Greek gov't slams international debt inspectors

By ELENA BECATOROS

BusinessWeek

Feb. 12, 2011

ATHENS, GREECE - Greece on Saturday slammed European and International Monetary Fund debt inspectors overseeing the country's efforts to reform its economy, accusing them of interfering in the debt-ridden country's internal affairs and saying they had overstepped their mark.

In an unusually harshly worded statement issued in the early hours of Saturday morning, government spokesman Giorgos Petalotis said the behavior of the inspectors at a news conference the previous day had been unacceptable.

The IMF, European Central Bank and European Commission delegation said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat. The IMF representative also said some of Greece's frequent demonstrations against the government's reforms were being carried out by groups angry at the prospect of losing "unfair advantages and privileges."

Petalotis said in his statement that, "We have needs, but we also have limits. And we do not negotiate the limits of our dignity with anyone," He added: "We take orders only from the Greek people."

It is the first time the government has publicly struck back at the IMF and EU, which have rescued Greece from bankruptcy but at a price many Greeks consider too harsh.

The opposition conservative party, however, struck back at the government, saying it was "too late for false tears" and that the government's "post-midnight theatrical performance is a farce."

Greece's economy is under strict supervision as part of a deal for the country to receive a euro110 billion package of bailout loans from the IMF and other European Union countries that use the euro -- funds that saved Greece from defaulting on its mountainous debts last May.

In return, the government has been pushing through stringent and unpopular reforms, including cutting public sector salaries and pensions, increasing taxes and overhauling labor laws. The austerity program has led labor unions to stage a series of strikes and demonstrations.

Batches of the loan are released every quarter, before which representatives from the IMF, EC and ECB visit Athens to review progress.

On Friday, the representatives -- collectively dubbed the 'troika' in Greece -- said Greece must privatize euro50 billion ($68 billion) in state assets and speed up structural reforms in the next few months to keep the country's troubled finances afloat.

IMF mission chief Poul Thomsen said Greece's long-term reforms were being "fiercely tested by vested interests." He said some of those demonstrating against the reforms, such as truck drivers and pharmacists, were "people who are angry because the government wants reforms that will take away their privileges."

Thomsen said he was "not surprised that these groups are protesting but I'm also convinced ... that the Greek population see it for what it is: an attempt to preserve their unfair advantages and privileges."

The troika's Friday afternoon press conference had led to quick outrage in sections of the Greek press, with one anchor on a private network describing Thomsen's remarks as being "unacceptable." But there was no government reaction until Petalotis' statement shortly before 2 a.m.

"We asked them to help and we are fully honoring our commitments. But we didn't ask for anyone to intervene in our country's internal affairs," he said, adding the government would make clear that "everyone must understand their role."

Greek national debt is set to exceed 150 percent of GDP this year, and during the news conference the troika laid out the new privatization program worth euro50 billion through 2015 -- seven times larger than a target set three months ago.

Thomsen scoffed at a suggestion that Greece might sell its ancient monuments to raise money, but argued "the mismanagement of public property is a major source of waste" in Greece.

Privatization targets are likely to include state companies not listed on the stock market and the development of public land, including Olympic facilities that have languished since the Athens Games in 2004. Greece will seek euro15 billion ($20 billion) in privatization and real estate development this year alone, according to Finance Ministry officials.

Petalotis said the government had frequently spoken of the need to utilize state property, but stressed that any such program would have to be done transparently and "in no case means the sale of public land."

"It is equally obvious that only the Greek government is able to take these decisions," he said.

--------

Associated Press writer Derek Gatopoulos contributed to this report.

Japan Government Debt Hits Record Y919 Trillion

TOKYO (Dow Jones)--Japan's outstanding public debt hit a record Y919.151 trillion at the end of last year, the Finance Ministry said Thursday, likely fueling concerns over the nation's fiscal health and adding to a sense of urgency within the government to quickly formulate a tax hike plan.

The ministry's quarterly data showed public debt rose 1.1% from the end of September, reaching a level equivalent to 194% of Japan's nominal gross domestic product for the fiscal year ended March 2010.

[This article is a stub - You must be a subscriber to the Wall Street Journal to view the rest.]

In Congress, Bernanke Faces Questions About Inflation

By SEWELL CHAN

Feb 9, 2011

WASHINGTON — The Federal Reserve chairman, Ben S. Bernanke, parried tough questions Wednesday about rising gasoline prices in the United States and the soaring cost of food and grains in the emerging world as he defended the central bank’s $600 billion program to shore up the recovery.

Mr. Bernanke said it was “certainly possible” that the Fed might cut short its efforts to loosen credit by buying Treasury bonds, especially if domestic inflation were to flare. But Mr. Bernanke maintained that for now, inflation was comfortably in check despite rising commodity prices overseas.

