Eurozone: Dancing Downgrades!

The eurozone has been hit with a number of credit downgrades by Standard & Poor's, France and Austria both lost their AAA credit ratings and were reduced to AA+, and the credit ratings of Italy, Spain and Portugal were cut by two notches each.

Germany, the Netherlands, Finland and Luxembourg have maintained their triple A ratings for now.

In plain English, what the means is that the costs of borrowing for the countries hit with downgrades is headed upwards and they'll have to offer a higher rate on bonds to attract investors.It also means that the eurozone's rescue fund used for bailouts could also very likely have it's rating cut,ultimately meaning that the eurozone countries are going to have to pony up more cash to keep it solvent.

The current downgrade came on the heels of disappointing returns on the recent Italian bonds auction and a failure of the major banks participating in the write down of Greek debt to agree on who gets stuck for how much, thus stalling the negotiations.

On the selfishly plus side,this could spark more of an appetite among investors for non-EU debt in America, Israel, Australia, Canada, and elsewhere, because it's seen as safer.

Eurozone: Dancing Downgrades!

The eurozone has been hit with a number of credit downgrades by Standard & Poor's, France and Austria both lost their AAA credit ratings and were reduced to AA+, and the credit ratings of Italy, Spain and Portugal were cut by two notches each.

Germany, the Netherlands, Finland and Luxembourg have maintained their triple A ratings for now.

In plain English, what the means is that the costs of borrowing for the countries hit with downgrades is headed upwards and they'll have to offer a higher rate on bonds to attract investors.It also means that the eurozone's rescue fund used for bailouts could also very likely have it's rating cut,ultimately meaning that the eurozone countries are going to have to pony up more cash to keep it solvent.

The current downgrade came on the heels of disappointing returns on the recent Italian bonds auction and a failure of the major banks participating in the write down of Greek debt to agree on who gets stuck for how much, thus stalling the negotiations.

On the selfishly plus side,this could spark more of an appetite among investors for non-EU debt in America, Israel, Australia, Canada, and elsewhere, because it's seen as safer.

So Now, It's 'Recovery Winter'!!

Remember 'recovery summer' and how that ultimately turned out? Well it's back,this time as 'recovery winter' . At least if you read the Soros media, outlets like the New York Times and other assorted Obamabot shills.

What they're jumping up and down about is a downtick in unemployment of a huge one tenth of a percent in December, from 8.6 to 8.5 and the 'robust' addition of 200,000 jobs.

I deconstructed this once before, but let's go over a few things again.

The percentages they're talking about are the the 'official' U-3 unemployment rate. It accounts only for the people who are receiving or have applied for unemployment benefits and are actively seeking work.

The more accurate stat is the U-6 rate, which government never trumpets but is a lot closer to reality. It includes the above plus people no longer actively seeking employment, people who are not covered by unemployment, like people hired as independent contractors or the owner of the small dry cleaning business or restaurant that closed its doors in your neighborhood last week or people let go with not enough quarters of employment to qualify for benefits or from part time and seasonal jobs. That rate fell too...from 15.6 to 15.4.

Adding 200,000 jobs during the holiday season is also not evidence of an uptick, since a number of seasonal jobs open up and then close afterwards in places like retail. Normally unemployment rates go down between 1 and 2%. A reduction of a tenth of a percent tells us things are actually getting worse. Retailers and others expected a skinny Christmas and gauged their hiring accordingly.

As Zero Hedge points out, there's also a distinct possibility that the Bureau of Labor Statistics is cooking the books by lowering the labor force participation rate to provide an artificially 'lower' unemployment rate.

The market isn't fooled either - the Dow is down almost 40%, although it may come back a bit if there are sell offs.

Look for a 'correction' in this horse manure next month.

So Now, It's 'Recovery Winter'!!

Remember 'recovery summer' and how that ultimately turned out? Well it's back,this time as 'recovery winter' . At least if you read the Soros media, outlets like the New York Times and other assorted Obamabot shills.

What they're jumping up and down about is a downtick in unemployment of a huge one tenth of a percent in December, from 8.6 to 8.5 and the 'robust' addition of 200,000 jobs.

