robot-heart-politics:thepoliticalpartygirl:pragmatism:
One sure thing about America other than baseball and hot dogs is its astronomical incarceration rate. View the graphic to find out the details.
Click to see the graphic!
Even as the BLS and the administration are trying to cover up the real state of unemployment affairs using assorted semantic gimmicks of just what it means to be unemployed, and as companies provide adjusted EPS numbers, while actual earnings continue to collapse, the true barometer of spending, provided by the Financial Management Service, tax withholdings (net of refunds), continues to paint the truest picture of just what is really happening with both America’s consumer and the corporate world. And it ain’t pretty. On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company witholding are down a whalloping 64%, from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury’s pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America’s short, medium and long-term future.
(via continuum)
CHART OF THE DAY: The Rest Of The World Owns Us
When investing in foreign bonds, there are two important risks. The first, interest rate risk, is the risk that interest rates will rise in the future, decreasing the market value of your bonds. The second risk is currency risk. As the value of the dollar falls against foreign currencies, the foreign investors lose money on their bonds unless the interest rate on the bonds is greater than the percentage gain by their own currency. As the US attempts to devalue the dollar, foreign investors might demand higher interest rates.
That’s potentially painful, but not exactly a DOOM scenario. Try this on for size:
There is a good chance that China will move from being a net exporter to a net importer in the next decade. As that happens, China will become less dependent upon the US for its growth. It is conceivable that China could eventually run a trade deficit with the US. At that point, China would benefit from relative strength in the Yuan. Contemplate what would happen if China were to dump all its US bonds at once. Bond prices would plummet and rates would skyrocket. US deficit spending would become prohibitive, interest rates on credit cards would make current usurious rates look tame by comparison, and economic collapse would ensue. Now, to preempt any argument that China would not take such an action against the US, I defer to wikipedia’s discussion of the Suez Canal Crisis:
The United States also put financial pressure on Great Britain to end the invasion. Eisenhower in fact ordered his Secretary of the Treasury, George M. Humphrey to prepare to sell part of the US Government’s Sterling Bond holdings. The Government held these bonds in part to aid post war Britain’s economy (during the Cold War), and as partial payment of Britain’s enormous World War II debt to the US Government, American corporations, and individuals. It was also part of the overall effort of Marshall Plan aid, in the rebuilding of the Western European economies.
Britain’s then Chancellor of the Exchequer, Harold Macmillan, advised his Prime Minister Anthony Eden that the United States was fully prepared to carry out this threat. He also warned his Prime Minister that Britain’s foreign exchange reserves simply could not sustain a devaluation of the pound that would come after the United States’ actions; and that within weeks of such a move, the country would be unable to import the food and energy supplies needed simply to sustain the population on the islands.
The US was willing to resort to such tactics against an ally. We rarely consider China an ally. Granted, China won’t resort to such tactics unless it is in the best interest of China, but that may happen sooner than most people expect.
There’s a difference between beating on earnings and beating on revenue. A company can get extra earnings from a given revenue stream by cutting costs (firing employees). That strategy makes sustained growth more difficult.
(via The Daily Reckoning : 5 Min. Forecast)
Chart of the Day - Unemployment rate above 10% for only the second time since WWII
Well, it happened. Double digits. A new Roman numeral to display. Where do we go from here?
Japan total Debt in 1990 was roughly 150 of GDP: today total debt is close to 290% and the market is still in a funk. Could this be what lies in store for the U.S?
— Sol Palha in Debt Crisis
US foreclosures’ flurry of activity
Oh, is that all?
CHART OF THE DAY: The Government Debt Explosion
“The growth of government debt has “decoupled” from the rest of the economy.
While households, businesses and the financial sector reduce leverage, public sector debt growth has simply exploded. As you can see from the chart, every non-governmental sector of the economy is now in debt reduction mode while governmental debt is growing a breakneck speeds.”
Just a heads up: Government debt is our (you, me, etc.) debt.