In his first appearance before House lawmakers since Republicans took control of the chamber last month, they repeatedly tried to draw him into the fierce debate over a looming vote to raise the government’s $14.3 trillion borrowing limit.

But the Fed chairman repeatedly declined to side with one party or the other on what was needed to plug the budget deficit. “Congress is going to have to decide where its values are, whether it wants to raise taxes, whether it wants to cut spending or whether it wants some combination,” Mr. Bernanke said.

The chairman reiterated his view that toying with the debt ceiling — some Republicans want to use the vote to force the Obama administration to make immediate spending cuts — could be disastrous if it resulted in a time-consuming debate that worried debt markets and forced the Treasury to default.

Representative Paul D. Ryan of Wisconsin, the new chairman of the House Budget Committee and a vocal skeptic of the Fed’s bond-buying effort, told Mr. Bernanke: “My concern is that the costs of the Fed’s current monetary policy — the money creation and massive balance sheet expansion — will come to outweigh the perceived short-term benefits.”

Mr. Ryan described “a sharp rise in a variety of key global commodity and basic material prices,” and an increase in interest rates of longer-term Treasury securities. And while conceding that American consumers were not yet experiencing substantially higher prices, Mr. Ryan warned that “the inflation dynamic can be quick to materialize and painful to eradicate once it takes hold.”

Mr. Ryan all but accused Mr. Bernanke of devaluing the dollar, saying, “There is nothing more insidious that a country can do to its citizens than debase its currency.”

Mr. Bernanke said the rise in commodity prices was mostly “a result of the very strong demand from fast-growing emerging market economies, coupled, in some cases, with constraints on supply.” He did not mention China by name, but he has in the past.

He added that overall inflation was “still quite low” and that longer-term inflation expectations, which can influence short-term changes in prices, were stable.

In 2010, a closely watched measure of inflation, the price index for personal consumption expenditures, rose by 1.2 percent, compared with 2.4 percent in 2009. And core inflation, which excludes the food and energy prices, was 0.7 percent in 2010, compared with around 2.5 percent in 2007. Wages rose only 1.7 percent last year.

Mr. Bernanke also denied printing money to finance government borrowing, saying, “What we’re doing here is a temporary measure that will be reversed.” Eventually, the Fed sells the bonds it acquires.

While part of the historically large deficits of the last two years stem from the government’s responses to the recession, Mr. Bernanke said the budget would remain on an unsustainable path even as the economy improved because of an aging population and rising health care costs.

Though Mr. Bernanke did not take sides on the most volatile questions of fiscal policy — whether to cut military spending, change entitlement programs like Medicare and raise personal income tax rates — he did offer lawmakers some suggestions.

He told Representative Betty McCollum, a Minnesota Democrat, that Congress should close myriad corporate tax loopholes and then lower the corporate tax rate. He told Representative Mike Honda, a California Democrat, that wise investments in education, including community colleges and on-the-job training, were essential to lowering unemployment.

The chairman also offered some of his most detailed comments to date on what he called China’s “counterproductive policy” of undervaluing its currency, the renminbi.

“They have an inflation problem, and the way they’re addressing it is not by raising their currency value, which would reduce the demand for their exports,” he told Representative Tim Ryan, an Ohio Democrat. “Rather, they are leaving it where it is, and they are instead trying to reduce domestic demand through higher interest rates. And it would seem like a better strategy would be to let domestic demand be what it is and let people enjoy a higher standard of living in China, and reduce their exports via a higher exchange rate.”

On Tuesday, China raised interest rates for the third time since October, and many economists in Asia expect that China will do so again this year.

Mr. Bernanke said the Fed was prepared to start raising interest rates when the time came. “Just like a quarterback has to lead a receiver,” he told Representative James Lankford, an Oklahoma Republican, the Fed has to begin tightening monetary policy before inflation becomes a problem.

But Representative Todd Rokita, Republican of Indiana, said the Fed had a poor track record in that regard. “Can you name one time in your agency’s history where you got it right, where you got on the brakes in time to correct runaway inflation?” he asked.

Mr. Bernanke pointed to his predecessor Paul A. Volcker, who crushed inflation in the early 1980s by sharply raising interest rates. But Mr. Rokita said the Fed had not acted in time.

As Mr. Bernanke spoke, Representative Ron Paul, a Texas Republican, held his own hearing to lambast the Fed.

“There is a great recovery going on,” said Mr. Paul, who has advocated abolishing the Fed and now leads a Financial Services subcommittee that oversees the Fed. “But the people don’t feel that way.”

The Fed did not take part in the hearing, at which three experts testified.

Christine Hauser contributed reporting from New York.

