March 23, 2013 § Leave a Comment
China’s economy expanded last year at 7.8pc – its slowest pace in more than a decade – and recent data has fuelled concerns that any rebound in the country’s growth is losing steam.
However, the OECD was upbeat, predicting in a new survey of China’s prospects that the country’s economy could expand by 8.5pc this year and by 8.9pc in 2014.
While the OECD noted the slowdown in China’s aggressive expansion, it nonetheless predicted that growth should average 8pc in this decade at current rates of investment and reform.
After allowing for price differences, it forecast that China could become the world’s largest economy, overtaking America, around 2016.
High debt is a drag on growth. You’re using sooo much money for debt service (paying interest) that could have gone to pay for more useful activity… education, roads, technology, etc.
China’s economy grew at nearly 8% last year. U.S.’s economy grew at less than 1/2 that. (Thanks Obamacare and businesses fearing other Obama policies.)
Also worth noting that this story NOT being carried by any major U.S. news organization save the Washington Post and CNN International. Not even a single link / page to the regular CNN site despite the story begin pick-up by Reuters news service. To ABC/NBC/CBS/MSNBC and yes, even Fox this story is not news worthy.
March 14, 2013 § Leave a Comment
Moody’s Investors Service has downgraded to A3 from Aa3 the rating on the City of Chicago’s (IL) $181 million of outstanding rated motor fuel tax debt. The outlook has been revised to negative.
Surprises no one. Barely qualifies as news actually.
The City’s broke. Unemployment (real unemployment, the U6 number) is out of control and people simply don’t have the means to support driving when they don’t have to. Tie that in with Springfield’s ability and desire to continue to kick-the-can down the road and Chicago may just get screwed on its portion of the fuel tax.
It’s generally dumb anyway that Chicago gets a kick-back on the state’s fuel tax anyway as the city has it’s own fuel tax. It’s just robbing Peter to pay Paul. Round and round the money goes.
March 11, 2013 § 1 Comment
Illinois broke federal securities laws in misstating the true health of the state’s depleted pension funds when going out onto the bond market between 2005 and early 2009, the Securities and Exchange Commission announced Monday. …
The finding of securities fraud doesn’t subject the state to any fines or penalties but amounts to a warning to potential investors about the state’s past financial misdeeds.
The action focuses mostly on misstatements made during impeached ex-Gov. Rod Blagojevich’s administration, though Gov. Pat Quinn’s administration wasn’t spared entirely in the federal order.
“Municipal investors are no less entitled to truthful risk disclosures than other investors,” said George S. Canellos, Acting Director of the SEC’s Division of Enforcement in a prepared statement.
“Time after time, Illinois failed to inform its bond investors about the risk to its financial condition posed by the structural underfunding of its pension system,” Canellos said.
via Sun-Times Politics.
Wow!! So, the article says (twice) that there are no fines or penalties that go with this… But what the article doesn’t say is that the State is now subject to a civil suit by bond-holders.
Q: Where was Lisa Madigan while this was happening?
March 1, 2013 § Leave a Comment
Druckenmiller, who is known to be media shy, told Bloomberg TV that he sees “a storm coming, maybe bigger than the storm we had in 2008, 2010″ and it has to do with a demographic bubble.
“But the demographic storm is just starting now. It reminds me of ’05 when people just extrapolated housing prices going up for 50 years…Everyone sorta lives with their rulers in the past and doesn’t look at coming changes,” he said.
What’s happening, he explained, is we have a working population now where the current workforce pays for the benefits of the seniors. Since 2000, there have been about 4.5 to 4.8 workers per retiree. He said by 2050 it will be only 2.4 workers per retiree.
He told Bloomberg TV that people like him need to speak out about this issue. Just to be clear, he’s not against the seniors.
“And let me just say one thing. I am not against seniors, okay. I love seniors. Unfortunately I’m going to be one in the not-too-distant futures. What I am against is current seniors to me stealing from future seniors.”
via Business Insider. (Video at the jump.)
Now is the time we should be saving money like mad. Paying off debt and getting ready for the massive exodus of retirees from the workforce. Instead we’re spending like drunken sailors and not worrying about tomorrow. (Tomorrow never comes.)
Right now millions of savings from boomers still flow into the market each week. The money has to go somewhere. This is artificially keeping stock prices high and bond rates low. There will come a day soon when the net flow of money is not INTO the market but OUT. Retirees will be pulling money out so they can pay bills and buy food. When that happens look out!!
The markets will turn upside-down overnight.
February 8, 2013 § Leave a Comment
I found this while at the Khan Academy.
February 8, 2013 § Leave a Comment
Democratic Gov. Pat Quinn on Thursday signed into law an extra $1.5 billion in spending for road construction and child welfare investigations, even as Republicans decried the measure as including ill-timed, pork barrel money.
via Chicago Tribune.
What is wrong with this guy? Really?
