Thursday, February 25, 2010

SAR #10056

Our motto: contribute less, consume more.

Day Late, Several Dollars Short:  Alan Greenspan now says that the current economic collapse is “by far the greatest financial crisis, globally, ever”, including the Great Depression.  He's real glad it didn't happen on his watch.

Snow Job:  Mortgage applications were down 8.5% last week, seasonally adjusted. But not, apparently, adjusted for the snow.  Nearly 30% of all houses with mortgages now have negative equity – that's 11 million potential foreclosures.

Location, Location: The new US embassy in London will cost $1 billion, plus overruns and the usual graft.  The US embassy in Baghdad was a bargain at $700 million and the thing going up in Islamabad is well over $850 million and rising.  Neither of them has a moat.

One If By Land:  Admiral Mich McConnell, former director of national intelligence, says that if cyber-war broke out today, the US would lose. “National security and our economic security are at stake.”  And here I was worrying about my on-line medical records

Spade/Spade:  The National Association of Realtors wants Fannie and Freddie “converted into non-profits.”  I thought they already were.

Preview:  State tax revenues fell 4.1% in the fourth quarter, making it 5 declines in a row and all but certain that further cuts in payrolls (nearly a million more are expected) and services will be required as the states struggle to close a $180 billion gap in their 2011 budgets.

Debt Load:  According to the unvarnished data, deficit hawks who go around preaching doom and disaster are... well, wrong. And what they're peddling is a load of …. bad data, questionable assumptions and ulterior motives.

Ooops: B efore today's report on new house sales, economists predicted the extension of the homebuyers tax credit would lift sales from a nine-month low.  What the report said was that new single-family house sales fell 11%.  Why do these clowns still have their jobs?

Cautionary Tale:  Various politically motivated polls show that Americans no longer support the idea of lowering health care costs.  But in honest polls which accurately describe the health care reform legislation find just the reverse – Americans want and support health care reform.

'splain to me:  If there is no global warming, where did an area of Arctic ice ten times the size of California go? It used to be frozen but it isn't anymore.  Worse, there is nothing politically plausible we could do now that would prevent the Arctic from becoming ice free in a few years.  “I haven't met a single scientist who thinks there's anything we can do now that can save the sea ice in total. ...humans won't act unless there's a disaster.”

Rose Colored Glasses: In the magical world of the FHA, the coming drain on its resources is nothing to worry about – it can always turn to the US Taxpayer to bail it out.


Eric Hacker said...

re: Public Debt

It seems to me that much of the time when comparing countries debt loads, public debt is used to refer to the entire debt of the government at all levels. The official treasury term public debt is something completely different.

Gross debt is the more accurate figure for the US govt debt, unless you don't think social security obligations are real. On top of gross debt, one needs to and state, city and other municipal debts.

That's how much the public owes. That's what debt is: how much one owes. Not how much is owned by a group.

lineside said...

re public debt.

1/ dismissing our massive unfunded liabilities as the author does is absurd. if the government doesn't pay these liabilities, then the population must bear all those costs of retirement and medical benefits now being covered by social security and medicare. these dollars would have to come from either private borrowing and/or decreased consumption (= decreased GDP). there simply is no free lunch here.

2/ author presents a ridiculous relationship to support his argument, namely that our government's debt service is only 1.4% of GDP (so our debt burden is trivial, he would suggest). but the government doesn't have access to the entire GDP to support its obligations (unless it were to appropriate all private assets). if you're going to look at the government's debt service ratios, look at government's interest costs compared only to its own tax revenues. If you want to compare debt service to total GDP, then to have apples to apples you must add in debt service on all corporate and household debt too.

lineside said...

further to eric's comments, if treasury debt now held by the fed is not public debt, and therefore does not enter the author's suggested framework, then i guess we could escape all our obligations through the fed just printing more dollars and buying all the treasuries now in private hands.

in the author's free lunch fantasy world, i suppose this could occur without consequence.


realworld said...

The design of the new US embassy for London is a crystal cube surrounded by gardens and a lake. This suggests transparency, openness to outside views and a concern for nature.
A more appropriate design would have been a black Death Star mounted on a barbed pedestal.