I deconstructed this once before, but let's go over a few things again.

The percentages they're talking about are the the 'official' U-3 unemployment rate. It accounts only for the people who are receiving or have applied for unemployment benefits and are actively seeking work.

The more accurate stat is the U-6 rate, which government never trumpets but is a lot closer to reality. It includes the above plus people no longer actively seeking employment, people who are not covered by unemployment, like people hired as independent contractors or the owner of the small dry cleaning business or restaurant that closed its doors in your neighborhood last week or people let go with not enough quarters of employment to qualify for benefits or from part time and seasonal jobs. That rate fell too...from 15.6 to 15.4.

Adding 200,000 jobs during the holiday season is also not evidence of an uptick, since a number of seasonal jobs open up and then close afterwards in places like retail. Normally unemployment rates go down between 1 and 2%. A reduction of a tenth of a percent tells us things are actually getting worse. Retailers and others expected a skinny Christmas and gauged their hiring accordingly.

As Zero Hedge points out, there's also a distinct possibility that the Bureau of Labor Statistics is cooking the books by lowering the labor force participation rate to provide an artificially 'lower' unemployment rate.

The market isn't fooled either - the Dow is down almost 40%, although it may come back a bit if there are sell offs.

Look for a 'correction' in this horse manure next month.

UK's Cameron Vetoes Changes to EU Treaty..France And Germany Outraged

The efforts to save the eurozone took another body blow as UK PM David Cameron exercised, for the first time, the UK's veto over major changes to the Eu treaty France and Germany worked out.

The new changes amounted to “automatic consequences” for countries whose public deficit exceeds 3 per cent of gross domestic product and a cap on countries’ structural deficits at 0.5 per cent. The tighter rules would be also be entered in the individuals laws of member countries, and the 'consequences' would be enforced by the other 27 members.

This is a fairly shocking abandonment of national sovereignty, and the French in particular were originally not planning to agree with it. But Germany's Angela Merkel was able to get France's Nicholas Sarkozy to capitulate.

And then Britain threw a monkey wrench into the entire structure by vetoing it. That led to several other countries refusing to go along until they 'consulted with their parliaments', namely Denmark, Sweden, The Czech Republic and Hungary.

PM Cameron's main sticking point was that he wanted secure safeguards for the single market and the City of London's financial infrastructure, and France and Germany refused to provide them..

'There are some real problems and nonsense there in terms of having safe and secure financial services, some deep unfairnesses that are currently in the system that I feel badly need to be addressed,' he said.

'You've got everyone else in the room saying give up your national interests, just go along with what everyone else wants, that would be the easy, comfortable, convenient thing to do. But it wasn't the right thing to do, so you've got to stick to your guns.'

France's President Sarkozy was particularly incensed at this, perhaps because he had caved in to Germany's demands in the face of considerable political pressure not to.

'What was on offer is not in Britain's interest so I didn't agree to it,' Cameron told reporters in Brussels.

'We're not in the euro and I'm glad we're not in the euro.'

'We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up.'

Merkel and Sarkozy are essentially ignoring the UK's veto and announced their plans to go ahead with finalizing the agreement,which is due to be signed in March.While this huge alteration of the Lisbon Treaty should normally signal referendums in the individual countries,there's no sign that this is going to happen. José Manuel Barroso, the European Commission president was quoted as saying that in his opinion,these difficulties could be "worked around."

In other words, they'll just impose it. Greece, Portugal,Ireland,Spain and Italy aren't going to squawk since they're in deep financial trouble and France and Germany are already on board,although it remains to be seen how long.

So why do these European shenanigans matter on this side of the pond? Well, among other things, thanks to President Obama, we're likely going to be footing the bill for a big chunk of the bail out cost.

Bypassing Congress,of course.

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UK's Cameron Vetoes Changes to EU Treaty..France And Germany Outraged

The efforts to save the eurozone took another body blow as UK PM David Cameron exercised, for the first time, the UK's veto over major changes to the Eu treaty France and Germany worked out.

The new changes amounted to “automatic consequences” for countries whose public deficit exceeds 3 per cent of gross domestic product and a cap on countries’ structural deficits at 0.5 per cent. The tighter rules would be also be entered in the individuals laws of member countries, and the 'consequences' would be enforced by the other 27 members.