Quinn already stopped a bond auction because the rates for Illinois bonds are too high (and only going to go higher.)
Illinois already has $9 billion in unpaid bills. There’s also the looming pension time-bomb that no one wants to talk about.
What does The Machine not understand?
STOP SPENDING MONEY!
February 8, 2013 § Leave a Comment
The cost of a new pair of basketball shoes could jump by 25 cents under a proposal floated this week by an Illinois lawmaker.
State Rep. Will Davis, D-Hazel Crest, wants to create a new tax that would generate an estimated $3 million annually for a youth job preparation program. He said the added cost would likely go unnoticed by most consumers, while helping finance a program for kids during tight budget times.
via St. Louis Today.
Embarrassing that we have these people represent us.
February 7, 2013 § Leave a Comment
Hundreds of people jostled for free vegetables handed out by farmers in a symbolic protest earlier on Wednesday, trampling one man and prompting an outcry over the growing desperation created by economic crisis.
Images of people struggling to seize bags of tomatoes and leeks thrown from a truck dominated television, triggering a bout of soul-searching over the new depths of poverty in the debt-laden country.
“These images make me angry. Angry for a proud people who have no food to eat, who can’t afford to keep warm, who can’t make ends meet,” said Kostas Barkas, a lawmaker from the leftist Syriza party.
Other lawmakers from across the political spectrum decried the images “of people on the brink of despair” and the sense of “sadness for a proud people who have ended up like this”.
People have seen their living standards crumble as the country faces its sixth year of recession that has driven unemployment to record highs.
Greece has been forced to push through painful wage and pension cuts demanded by its European Union and International Monetary Fund lenders as the price of bailout funds to avert bankruptcy.
Greek ships sailed again from the busy ports of Piraeus and Rafina on Wednesday after the government ordered seamen to end a six-day strike aimed at securing wages and union rights.
At dawn, smiling passengers who had been stranded at Piraeus carried their luggage across the port, relieved to be boarding the ships.
But in northern and central Greece, farmers protesting high production costs and fuel prices placed their tractors on the sides of highways, threatening to block the country’s main road artery if not satisfied.
In the capital, bus and trolleybus workers held a four-hour work stoppage, as did journalists at state broadcasters.
The free food handout in Athens began peacefully as hundreds of Greeks lined up in advance outside the agriculture ministry, where protesting farmers laid out tables piled high with produce, giving away 50 metric tonnes (55.11 tons) of produce in under two hours.
Tensions flared when the stalls ran out of produce and dozens of people – some carrying small children – rushed to a truck and shoved each other out of the way in the competition for what was left.
One man was treated for injuries after being trampled when he fell to the ground in the commotion.
“I never imagined that I would end up here,” said Panagiota Petropoulos, 65, who struggles to get by on her 530-euro monthly pension while paying 300 euros in rent.
“I can’t afford anything, not even at the fruit market. Everything is expensive, prices of everything are going up while our income is going down and there are no jobs.”
I’m willing to consider any logical and rational explanation as to why this won’t happen here. But frankly, I don’t see how it can be any other way.
Our debt to GDP ratio is now just over 100% in that we have over $16 trillion in debt and a estimate 2012 GDP of $15.8 trillion.
As recently as 2007 Greece’s ratio was a mere 105.1. Today it’s 157. How did this happen so quickly? Because the debt kept growing faster that the economy was expanding; they economy was actually contracting for awhile (as was ours.)
Spend a few minutes over at Shadow Government Statistics and you’ll see that sound economists believe this is exactly what is happening here. Our debt keeps growing and growing and the economy is actually shrinking.
This wouldn’t be the first time your government was lying to you.
Tough times ahead. Plan accordingly.
February 6, 2013 § Leave a Comment
Today’s Local Bad News:
Illinois companies warned in January that they may lay off as many as 1,200 workers in the next two months, according to filings with the Illinois Department of Commerce and Economic Opportunity.
The economy sucks and the media doesn’t want to talk about it. Manufacturing in Illinois is on life support. It’s questionable if it can be revived.
To this mess we add:
Quinn wants Illinois’ minimum wage to increase from $8.25 to $10 an hour, according to a source familiar with the planned remarks. The federal minimum wage is $7.25 an hour, but Illinois’ rate has been higher for years.
via Chicago Tribune.
That will not help growth. It will not help poor communities. It will not help high school drop-outs or college professors. It’s an inflation creator and job killer. We don’t need the cost of fast food going up. We don’t need the cost of goods at Target going up. We’re taxed to death already. The state is $100+ billion in the red and he’s upset that some kid’s making $8.75/hr making pizza’s.
Illinois is dying. The Machine is driving full speed off the edge of the cliff.
February 5, 2013 § Leave a Comment
You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong.
You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking
away people’s initiative and independence.
You cannot help people permanently by doing for them what
they could and should do for themselves.
– Abraham Lincoln