[quote=garo;215044][URL="http://www.roaneviews.com/files/images/National-Debt-by%20president%20as%20a%20percentage%20on%20GNP%20zfacts%20National-Debt-GDP-L.preview.gif"]National Debt by President[/URL][/quote]If this graph is to be referenced in arguments about deficits and presidents, the dividing lines between administrations really should each be shifted a year later (with one partial exception I'll explain).

(Maybe this won't make much practical difference, but I'm being picky.)

Why?

Let's look at the budgetary time-line:

When a new president takes office (example: Reagan in January 1981), he has to submit his first budget to Congress only a short while afterward. His staff won't have had much time to go through the budget inherited from the previous administration and massively revise it to fit the new president's priorities. Oh, they can make some dramatic changes, but they can't go through all the little details and reshape them in just a month.

So a new president's first proposed budget, and its surplus/deficit, generally bears a strong flavor from his predecessor, despite a few showy items.

(Note that when there's a same-party transition, there usually would be very little change the new president would make in his first-submitted budget. Thus, the diagram quite correctly lumps the Reagan and Bush-the-Elder administrations together as a single span.)

Now, this budget covers the next federal fiscal year, the one starting the next October. The number of that fiscal year will be: year-the-new-president-was-elected (1980 in my example) plus 2.

(Note that the diagram is labeled at bottom with calendar-year numbers rather than fiscal-year numbers.)

E.g., the first budget Reagan submitted was for fiscal year 1982 (which ran from October 1981 through September 1982). It necessarily bore a strong flavor from the preceding Carter administration.

The first budget a new president submits that is entirely his administration's own is the next one, for fiscal year
year-the-new-president-was-elected (1980 in my example) plus 3 (= 1983 in my example).

Now, that's the usual way it goes.

A lot of folks don't get this budget year-number thing right.

We have, however, seen an exception in 2009: Obama's first-submitted budget (fiscal 2010) had not just a few tweaks here and there in the budget he inherited from his predecessor, but also had a massive trillion-dollar-plus stimulus addition. That addition was not at all in line with the usual relatively-minor changes by a new president. That addition should, in my opinion, be credited to Obama rather than to Bush-the-Younger, even though most of that fiscal year's budget nitty-gritty was indeed the product of the preceding administration.

So, if I were charting this for purposes of reference to deficits, I'd show an exception where responsibility for the fiscal 2010 deficit should be divided between Obama (only the roughly $trillion fiscal-stimulus and bailout part) and Bush the Younger (the rest), instead of all being credited to B-t-Y. (That exception has tough timing for Obama and lifts a $trillion responsibility off B-t-Y's shoulders, but "them's the breaks".)

It could reasonably be argued that since the nation's financial difficulties as of January 2009 were the responsibility of the B-t-Y administration, then so should the entire extraordinary measures taken to remedy them be B-t-Y's responsibility, so there shouldn't be any exception. My counter-argument would be that Obama wasn't absolutely [I]forced[/I] to make that extraordinary $trillion excursion -- he could've done something different -- so his administration should bear responsibility for that extraordinary part of the fiscal 2010 deficit as well as deficits in future fiscal years 2011-2014 or -2018.

The New York Times is publishing a series titled, "The New Poor".
[URL]http://topics.nytimes.com/top/news/business/series/the_new_poor/index.html?scp=1-spot&sq=The%20New%20Poor&st=Search[/URL]

Here's the third in the series:

"In Job Market Shift, Some Workers Are Left Behind"

[URL]http://www.nytimes.com/2010/05/13/business/economy/13obsolete.html[/URL]

[quote]Many of the jobs lost during the recession are not coming back.

Period.

For the last two years, the weak economy has provided an opportunity for employers to do what they would have done anyway: dismiss millions of people — like file clerks, ticket agents and autoworkers — who were displaced by technological advances and international trade.

The phasing out of these positions might have been accomplished through less painful means like attrition, buyouts or more incremental layoffs. But because of the recession, winter came early.

The tough environment has been especially disorienting for older and more experienced workers ...

. . .