NYT: Day of angry protest stuns Egypt

With the January 2011 protests in Egypt in full swing, it is appropriate to take a look at some of the roots of this international crisis. This New York Times story in 2008 was a precursor to what we are experiencing in January 2011. - Editor

By Michael Slackman

Published: Sunday, April 6, 2008

CAIRO — The center of this normally bustling, overcrowded, traffic-clogged city was largely quiet Sunday, the roads nearly empty, many of the stores shuttered, as the riot police came out in force to prevent a general strike aimed at signaling widespread discontent with President Hosni Mubarak and his government.

Egypt has virtually no organized political opposition, except the Muslim Brotherhood, which is banned and barred from politics.

But events Sunday underscored the rise of a potentially more dangerous challenge to the government's monopoly on power: Widespread public outrage and a growing willingness by workers and professionals to press their demands by striking.

The main complaint is economic, driven by rising food prices, depressed salaries and what opposition leaders say is an unprecedented gap between rich and poor. It is hard to say if the streets were empty Sunday because people stayed home for fear of getting caught in the crossfire between protesters and police, or because of the call to stay home as a form of protest.

Either way, the government took the threat of a mass mobilization so seriously that it issued a warning to potential strikers, saying it would "take necessary and resolute measures toward any attempt to demonstrate, impede traffic, hamper work in public facilities or to incite any of this."

In Cairo, riot police officers massed in Tahrir Square, the center of the city. They stood in formation outside the lawyers', doctors' and journalists' syndicates. State security agents had visited government workers in advance and ordered them to attend work on Sunday, some workers said. At the lawyers' syndicate, a few hundred protesters stood on the roof and on a balcony chanting "Down, down Hosni Mubarak."

Hundreds of students demonstrated at three universities in Cairo.

In Mahalla al-Kobra, the center of Egypt's textile industry north of Cairo, a melee broke out late in the day as the riot police fired tear gas and workers threw stones. Officials said there were more than 200 arrests around the country, including at least seven people arrested for their efforts to use the Internet to promote the call for a day of unrest.

"I am not about to claim that the Egyptian people are finally rebelling," said Abdel Ahab El Meseery, an organizer with Kifaya, an opposition movement, who once served as the Arab League's cultural attaché to the United Nations. "The element of fear is there. The people are afraid of the government, but the government is as afraid of the people."

Under Mubarak and his governing National Democratic Party, officials have succeeded in stunting the growth and influence of political opposition. The only opposition group with a broad network and a core constituency is the Muslim Brotherhood, which has little ability to effect political change because its members are routinely arrested and jailed. Local elections are scheduled for Tuesday, and the government has arrested hundreds of Brotherhood members and supporters in advance.

The Brotherhood, struggling to regain its footing after the intense and persistent police pressure, distanced itself from the call to strike and said it would not participate.

Since September 2007 the government itself has scrambled to keep pace with the growing reliance on strikes as a tool to press worker demands. Textile workers, tax clerks and university professors have all held strikes or threatened to strike.

Doctors have also threatened to strike, complaining that physicians with 20 years experience, for example, often make no more than 450 Egyptian pounds a month, the equivalent of about $80.

"What made us take more confrontational measures is that we saw other groups doing so and making their demands," said Hamdy El Sayyid, longtime chairman of the doctors' syndicate.

But what has turned the demands of individual workers into a potential mass movement, officials and political analysts said, has been inflation on food products, mostly bread and cooking oil. The rising cost of wheat, coupled with widespread corruption in the production and distribution of subsidized bread, has prompted the president to order a resolution to the problem.

But that has done little to calm public outrage, or lower bread prices.

On Adly Street, a broad thoroughfare in central Cairo, many more stores than usual were shuttered Sunday, according to street vendors and local residents. It was a windy day, with a sandstorm and rain showers, which may have offered people added encouragement to stay off the streets.

"People are staying at home today," said Ashraf, a clerk in a luggage store on Adly Street. He was afraid to give his last name, for fear of arrest, but he said he kept his children home from school and dressed in all black as signs of support for the protest. "Because of the prices, because we can't get food," he said explaining the reason for the strike.

The strike plans began with the workers in Mahalla, who had said they would strike at 7 a.m., when workers changed shifts, to protest low wages. But state security forces arrived in mass and workers said they grew intimidated and went to work.

But the initial plan led other, smaller groups to call for the day of protest as a general sign of discontent with the direction Egypt is taking.

Kifaya, which had been in the vanguard of opposition movements until 2005, when its public following dwindled, joined the call. What may have spooked government officials mostly is the way in which technology - especially text messages on cellphones - was used to spread the word, without any formal organization promoting the call, political analysts said.

Residents of Imbaba, a conservative, poor neighborhood inside Cairo, asked neighbors to stay home as a sign of protest.

Belal Fadl, a scriptwriter and satirist in Cairo, said that Egypt was going through a very confusing time, one in which, he warned, the government should not rely on a population that is politically apathetic.