This is a fairly shocking abandonment of national sovereignty, and the French in particular were originally not planning to agree with it. But Germany's Angela Merkel was able to get France's Nicholas Sarkozy to capitulate.

And then Britain threw a monkey wrench into the entire structure by vetoing it. That led to several other countries refusing to go along until they 'consulted with their parliaments', namely Denmark, Sweden, The Czech Republic and Hungary.

PM Cameron's main sticking point was that he wanted secure safeguards for the single market and the City of London's financial infrastructure, and France and Germany refused to provide them..

'There are some real problems and nonsense there in terms of having safe and secure financial services, some deep unfairnesses that are currently in the system that I feel badly need to be addressed,' he said.

'You've got everyone else in the room saying give up your national interests, just go along with what everyone else wants, that would be the easy, comfortable, convenient thing to do. But it wasn't the right thing to do, so you've got to stick to your guns.'

France's President Sarkozy was particularly incensed at this, perhaps because he had caved in to Germany's demands in the face of considerable political pressure not to.

'What was on offer is not in Britain's interest so I didn't agree to it,' Cameron told reporters in Brussels.

'We're not in the euro and I'm glad we're not in the euro.'

'We're never going to join the euro and we're never going to give up this kind of sovereignty that these countries are having to give up.'

Merkel and Sarkozy are essentially ignoring the UK's veto and announced their plans to go ahead with finalizing the agreement,which is due to be signed in March.While this huge alteration of the Lisbon Treaty should normally signal referendums in the individual countries,there's no sign that this is going to happen. José Manuel Barroso, the European Commission president was quoted as saying that in his opinion,these difficulties could be "worked around."

In other words, they'll just impose it. Greece, Portugal,Ireland,Spain and Italy aren't going to squawk since they're in deep financial trouble and France and Germany are already on board,although it remains to be seen how long.

So why do these European shenanigans matter on this side of the pond? Well, among other things, thanks to President Obama, we're likely going to be footing the bill for a big chunk of the bail out cost.

Bypassing Congress,of course.

please donate...it helps me write more gooder!

The Real Numbers On Unemployment

There's this Drudge headline today...HO HO HO: UNEMPLOY RATE 8.6%. Only when you delve into the numbers do you realize that far from being anything to celebrate, it means things are getting worse.

Seasonally, this time of year normally sees an uptick in employment numbers because of temporary jobs, mostly in retail. That uptick is normally between 1 and 2%. An reduction in unemployment of a measly .3% is a sign that not only is the economy not getting better but that retailers expect meager holiday sales and have adjusted their seasonal hiring accordingly.

Another sign of the times is the emergence of a company that allows parents whose budgets are strained to rent toys for their children instead of buying them retail.

It's also worth repeating that the 8.6% is the 'official' U-3 unemployment rate. It accounts only for the people who are receiving or have applied for unemployment benefits and are actively seeking work.

The U-6 rate, which government never trumpets is a lot closer to reality. It includes people no longer actively seeking employment, people who are not covered by unemployment, like people hired as independent contractors or the owner of the small dry cleaning business or restaurant that closed its doors in your neighborhood last week or people let go with not enough quarters of employment to qualify for benefits or from part time and seasonal jobs. As of November, 2011, that rate was 15.6%.

In that context it's worth noting that new claims for unemployment rose last month to a seasonally adjusted 402,000, the first time it's been over 400,000 in months. And this, again is at a time when such claims normally decrease because of seasonal employment.

The president, his apparatchiks and their allies in the media will point to this 'drop' in unemployment as a sign that we have begun a recovery from recession and that President Obama's policies are working just fine. it isn't and they aren't.

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The Real Numbers On Unemployment

There's this Drudge headline today...HO HO HO: UNEMPLOY RATE 8.6%. Only when you delve into the numbers do you realize that far from being anything to celebrate, it means things are getting worse.

Seasonally, this time of year normally sees an uptick in employment numbers because of temporary jobs, mostly in retail. That uptick is normally between 1 and 2%. An reduction in unemployment of a measly .3% is a sign that not only is the economy not getting better but that retailers expect meager holiday sales and have adjusted their seasonal hiring accordingly.