Ms. Norton is one of 1.7 million Americans who were employed in clerical and administrative positions when the recession began, but were no longer working in that occupation by the end of last year. There have also been outsize job losses in other occupation categories that seem unlikely to be revived during the economic recovery. The number of printing machine operators, for example, was nearly halved from the fourth quarter of 2007 to the fourth quarter of 2009. The number of people employed as travel agents fell by 40 percent.

This “creative destruction” in the job market can benefit the economy.

Pruning relatively less-efficient employees like clerks and travel agents, whose work can be done more cheaply by computers or workers abroad, makes American businesses more efficient. Year over year, productivity growth was at its highest level in over 50 years last quarter, pushing corporate profits to record highs and helping the economy grow.

But a huge group of people are being left out of the party.

Millions of workers who have already been unemployed for months, if not years, will most likely remain that way even as the overall job market continues to improve, economists say. The occupations they worked in, and the skills they currently possess, are never coming back in style. And the demand for new types of skills moves a lot more quickly than workers — especially older and less mobile workers — are able to retrain and gain those skills.

There is no easy policy solution for helping the people left behind. The usual unemployment measures — like jobless benefits and food stamps — can serve as temporary palliatives, but they cannot make workers’ skills relevant again.

. . .

Offices, not just in Jacksonville but all over the country, have found that life without a secretary or filing clerk — which they may have begun somewhat reluctantly when economic pressures demanded it — is actually pretty manageable.

After all, the office environment is more automated and digitized than ever. Bosses can handle their own calendars, travel arrangements and files through their own computers and ubiquitous BlackBerrys. In many offices, voice mail systems and doorbells — not receptionists — greet callers and visitors.

And so, even when orders pick up, many of the newly de-clerked and un-secretaried may not recall their laid-off assistants. At the very least, any assistants they do hire will probably be younger people with different skills.

Economists have seen this type of structural change, which happens over the long term but is accelerated by a downturn, many times before.

“This always happens in recessions,” says John Schmitt, a senior economist with the Center for Economic and Policy Research. “Employers see them as an opportunity to clean house and then get ready for the next big move in the labor market. Or in the product market as well.”

Economists like [URL="http://www.newyorkfed.org/research/current_issues/ci9-8/ci9-8.html"]Erica Groshen[/URL] at the Federal Reserve Bank of New York have argued that bigger structural job losses help explain why the last two economic recoveries were jobless — that is, why job expansion lagged far behind overall growth.

But there is reason to think restructuring may take a bigger toll this time around. The percentage of unemployed workers who were permanently let go has hovered at a record high of over 50 percent for several months.

Additionally, the unemployment numbers show a notable split in the labor pool, with most unemployed workers finding jobs after a relatively short period of time, but a sizable chunk of the labor force unable to find new work even after months or years of searching. This group — comprising generally older workers — has pulled up the average length of time that a current worker has been unemployed to a record high of 33 weeks as of April. The percentage of unemployed people who have been looking for jobs for more than six months is at 45.9 percent, the highest in at least six decades.

. . .

Of course, just as there is a structural decline in some industries, others enjoy structural growth (the “creative” part of “creative destruction”). The key is to prepare the group of workers left behind for the growing industry.

. . .[/quote]

[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=awnKMEx2eVqE]German Households Are More Indebted Than Rescued Greeks: Chart of the Day[/url]:[i]Germans, who largely opposed their country’s participation in a bailout for Greece, are more indebted than the citizens of the Mediterranean nation they share a currency with.Sponsored links[/i]
[quote]The CHART OF THE DAY shows that while Greece has the highest level of government debt as a percentage of gross domestic product, shown in white, its household debt, shown in red, is less than Germany’s. Overall, Greece has 26 percent more debt as a percentage of GDP than Germany, according to data from Luxembourg-based Eurostat and the European Central Bank.

“Greece is a relatively rich country but with an impoverished state,” Ciaran O’Hagan, a fixed-income strategist at Societe Generale SA in Paris, said in an interview. “Greece does have the means to repay its external debts, especially when you add in the private sector.” [/quote]
[i]My Comment:[/i] It seems its a lot easier to accumulate household wealth when tax-dodging is the national pastime, with the full (at least until very recently) blessing of the state.