The problems, he said, were now too widespread, and too close to home.

"People in Egypt," Fadl said, "don't care about democracy and the transfer of power - they don't believe in it because they didn't grow up to it in the first place. This is unfortunately the case. Their problem is limited to their ability to survive and if that is threatened then they will stand up."

Mona el Naggar contributed reporting.

National Review Online - Democrats, The Financial Crisis and Evil-Man Economics

JANUARY 28, 2011 4:00 A.M.
National Review Online


Chairman Phil Angelides and the Democratic majority on the Financial Crisis Inquiry Commission have released their report, a textbook-worthy example of the “Evil Man School of Economics.” Something went wrong, and a villain must be identified. This is tediously familiar territory for those who have followed the political establishment’s years-long attempt to evade responsibility for the crisis of which it was a cause.


“We conclude this crisis was avoidable,” they write. “The crisis was the result of human action and inaction, not of Mother Nature or computer models gone haywire.” That much is hardly objectionable. But which human actions? On that question, the commission’s report is both implausible and nakedly political: The Evil Men are greedy corporate executives and Wall Street moneymen, and the crisis might have been averted if only they had been endowed with sufficient moral fiber — or had an appropriately mindful policeman appointed over them, which is the real point of the Angelides report. Which is to say, the Democrats have produced an analysis that relies upon and reinforces the mythology of the Left, producing a document that may as well have been written by Rolling Stone’s Matt “Vampire Squid” Taibbi, minus the literary flair.



Yes, this crisis was avoidable. To avoid it, we would have had to do a number of things differently. The first is to alert the authorities, beginning in the 1930s, that federal policies designed to encourage homeownership — well-intentioned though they have been — would create, and today continue to sustain, a set of economic incentives driving vast amounts of capital from around the world into the U.S. residential real-estate market.

From the Federal Housing Administration to Fannie Mae and Freddie Mac to the mortgage-interest deduction, U.S. government policies distorted the market, creating a massive misallocation of capital under the naïve theory that housing prices only move in one direction: up.

The second action would be to prevent the dot-com bubble of the 1990s, of which the housing-market meltdown was both an echo and a consequence. Like the real-estate bubble, the dot-com bubble was cheered on by the American government, the American consumer, and the American banker, because nearly everybody likes appreciating asset prices and the illusion of wealth that accompanies them. When the dot-com bubble burst, Washington responded the way Washington always responds: by slashing interest rates, hoping that a sluice of cheap money and easy credit sloshing through the economy would stimulate productive economic activity, or the illusion of productive economic activity, sufficient to disguise the damage done by the bubble. Having been burned by unprofitable start-ups at home and disappointing emerging-market investments abroad, a great many Americans decided to invest that easy money in houses. Washington was keeping interest rates down and encouraging the loosening of mortgage-lending standards; at the same time, Washington’s creatures, Fannie Mae and Freddie Mac, helped give the mortgage market enough liquidity to alarm Noah. They were helped mightily in that endeavor by the rise of massive savings in China and elsewhere in the developing world, all of which went looking for somewhere to invest: Where better than the American mortgage market, where a great many of the underlying loans were insured by the government or its proxies?

Third, we would need to convince a great many Americans not to take out mortgages they could not afford should their houses fail to appreciate, and convince a great many financial managers not to make bad investments large enough to bring down their firms.

Mr. Angelides, formerly the treasurer of California, should know something about man-made financial disasters. And the truth is that Goldman Sachs did not cause this crisis, and neither did Barney Frank. Bad investments, economics, and well-meaning government policies caused it. There were, and are, bad actors in this story. But the main problems have been the natural limitations on human knowledge, including the knowledge of government officials and the managers of large financial institutions.

The dot-com bubble actually destroyed more wealth than did the decline in housing prices; the housing meltdown became a crisis because the related securities losses were concentrated in a small number of firms, and because those firms were dramatically over-leveraged. If there is a public-policy proposal to be extracted from this mess, it is that in a world of “too big to fail” banks — and, like it or not, that is the world in which we live — large financial institutions should be subject to tighter leverage controls, with higher standards for capital reserves and liquidity. That dry, technical reform would solve most of the problems that we might hope to solve with new financial regulation, but it would not provide any emotional satisfaction to those who wish to use this crisis to rail against executive bonuses, which had almost nothing to do with the problem, or to those who wish to sermonize about the alleged moral failings of capitalism. Still less would it offer any political opportunity to former real-estate developer Phil Angelides and his Wall Street–backed Democratic colleagues, who wish to use the crisis as an opportunity to expand the size and scope of the managerial state that did so much to create it.