Another sign of the times is the emergence of a company that allows parents whose budgets are strained to rent toys for their children instead of buying them retail.

It's also worth repeating that the 8.6% is the 'official' U-3 unemployment rate. It accounts only for the people who are receiving or have applied for unemployment benefits and are actively seeking work.

The U-6 rate, which government never trumpets is a lot closer to reality. It includes people no longer actively seeking employment, people who are not covered by unemployment, like people hired as independent contractors or the owner of the small dry cleaning business or restaurant that closed its doors in your neighborhood last week or people let go with not enough quarters of employment to qualify for benefits or from part time and seasonal jobs. As of November, 2011, that rate was 15.6%.

In that context it's worth noting that new claims for unemployment rose last month to a seasonally adjusted 402,000, the first time it's been over 400,000 in months. And this, again is at a time when such claims normally decrease because of seasonal employment.

The president, his apparatchiks and their allies in the media will point to this 'drop' in unemployment as a sign that we have begun a recovery from recession and that President Obama's policies are working just fine. it isn't and they aren't.

please donate...it helps me write more gooder!

King cartoon

President Obama's Latest Horror - A Trillion Dollar Timebomb For America's Economy

President Obama has just enacted his latest raid on the American treasury. It's designed to benefit the president by pandering to the student vote at the expense of the American taxpayer.

President Obama has announced that he intends to issue an executive order for the federal government to reduce student loan payments to 10 % of a borrower's income above the poverty line, and for total debt forgiveness after 20 years, regardless of the outstanding balance.

"We're just going to do this by ourselves. We can't wait for Congress, we're just going to act," said Education Secretary Arne Duncan on CNN.

And of course, the president is putting this out there at universities all over the country.

To see how insidious this really is, let's take a look at how this works in the real world. Let's say Jane Jones borrows $150,000 to obtain a liberal arts undergraduate degree at your typical university. Her repayment is based on what she earns, if anything. Let's say Jane gets a job as a community organizer at $30,000 per year. Factor out the $10,800 for a single person under the federal poverty guidelines and her total annual repayment is $1,600 per year, or only $133.33 per month.

Twenty years later, she's only repaid $32,000 on her loan. And the balance? it doesn't 'dissolve' as the Obama Administration's rhetoric suggests. It gets picked up by the rest of us and gets added to the national debt.

Yes, fellow citizens. If some of the people the president and his minions feel are more deserving than you are want to go to academia for a 4-year funfest and pick up an overpriced diploma in ethnic or womyn's studies, you and your children are footing the bill.

The tenured radicals installed in the university system working to destroy America one mind at a time always had their six-figure lifestyles subsidized by the rest of us, but the bill just increased a hundred fold.

This is by no means small change. Americans currently owe over $1 trillion in college debt, and some 1.6 million have subsidized student loans, which Obama had the federal government take over in 2009.

Now that it's essentially going to be a free ride, that $1 trillion is going to look like pocket money.

College costs have increased nearly 600 percent since 1980, far ahead of inflation and price increases on cars, homes, and medical care. But for some strange reason, no one is suggesting cutting tuition, limiting tenure, creating alternative programs like apprenticeships, eliminating programs of dubious value or other steps that could make college more affordable. Instead, this president is inflating yet another bubble, since more money directed at the same commodity means schools can increase their prices, based on the 'bigger fool' theory that worked so well when it came to real estate. Remember how people bought homes at inflated prices they couldn't afford because they were always going to appreciate and they could always flip them for a profit in a few months? Remember how realtors always told people that now was the time to buy, before prices went up again?

President Obama is doing exactly the same thing here. He's deliberately setting another time bomb for the economy and creating another megabucks unfunded entitlement for the sole purpose of trying to slither back into office for another four years.When it explodes, he'll be long gone and away from the scene of the crime.

At least with real estate, the private sector was involved, or at least it was until the Obama Administration essentially took over the mortgage industry. Here, the debt bomb is already going to be absorbed via executive order without benefit of any congressional oversight, and it will increase to toxic levels as universities hyper-inflate their already obscene costs.