Bloomberg`s Kevin Hassett has an interesting commentary on the danger of playing musical chairs with government debt:

[url=http://www.bloomberg.com/apps/news?pid=20601039&sid=aJ3fIfG1JnoE]Greece’s Bailout Heroes Arrive in Leaking Boats[/url]:[i]The $1 trillion coordinated bailout to stave off a Greek debt default is fatally flawed and may well lead to another, deeper global recession.[/i]
[quote]While optimists hope the bailout will signal an end to the government debt crisis, the history of debt crises suggests it is just the end of the first act in what will be a long and drawn-out tragedy.

As part of the bailout, Greece is required to take tough medicine to get its fiscal house in order, such as cutting salaries and pensions of government workers. That’s easier said than done, given Greece’s long history of generously rewarding those who go to work.

But the story doesn’t end here. The fatal flaw in the plan is that the European nations bailing out Greece -- even Germany, where government debt has risen to about 80 percent of gross domestic product -- have similar budget problems and even less political will to take similar medicine.

Their plan appears to rest on the hope that lenders won’t notice. Eventually they will, and when that happens, a worldwide loss of faith in government debt markets is a virtual certainty.

In other words, it is hardly good news for a creditor if a hopelessly bankrupt borrower offers to take on the debts of a hopelessly bankrupt borrower.

During the financial crisis, faith was restored in large financial institutions because toxic assets were essentially exchanged for government bonds. If government bonds become toxic, there will be no effective treatment options remaining. The collapse will have no bottom.

And that collapse could happen at any moment. If lenders decide collectively that the big Western governments have unsustainable debt positions and lack the political will to fix them, the end can come tomorrow.
...
The only thing that has to happen is that lenders notice that the Europeans who plan to borrow money to repay entities that hold Greek debt are hardly better credit risks than the Greeks themselves. It might start with a failed Greek government debt auction, but it could rapidly affect every Western government trying to borrow funds.

If that happens, even the U.S. is in trouble. [/quote]
[i]My Comment:[/i] But fear not, our own dear intrepid debt-meister, Turbotax Timmay Geithner, assures us that the [url=http://www.nakedcapitalism.com/2010/05/geithner-on-europe-subprime-is-contained-redux.html]European sovereign debt crisis is "contained"[/url].

[QUOTE=cheesehead;215066]
Here's the third in the series:

"In Job Market Shift, Some Workers Are Left Behind"

[URL]http://www.nytimes.com/2010/05/13/business/economy/13obsolete.html[/URL][/QUOTE]
The comments here are incredible; I gave up after 12 pages of pure outrage

Desperation Time In EuroLand
 

Barry Ritholtz is normally a pretty astute student of the world of investing, but sometimes his being part of the professional investing community blinds him to the obvious ... for example his bafflement [url=http://www.ritholtz.com/blog/2010/05/does-tradebot-have-a-perfect-trading-record/]in this piece[/url]. Hint: It`s called "front-running", and it`s one of the main drivers of the whole 2-tiered market structure ("preferred" clients getting advance peeks at coming orders via flash-trading systems) and HFT which has mushroomed in the past few years.


Economist James K. Galbraith, in a statement to members of the Senate Judiciary Committee, writes eloquently about how the economics profession [url=http://www.zerohedge.com/article/james-galbraith-economic-theory-disgraced-profession]disgraces itself[/url] by (among many other failures) ignoring the pervasive phenomenon of fraud in the capital markets.
[quote]I write to you from a disgraced profession. Economic theory, as widely taught since the 1980s, failed miserably to understand the forces behind the financial crisis. Concepts including "rational expectations," "market discipline," and the "efficient markets hypothesis" led economists to argue that speculation would stabilize prices, that sellers would act to protect their reputations, that caveat emptor could be relied on, and that widespread fraud therefore could not occur. Not all economists believed this – but most did.
...
Some appear to believe that "confidence in the banks" can be rebuilt by a new round of good economic news, by rising stock prices, by the reassurances of high officials – and by not looking too closely at the underlying evidence of fraud, abuse, deception and deceit. As you pursue your investigations, you will undermine, and I believe you may destroy, that illusion.