Monster debt threatens our future

5:15 PM, Jan. 28, 2011
Indianapolis Star 


The Congressional Budget Office issued yet another warning this week about the fiscal calamity awaiting the nation if the federal deficit is not soon brought under control. It's questionable, however, whether anyone on Capitol Hill or in the White House is prepared to seriously heed those warnings, delivered with ever-higher intensity over the past year.


In its latest projection, the CBO forecast that an additional $7 trillion will be added to the national debt in the next decade. If that occurs, annual interest payments on the debt, according to the CBO, would hit nearly $780 billion by 2021, which is more than the nation now spends each year on military defense.


Neither the president nor congressional Republicans have offered remedies that fully confront the looming crisis. President Barack Obama this week proposed a five-year freeze on optional domestic spending. Republicans have called for deep cuts in nondefense spending but haven't been willing to take on the Pentagon, Social Security or Medicare, all of which must be trimmed if the debt is to be tamed.


The CBO pointed out that the extension of the so-called Bush tax cuts and the temporary cut in the Social Security payroll tax, which Congress approved and the president signed last month, will add about $400 billion to the deficit this year alone. But the nation's long-term fiscal problems have more to do with spending levels than tax rates.


By 2021, federal revenues are projected to rest above the historical average of 18 percent of gross domestic product. Current projections, however, also show federal spending to be at more than 26 percent of GDP in 10 years.


It's more critical than ever that someone in Washington step forward to speak honestly about the painful choices facing the nation. Our government cannot continue to spend far more than it takes in without serious consequences. Our promises to future retirees cannot be met without substantive changes in Social Security and Medicare. Our future as a nation will be badly compromised, our children's future painfully altered, unless serious corrections are made in short order.


The alarms are sounding louder than ever. When will those elected to lead stop to listen?

Presidential Administrations and their percentage of the National Debt - Part II

The last time the National Debt went down was in 1960, the last year of the Eisenhower administration. My previous post yesterday on the matter was incorrect when I stated 1959. In 1960, the debt went down by $580,956,475.95. Since then, it has never gone down - only up. Part of the problem is the fact that the interest payments are off-ledger.

While it is conceivable to have a "budget surplus" like we did in the 1990s, this is negated from the mandatory interest payments that are not considered part of the budget. At the lowest rate of increase, 1999, the debt still went up $17,907,308,271.43. The next year, 2000 and President Clinton's last year in office, the debt rose by $133,285,202,313.20 - which was hardly leaving office under the economic conditions the American left claim.

How do the Presidential Administrations compare?

President George Washington through President Gerald Ford, Presidents 1-38, 1791-1976
Debt Increase: $707,142,528,417.78

President James Earl Carter, 39th President, 1977-1980
Debt Increase: $276,666,000,000.00

President Ronald Wilson Reagan, 40th President, 1981-1988
Debt Increase: $1,672,127,712,041.16

President George Herbert Walker Bush, 41st President, 1989-1992
Debt Increase: $1,462,282,943,480.50

President William Jefferson Blythe Clinton, 42nd Presidnet, 1993-2000
Debt Increase: $1,609,557,554,365.20

President George Walker Bush, 43rd President, 2001-2008
Debt Increase: $4,899,100,310,608.44

President Barack Hussein Obama, 44th President, 2009-present
Debt Increase: $3,031,935,408,476.43 (as of 10/28/2010 report on TreasuryDirect.gov)

The current size of the Debt, on Oct. 28, 2010 as we head into the mid-term elections is:
$13,658,812,457,389.51

The percentage of debt by Administration is as follows:
President George W. Bush (35.87%)
President Barack H. Obama (22.20%)
President Ronald W. Reagan (12.24%)
President William J.B. Clinton (11.78%)
President George H.W. Bush (10.71%)
Presidents Washington - Ford (5.18%)
President James E. Carter (2.02%)

 In 1835, the total debt was $33,733.05 and the debt was considered to be paid off, as the sum was inconsequential even for that time period. In 1836, it grew to $37,513.05 - only a $3,780.00 increase. That was before President Andrew Jackson issued his famous "Specie Circular" which mandated all payments to the Federal Land Office to be in gold and silver payments only, barred the highly speculative "greenbacks" as a form of payment.  This caused a panic. The debt grew by $299,444.78 in 1837 to $336,957.83. A year later, it grew by $2,971,169.24 to $3,308,127.07. It has never been at that level since.

In the modern era (Carter to present), Presidents Reagan and Clinton each served two terms and the National Debt increased by comparable amounts. In those 16 years of Reagan and Clinton, the increase totaled $3,281,685,266,406.36. In less than two years, the Obama increase is just $249,749,857,930.00 shy of that figure.

 President George W. Bush had an almost $5 trillion increase during his eight years, yet President Obama's increase is already 62% of the total of that amount in only 616 days. That's 2,306 fewer days than President George W. Bush.

