped below 2% for the first time in half a century. And the price of gold has set one record after another. It topped $1,800 an ounce last week.
Although unemployment remains stubbornly high, at 9.1%, there are signs that the economy, while not strong, is still growing. Retail sales grew in July at the fastest pace since March. Employers added 117,000 jobs last month, but far better than the hundreds of thousands of jobs lost each month during the Great Recession. Factory production rose in July because automakers made more cars.
And Wall Street analysts who analyze companies and advise investors when to buy and sell don't seem to be worried. As stocks were falling Friday, research firm FactSet released figures that showed just how much more optimistic these analysts are than the average investor.
Stocks are priced at roughly 11 times their expected earnings per share over the next year. That's a steep discount compared with the market's long-term average of 15 times. Translation: If you believe the US will avoid recession and companies will generate profits as high as the analysts think they will, the S&P should be trading at 1,560 — just below the S&P's record high of 1,565 in October 2007.
Of course, if the economy is weak and earnings don't come in as expected, it could turn out that stocks were trading today at 15 times the next year's earnings. That's what many of today's sellers seem be expecting.
And skeptics note that analysts are notoriously bullish, and tend to overestimate profits as the economy slows. Wells Capital's Paulsen thinks stocks should be trading higher, though he suggests investors will pay a steep price if he's wrong.
"If we have a recession, we'll probably break 1,000" on the S&P index, he says.
Investors will be on edge this week as they scrutinize new data on the economy. On Tuesday, new home sales for July are released, followed on Thursday by a weekly report on how many people are joining the unemployment line. On Friday, the government will give its second estimate of how fast the economy grew from April through June.
The most anticipated event, though, is a speech the same day by Federal Reserve Chairman Ben Bernanke at a retreat in Jackson Hole, Wyoming sponsored by the Federal Reserve Bank of Kansas City. The Fed pledged earlier this month to keep interest rates low through mid-2013. Investors hope Bernanke will announce, or at least preview, further steps to help the economy. But economists say it is unlikely Bernanke will unveil anything ambitious.
With all the high emotion surrounding stocks, economist Joel Naroff cautions investors not to read too much into the recent swings. He says that stocks have a habit of running from one extreme to the other, including this spring, when he thought they were far too high. He thinks stocks may be fairly valued now.
They reflect an "economy that is growing but not growing at any great pace," he says. "It is not in recession."
Wednesday, July 27, 2011
Just Who Owns America's Debt? Americans!
Truth is elusive. But it's a good thing we have math. Our friends at Business Insider know this, and put those two principles to work today in this excellent and highly informative little slideshow, made even more timely by the ongoing talks in Washington, DC aimed at staving off a US debt default.
Here's the big idea:
Many people — politicians and pundits alike — prattle on that China and, to a lesser extent Japan, own most of America's $14.3 trillion in government debt. But there's one little problem with that conventional wisdom: it's just not true. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it's really Americans who hold most of America's debt. Here's a quick and fascinating breakdown by total amount held and percentage of total US debt, according to Business Insider:
Hong Kong: $121.9 billion (0.9%)
Caribbean banking centers: $148.3 (1%)
Taiwan: $153.4 billion (1.1%)
Brazil: $211.4 billion (1.5%)
Oil exporting countries: $229.8 billion (1.6%)
Mutual funds: $300.5 billion (2%)
Commercial banks: $301.8 billion (2.1%)
State, local and federal retirement funds: $320.9 billion (2.2%)
Money market mutual funds: $337.7 billion (2.4%)
United Kingdom: $346.5 billion (2.4%)
Private pension funds: $504.7 billion (3.5%)
State and local governments: $506.1 billion (3.5%)
Japan: $912.4 billion (6.4%)
US households: $959.4 billion (6.6%)
China: $1.16 trillion (8%)
The US Treasury: $1.63 trillion (11.3%)
US Social Security trust fund: $2.67 trillion (19%)
So foreigners own about $4.5 trillion in debt. But America owes America $9.8 trillion and there's where a default would hurt the worst!
Here's the big idea:
Many people — politicians and pundits alike — prattle on that China and, to a lesser extent Japan, own most of America's $14.3 trillion in government debt. But there's one little problem with that conventional wisdom: it's just not true. While the Chinese, Japanese and plenty of other foreigners own substantial amounts, it's really Americans who hold most of America's debt. Here's a quick and fascinating breakdown by total amount held and percentage of total US debt, according to Business Insider:
Hong Kong: $121.9 billion (0.9%)
Caribbean banking centers: $148.3 (1%)
Taiwan: $153.4 billion (1.1%)
Brazil: $211.4 billion (1.5%)
Oil exporting countries: $229.8 billion (1.6%)
Mutual funds: $300.5 billion (2%)
Commercial banks: $301.8 billion (2.1%)
State, local and federal retirement funds: $320.9 billion (2.2%)
Money market mutual funds: $337.7 billion (2.4%)
United Kingdom: $346.5 billion (2.4%)
Private pension funds: $504.7 billion (3.5%)
State and local governments: $506.1 billion (3.5%)
Japan: $912.4 billion (6.4%)
US households: $959.4 billion (6.6%)
China: $1.16 trillion (8%)
The US Treasury: $1.63 trillion (11.3%)
US Social Security trust fund: $2.67 trillion (19%)
So foreigners own about $4.5 trillion in debt. But America owes America $9.8 trillion and there's where a default would hurt the worst!
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