Ironically, the entire thing is a Ponzi scheme in reverse. The same students crying 'whoo hoo!' as they listen to President Hope n' Change haven't figured out that the small amount their loan payments are going to be lowered is going to be eclipsed by the increasing amount of taxes they'll have to pay to cover what the federal government eats in debt forgiveness, the increased cost of a college degree for their children, and the diminished employment opportunities as more and more economic activity is swallowed up by yet another unfunded federal mandate.

The idea of a sitting president deliberately doing something like this via executive order simply to benefit his own election prospects at the expense of the nation is something new here. But that's what we have.

Along with all the other episodes of this abysmally failed presidency, this latest horror makes it clear that not only does this president not deserve re-election, but that he was unworthy of his office to begin with.

As the ancient Greeks said, character is destiny.

please donate...it helps me write more gooder!

President Obama's Latest Horror - A Trillion Dollar Timebomb For America's Economy

President Obama has just enacted his latest raid on the American treasury. It's designed to benefit the president by pandering to the student vote at the expense of the American taxpayer.

President Obama has announced that he intends to issue an executive order for the federal government to reduce student loan payments to 10 % of a borrower's income above the poverty line, and for total debt forgiveness after 20 years, regardless of the outstanding balance.

"We're just going to do this by ourselves. We can't wait for Congress, we're just going to act," said Education Secretary Arne Duncan on CNN.

And of course, the president is putting this out there at universities all over the country.

To see how insidious this really is, let's take a look at how this works in the real world. Let's say Jane Jones borrows $150,000 to obtain a liberal arts undergraduate degree at your typical university. Her repayment is based on what she earns, if anything. Let's say Jane gets a job as a community organizer at $30,000 per year. Factor out the $10,800 for a single person under the federal poverty guidelines and her total annual repayment is $1,600 per year, or only $133.33 per month.

Twenty years later, she's only repaid $32,000 on her loan. And the balance? it doesn't 'dissolve' as the Obama Administration's rhetoric suggests. It gets picked up by the rest of us and gets added to the national debt.

Yes, fellow citizens. If some of the people the president and his minions feel are more deserving than you are want to go to academia for a 4-year funfest and pick up an overpriced diploma in ethnic or womyn's studies, you and your children are footing the bill.

The tenured radicals installed in the university system working to destroy America one mind at a time always had their six-figure lifestyles subsidized by the rest of us, but the bill just increased a hundred fold.

This is by no means small change. Americans currently owe over $1 trillion in college debt, and some 1.6 million have subsidized student loans, which Obama had the federal government take over in 2009.

Now that it's essentially going to be a free ride, that $1 trillion is going to look like pocket money.

College costs have increased nearly 600 percent since 1980, far ahead of inflation and price increases on cars, homes, and medical care. But for some strange reason, no one is suggesting cutting tuition, limiting tenure, creating alternative programs like apprenticeships, eliminating programs of dubious value or other steps that could make college more affordable. Instead, this president is inflating yet another bubble, since more money directed at the same commodity means schools can increase their prices, based on the 'bigger fool' theory that worked so well when it came to real estate. Remember how people bought homes at inflated prices they couldn't afford because they were always going to appreciate and they could always flip them for a profit in a few months? Remember how realtors always told people that now was the time to buy, before prices went up again?

President Obama is doing exactly the same thing here. He's deliberately setting another time bomb for the economy and creating another megabucks unfunded entitlement for the sole purpose of trying to slither back into office for another four years.When it explodes, he'll be long gone and away from the scene of the crime.

At least with real estate, the private sector was involved, or at least it was until the Obama Administration essentially took over the mortgage industry. Here, the debt bomb is already going to be absorbed via executive order without benefit of any congressional oversight, and it will increase to toxic levels as universities hyper-inflate their already obscene costs.

Ironically, the entire thing is a Ponzi scheme in reverse. The same students crying 'whoo hoo!' as they listen to President Hope n' Change haven't figured out that the small amount their loan payments are going to be lowered is going to be eclipsed by the increasing amount of taxes they'll have to pay to cover what the federal government eats in debt forgiveness, the increased cost of a college degree for their children, and the diminished employment opportunities as more and more economic activity is swallowed up by yet another unfunded federal mandate.