At current spending levels, Obama's Debt will match George W. Bush's Debt in 51 more days - approximately Saturday December 18, 2010 (in 2255 fewer days). If the $4,991,064,525.20 daily average continues, the total increase in the 1457 days of the Obama administration will come to $7,271,981,013,216.40.

Presidential Administrations and their percentage of the National Debt - Part I

Last night I was asked by a nationally-syndicated radio talkshow host to calculate the percentage of the National Debt growth by each administration. Since the National Debt first crossed the $1 trillion mark under President Ronald Reagan, but the economy suffered greatly under his predecessor, President Jimmy Carter, I will be making those calculations later today from January 20, 1977 when Carter took office to the present, and post them when complete.

For the record, the National Debt, despite erroneous claims by Democrat activists, has not gone down since 1959 under President Dwight Eisenhower. Even at the height of the economic boom in the 1990s, the Debt still grew $17 Billion at it's slowest rate of growth. Under the Kennedy, Johnson, Nixon, Ford, Carter, Reagan, George H.W. Bush, Clinton, George W. Bush and Barack Obama administrations, the debt grew. There was no single year since 1959 when the net size of the Debt actually went DOWN, though periods of governmental spending restraint coupled with a fast growing economy slowed the rate of growth.

I'll post those figures later today.

Newest National Debt Statistics Now Posted - September 2010 (End FY 2010)

Here are the newest National Debt Statistics for the period ending September 30, 2010 - per www.treasurydirect.gov - the official website of the U.S. Treasury Department's Bureau of the Public Debt. September 30, 2010 is the end of Fiscal Year 2010 for the United States Government.

National Debt (Sept. 30, 2010)
Publicly Held
$9,022,808,423,453.08

Intragovernmental Holdings
$4,538,814,607,438.71

Total Debt:
$13,561,623,030,891.79

Amount of Debt on Sept. 30, 2009:
$11,909,829,003,511.75

Increase in Fiscal Year 2010:
$1,651,794,027,380.04

Debt on Inauguration Day 2009:
$10,626,877,048,913.08

Debt increase in 588 days of President Obama's administration:
$2,934,745,981,978.71
($4,991,064,525.20/day)

Total Debt increase in President George W. Bush's administration:
$4,899,100,310,608.44
($1,676,625,705.20/day - 2922 days)

Difference between Bush/Obama administrations:
$1,964,354,328,629.73
(Bush larger than Obama)

Interest payments
September 2010
$18,186,175,433.65

Fiscal Year 2010
$413,954,825,362.17

Gifts to reduce the Public Debt
August 2010
$81,444.76

Fiscal Year 2010 (one month to report)
$2,824,256.11

Just the Facts: Deficit Commission member Jan Schakowsky

Posted at www.bankruptingamerica.org

REP. JAN SCHAKOWSKY (D-IL)
Member

Rep. Jan Schakowsky was elected in 1998 to represent Illinois’ 9th congressional district. Prior to that, she served in the Illinois State Assembly. Rep. Schakowsky serves on the House Select Intelligence Committee, and on the House Energy and Commerce Committee where she worked to pass the recent health care reform bill. Rep. Schakowsky also serves as the Democrats’ chief deputy whip.

In an April column in The Huffington Post, Rep. Schakowsky outlined her ideas and hopes for the fiscal commission. She said, “Much will be said about what we can and cannot afford. These questions must be considered in the broadest possible context. For example, I believe that we can’t afford to skimp on educating our children … Bottom line, while we are committed to freeing our children and grandchildren from crippling debt, we must be just as committed to assuring that they are not ignorant, sick and unemployed.”

Rep. Schakowsky says the current budget deficit is not only a result of tax and spending policy, but also the recession, which she blames on Wall Street. Schakowsky has outlined cuts she would advocate, include eliminating tax loopholes, improving the government contracting system, and cutting outdated weapons systems.

In June, Rep. Schakowsky said it was unlikely the commission would come to an agreement on how to tackle the deficit because conservatives are unwilling to consider tax increases.

Mullen: National Debt is a Security Threat

By Michael Cheek

ExecutiveGov.com

August 27, 2010

The national debt is the single biggest threat to national security, according to Adm. Mike Mullen, chairman of the Joint Chiefs of Staff.

Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit.

“That’s one year’s worth of defense budget,” he said, adding that the Pentagon needs to cut back on spending.

“We’re going to have to do that if it’s going to survive at all,” Mullen said, “and do it in a way that is predictable.”

He also called on the defense industry to hire veterans and become more robust in the future.

“I need the defense industry, in particular, to be robust,” he said. “My procurement budget is over $100 billion, [and] I need to be able to leverage that as much as possible with those [companies] who reach out [to veterans].”

Mullen highlighted the unity of purpose between the government and industry as well, in working to solve national security issues.