But you have to act. The true alternative is a failure extending over time from the economic to the political system. Just as too few predicted the financial crisis, it may be that too few are today speaking frankly about where a failure to deal with the aftermath may lead.

[b]In this situation, let me suggest, the country faces an existential threat. [/b]Either the legal system must do its work. Or the market system cannot be restored. There must be a thorough, transparent, effective, radical cleaning of the financial sector and also of those public officials who failed the public trust. The financiers must be made to feel, in their bones, the power of the law. And the public, which lives by the law, must see very clearly and unambiguously that this is the case.[/quote]


[b]Desperation Time in the EuroBond Markets[/b]

When all other non-structural remedies fail to solve your underlying structural economic problems, the last resort is always the same: blame the messenger and ban short selling of various (or all) kinds. In a desperate attempt to arrest the Euro`s slide (after yesterday`s central-bank intervention proved only a brief stopgap ... you can only sell dollars to prop up the Euro while you have dollars left), German Finance Regulator Bafin has decided to [url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aRg1S6lCGHsY]ban naked short selling and naked CDSing[/url]. Which begs several questions, first of which is "why was naked shorting not already banned?", and "what evidence do you have that naked shorting is running rampant?" Bafin`s justification with regard to the second issue is kinda interesting, because it doesn't mention *naked* shorting, only "massive shorting", which is what markets do (usually quite legally and fully-clothed) when they lose all confidence in the actions of the regulators and holders-of-the-levers-of-power to address the underlying problems.
[quote]BaFin said it was taking the step because of “exceptional volatility” in euro-area bonds. “Massive” short-selling was leading to excessive price movements which “could endanger the stability of the entire financial system.”[/quote]
The 2 related quotes by analysts in the article are spot on:
[quote]“It makes it look as if the Germans are worried about something behind the scenes that the market’s not aware of,” said Michael O’Rourke, chief market strategist at BTIG LLC in Yardley, Pennsylvania, which provides trading services to institutional investors. “It almost looked panicked, which further undermines confidence in the markets. They’ve done as poor a job as one can do in delivering a message.”
...
“This is a mistake of a serious fundamental nature and of severe consequence,” Mark Grant, managing director of Southwest Securities Inc., in Fort Lauderdale, Florida, said in a note to institutional clients. Germany is making “an obvious attempt to control financial markets across the globe by this action just as they plead for investors to provide funding,” he said.[/quote]


[b]Budget Reality Check Comes to the UK[/b]

[url=http://www.telegraph.co.uk/news/newstopics/politics/conservative/7734803/Higher-taxes-for-a-million-as-George-Osbornes-emergency-Budget-hits-investors.html]Higher taxes for a million as George Osborne's emergency Budget hits investors[/url]
[quote]The Chancellor is to increase duty on capital gains even though the plan was not included in the Conservatives’ election manifesto.

CGT on “non-business assets”, including second homes, buy-to-let properties and shares, could rise from the current 18 per cent flat rate to a top rate of 40 or even 50 per cent, to fall in line with the higher rates of income tax.

The move could double tax bills for hundreds of thousands of investors and has been denounced as “legalised theft”. There has been speculation that the changes may be backdated to stop a “fire sale” of second homes and other assets.

The Liberal Democrats also want the tax to kick in below the current starting level of a £10,100 profit on any investment income. A threshold of £2,000 has been suggested. Deloitte, the accountancy firm, has estimated that that would mean the number of investors forced to pay CGT each year quadrupling to about a million.[/quote]
[i]My Comment:[/i] I`m not saying I agree that jacking up the CGT is a nifty idea - but given the budget hole that needs to be filled *now* (i.e. even with planned future massive spending cuts, which are the side of the equation - or at least what should be an equation - most-needing adjustment), if not this way, the money needs to come from somewhere else. Same kind of thing facing the Greeks, the Spanish, the Italians, the Irish, the Portuguese, and someday soon, the Americans.