The idea of a sitting president deliberately doing something like this via executive order simply to benefit his own election prospects at the expense of the nation is something new here. But that's what we have.

Along with all the other episodes of this abysmally failed presidency, this latest horror makes it clear that not only does this president not deserve re-election, but that he was unworthy of his office to begin with.

As the ancient Greeks said, character is destiny.

please donate...it helps me write more gooder!

Rick Perry's New Tax Plan

GOP Candidate Rick Perry has finally released an actual economic plan,and the policies he's endorsing are not terrible,at least the way they've been outlined so far.

It starts off with a 20% flat tax proposal that includes the key word voluntary,something you rarely hear. In other words, you would be able to have your accountant figure your taxes based onyour current rate and compare it to the flat tax rate of 20% and pick the one most advantageous to your situation.

It's unclear whether Perry's plan would continue to allow you to use itemized deductions if you picked figuring your taxes the old way over the 20% flat tax. If it does, fine, it's workable. If not, that's an error that will stifle a certain amount of economic activity.Either way, it's certainly something a lot better than Herman Cain's 9-9-9 Plan.

Perry's plan would continue to allow deductions for mortgage interest and charitable deductions for households earning less than $500,000 a year and would increase the standard deduction to $12,500.

Perry's plan calls for a 20 percent corporate tax rate,and calls for capping federal spending at 18 percent of the country's GDP - something I want a lot more details on.

It would be far preferable for me to hear a candidate make specific commitments on what he plans to cut rather than just throwing a figure out there.

Perry's proposal also calls for allowing younger workers the option of privatizing their Social Security accounts, something we also need a lot more concrete details on. Total privatization is likely counter productive and could lead to a situation like we had when the program was first adopted at the height of the depression - substantial numbers of destitute old people with no means of being self-supporting. But intelligent privatization that uses actuarial tables to determine a certain minimum amount as forced savings to prevent that but also allows discretionary invest of the rest is exactly what's needed.

After a number of gaffes and some horrible debate outings,Governor Perry is trying to play catch up and be seen as a serious candidate again. This is at least a step in the right direction.

please donate...it helps me write more gooder!

Rick Perry's New Tax Plan

GOP Candidate Rick Perry has finally released an actual economic plan,and the policies he's endorsing are not terrible,at least the way they've been outlined so far.

It starts off with a 20% flat tax proposal that includes the key word voluntary,something you rarely hear. In other words, you would be able to have your accountant figure your taxes based onyour current rate and compare it to the flat tax rate of 20% and pick the one most advantageous to your situation.

It's unclear whether Perry's plan would continue to allow you to use itemized deductions if you picked figuring your taxes the old way over the 20% flat tax. If it does, fine, it's workable. If not, that's an error that will stifle a certain amount of economic activity.Either way, it's certainly something a lot better than Herman Cain's 9-9-9 Plan.

Perry's plan would continue to allow deductions for mortgage interest and charitable deductions for households earning less than $500,000 a year and would increase the standard deduction to $12,500.

Perry's plan calls for a 20 percent corporate tax rate,and calls for capping federal spending at 18 percent of the country's GDP - something I want a lot more details on.

It would be far preferable for me to hear a candidate make specific commitments on what he plans to cut rather than just throwing a figure out there.

Perry's proposal also calls for allowing younger workers the option of privatizing their Social Security accounts, something we also need a lot more concrete details on. Total privatization is likely counter productive and could lead to a situation like we had when the program was first adopted at the height of the depression - substantial numbers of destitute old people with no means of being self-supporting. But intelligent privatization that uses actuarial tables to determine a certain minimum amount as forced savings to prevent that but also allows discretionary invest of the rest is exactly what's needed.

After a number of gaffes and some horrible debate outings,Governor Perry is trying to play catch up and be seen as a serious candidate again. This is at least a step in the right direction.

please donate...it helps me write more gooder!

King and Budget cartoon

The King has his own daily cartoon here:
http://baloosdailykingandqueencartoon.blogspot.com/

Economy cartoon