“I have found that universally, [private-sector workers] care every bit as much about our country, are every bit as patriotic and wanting to make a difference … as those who wear the uniform and are in harm’s way,” he said.

National debt soars to highest level since WWII

The following article appeared in the June 30, 2010 issue of USA Today.

The federal debt will represent 62% of the nation's economy by the end of this year, the highest percentage since just after World War II, according to a long-term budget outlook released today by the non-partisan Congressional Budget Office.


Republicans, who have been talking a lot about the debt in recent months, pounced on the report. "The driver of this debt is spending," said New Hampshire Sen. Judd Gregg, the top Republican on the Senate Budget Committee. "Our existing debt will be worsened by the president's new health care entitlement programs...as well as an explosion in existing health care and retirement entitlement spending as the Baby Boomers retire."


At the end of 2008, the debt equaled about 40% of the nation's annual economic output, according to the CBO.


The report comes as the National Commission on Fiscal Responsibility and Reform meets today. The group, created by President Obama, is expected to issue recommendations in December to curb the debt - a point Democrats raised today.


The CBO report "reinforces the importance of the work being done right now by the president's fiscal commisson," said Sen. Kent Conrad, D-N.D., who chairs the Senate Budget Committee. "We simply cannot allow the federal debt to explode as envisioned under CBO's projections. The economic security of the country and the quality of life for our children and grandchildren are at stake."


(Posted by John Fritze)

Is a Mortgage Refinance Right for You?

By Dave Ramsey

www.daveramsey.com

There’s a lot of hype about refinancing mortgages. You’ll hear, “Rates have never been lower!” or, “Refinance now to lock in your savings!” There are even special products like “streamlined” refinancing.

Like anything else, you need to determine if a refinance is right for you based on the specifics of your mortgage. Here are some guidelines to get you started:

The Break-Even Analysis

A refinance makes sense when you can lower your interest rate enough to pay for the closing costs before you plan to sell your home.

Here’s a simple example. If you have a $100,000 mortgage and you can lower your interest rate by 1% in a refinance, you’ll save $1,000 a year. If your closing costs are $3,000, it will take three years to break even on your refinance.

In general, a refinance is worth it if you can lower your rate by at least 2%. At that point, you’ll see real savings on your monthly payment.

Points, ARMs and Seconds

When you’re gathering quotes for a refinance, ask for a par quote or zero quote. That means the closing cost estimates will not include points or origination fees. Don’t pay these fees, which are simply pre-paid interest. The savings, if any, don’t justify the up-front expense.

If you have an Adjustable Rate Mortgage (ARM), Dave will almost always recommend you refinance into a fixed-rate mortgage. Even if you have to write a check to pay for the closing costs, it’s worth it to avoid the risk that your payments could go up when the rate adjusts.

A lot of homeowners with second mortgages want to roll it into their first mortgage with a refinance. Not so fast! If the balance on your second mortgage is less than half of your annual income, pay it off in Baby Step 2. If not, go ahead and refinance it with the first mortgage and pay it off in Baby Step 6.

Going from 30 to 15

When you buy a home, if you’re not paying cash, you should get no more than a 15-year mortgage. However, if you already have a 30-year mortgage and a good rate, you don’t have to go to the expense of refinancing just to get the shorter term. Just calculate what your monthly payment would be on a 15-year term and be disciplined about paying that amount.

What to do if you face vehicle repossession

By Andrew Housser Reposted from mysuncoast.com Over the past few years, the rate of auto repossessions has increased as the auto loan market has undergone its own subprime lending crisis, similar to the one that crippled the U.S. mortgage industry. As with mortgages, auto lenders frequently provided large loans to people with lower credit scores. In turn, American consumers, who became accustomed to borrowing rather than saving, purchased as much car as possible for a low monthly payment. That practice meant that loan repayment terms often extended to 60 months and beyond. For example, among borrowers with good credit, 41 percent of auto loans were longer than 60 months in 2007, up from 12 percent in 2002. Among subprime borrowers (people who paid higher interest rates because of poor credit), 67 percent of loans were for more than 60 months in 2007. Many vehicle loan contracts specify that if a borrower stops paying the loan, the lender can repossess, or take back, the vehicle. Lenders typically repossess cars once owners are behind on payments by about 90 days. After a vehicle is repossessed, the car will be sold at auction, typically within 41 days. The repossession has serious costs for the vehicle owner: The owner must pay the difference between the amount left on the loan and the profit brought in from the sale, minus costs for cleaning, repossession, transport and the sale. This amount is known as the deficiency. Some owners are stuck paying for years after they lose the vehicle. A repossession severely damages the credit score. One of the largest credit reporting agencies, Experian, reports that an auto repossession will remain on a credit report for seven years from the original delinquency date, or the date you missed your first payment. Even one late auto loan payment can knock a credit score down by as much as 100 points. As a result, buying a replacement vehicle costs more, with a higher interest rate on a vehicle loan. What to do if you face repossession 1. Cut costs where you can In many places, a vehicle is essential to take people to work or school. If this is the case for you, take a hard look at your budget to see if you can cut out expenses, which may range from eating out to entertainment to cigarettes, to free up more money to stay current with car payments. 2. Remove personal items from the vehicle If you are late on payments, do not keep any personal items in the vehicle in case it is repossessed. 3. Know your rights You can learn about local laws from the office of your state's attorneys general. For example, in every state, you have the right to try to redeem your vehicle, even after it has been repossessed, by paying all late payments and related costs. Service members on active military duty who bought the car before they went on active duty cannot have a vehicle repossessed without a court order. 4. Communicate with the lender If you are late on a payment, or worried you cannot pay, contact the lender and explain the situation. Get all promises from the lender in writing. At worst, you can voluntarily surrender the vehicle. This "voluntary repossession" still damages credit, but it will save you the repossession costs of about $700. 5. Sell the vehicle If you owe less than the vehicle is worth, consider selling it to pay off the loan, then purchasing a vehicle that is within your means. 6. Get help If you need help in managing your other debts (such as credit card debt) to help reduce your overall debt burden -- and possibly help prevent vehicle repossession -- seek out a reputable debt settlement company. An experienced advisor can help you manage your financial problems and make debt repayment affordable. Having a vehicle repossessed is second only to a mortgage foreclosure in the damage it can do to your credit and your lifestyle. Before you get into financial trouble with a car, try to remedy the situation -- but if you do face repossession, know how to minimize the damage.

Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC and its wholly owned subsidiary, Freedom Debt Relief, a national consumer debt resolution firm that has served more than 40,000 clients and manages more than $1 billion in consumer debt. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.

What was the National Debt in January 2009?

Courtesy of the U.S. Treasury Department (www.treasurydirect.gov).

The National Debt on January 1, 2009 was:
$10,669,804,864,612.13

When President Barack Obama was inaugurated on January 20, 2009, the National Debt was:
$10,626,877,048,913.08

In 1959, the interest paid on the National Debt was $7,592,769,000 (The total debt was $290,797,771,717.63 that year)

In Fiscal Year 2009, the interest paid on the National debt was:
$383,071,060,815.42 (greater than the total debt in 1959)

Newest National Debt Statistics Now Posted - August 2010

Here are the newest National Debt Statistics for August 25, 2010 - courtesy of the U.S. Treasury Department at www.treasurydirect.gov

Amount held by the Public:
$8,834,183,612,860.18

Intragovernmental Holdings:
$4,527,170,829,387.77

Total Debt:
$13,361,354,442,247.95

The National Debt 365 days ago (Aug. 25, 2009) was:
$11,730,400,622,450.31

Increase in the last 365 days:
$1,630,953,819,797.64

Size of the debt on Inauguration Day - Jan. 20, 2009:
$10,626,877,048,913.08

Increase in Debt since President Obama was Inaugurated:
$2,734,477,393,334.87
[$4,682,324,303.65 per day increase in the 584 days of the Obama Administration]

Interest paid July 2010:
$20,386,125,152.13

Interest paid - Fiscal Year 2010 (2 months left to report):
$375,247,863,222.70

Gifts to reduce the public debt:
June 2010: $197,532.43
FY2010: $2,703,107.90

Economy Caught in Depression, Not Recession: Rosenberg

By: Jeff Cox
CNBC.com Staff Writer

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions "a depression, and not just some garden-variety recession," and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered "euphoric response."

"Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times," he said.

The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent, sending the stock market to a 50 percent rally in early 1930 as investors thought the worst had passed.

"False premise," Rosenberg said. "And guess what? We may well be reliving history here. If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%."

Rosenberg's warning comes as a slew of major analysts—Goldman Sachs andJPMorgan among them—have slashed GDP projections for 2010 to the 1.5 to 2 percent range.

Chicago Federal Reserve President Charles Evans said in a speech Tuesday that the risk of a double-dip recession has escalated. He said government programs to help distressed homeowners have been ineffective and aren't helping the pivotal housing sector recover.

The dour outlooks come on the same day that the National Association of Realtors said home sales reached a 15-year low in June, dousing hopes that the industry had reached a bottoming point.

Rosenberg points out that the "overall economic malaise" has come despite aggressive efforts by the Federal Reserve to stimulate the economy through rate cuts. The central bank itself has scaled back its economic projections, has held steady on its balance sheet, and could be announcing another round of quantitative easing measures at its Jackson Hole summit this week.

"How's that for a reality check," Rosenberg said. "It's not too late, by the way, to shift course if you have stayed long this market."