BTW, I simply don`t get the "legalized theft" argument ... if you agree that 18% is legal, then it`s simply a matter of degree. Thus, while it may be "usurious", or "outrageous", or "exorbitant" or downright "egregious", if any rate greater than 0 is legal, then ... any rate greater than 0 (up to and including 100%) is legal. The thin end of the wedge ... I just finished John K. Galbraith`s classic [i]The Great Crash 1929[/i] last weekend, and one memorable-by-way-of-contrast-passage therein discusses how in late 1929 the Hoover administration attempted to goose the economy by "slashing" income tax rates [url=http://www.econlib.org/library/Enc/GreatDepression.html]by two-thirds[/url]. The problem? The tax rate for most people before the cut was [url=http://en.wikipedia.org/wiki/Income_tax_in_the_United_States]just over 1%[/url], so this bold stroke of tax-cutting put something like $5-10 in an average person`s pockets on an annualized basis. My, how that modest 1% slice has grown.

Still, kudos to the new UK coalition government for not beating around the bush on the kinds of cold-water-in-the-face-of-the-drunken-sailor measures which are needed. When was the last time we saw this kind of honesty about the budget from Gordon Brown`s administration. I believe "never" is the answer.


[b]U.S.: Multibillion-Dollar Muni-Bond Bid-Rigging Fraud Goes Unpunished, As Usual[/b]

[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=axH24KWxjVDE]Conspiracy of Banks Rigging State Finance Converged With Mortgage Meltdown[/url]:[i]A telephone call between a financial adviser in Beverly Hills and a trader in New York was all it took to fleece taxpayers on a water-and-sewer financing deal in West Virginia. The secret conversation was part of a conspiracy stretching across the U.S. by Wall Street banks in the $2.8 trillion municipal bond market. [/i]
[quote]A telephone call between a financial adviser in Beverly Hills and a trader in New York was all it took to fleece taxpayers on a water-and-sewer financing deal in West Virginia. The secret conversation was part of a conspiracy stretching across the U.S. by Wall Street banks in the $2.8 trillion municipal bond market.

The call came less than two hours before bids were due for contracts to manage $90 million raised with the sale of West Virginia bonds. On one end of the line was Steven Goldberg, a trader with Financial Security Assurance Holdings Ltd. On the other was Zevi Wolmark, of advisory firm CDR Financial Products Inc. Goldberg arranged to pay a kickback to CDR to land the deal, according to government records filed in connection with a U.S. Justice Department indictment of CDR and Wolmark.

West Virginia was just one stop in a nationwide conspiracy in which financial advisers to municipalities colluded with Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., Lehman Brothers Holdings Inc., Wachovia Corp. and 11 other banks.

They rigged bids on auctions for so-called guaranteed investment contracts, known as GICs, according to a Justice Department list that was filed in U.S. District Court in Manhattan on March 24 and then put under seal. Those contracts hold tens of billions of taxpayer money.[/quote]
[i]My Comment:[/i] And as always, no prosecutions, no justice department racketeering probes, nothing. That`s life in a corporate-owned kleptocratic financial oligarchy for you.

[quote=jasonp;215349]The comments here are incredible; I gave up after 12 pages of pure outrage[/quote]I logged in, but I don't see any comments with that article. Where were you looking?

Edit: never mind.

[QUOTE=ewmayer;215351]

Economist James K. Galbraith, in a statement to members of the Senate Judiciary Committee, writes eloquently about how the economics profession [url=http://www.zerohedge.com/article/james-galbraith-economic-theory-disgraced-profession]disgraces itself[/url] by (among many other failures) ignoring the pervasive phenomenon of fraud in the capital markets.

.[/QUOTE]


I got myself intensively disliked by two professors while I was in grad school
because I argued with them about the so-called "efficient market" theories.

I had said that the markets really operated via insider information, and that
anyone who believed otherwise was an "intellectual fraud" by espousing
theories that were separate from reality.

Go to the first article in the NYT series that cheesehead points out ([url="http://www.nytimes.com/2010/05/13/business/economy/13obsolete.html"]link[/url], hopefully it works for non-subscribers), click on 'single page' then click on 'comments'. Note that that article was published several months ago.

Upon testing the above, I actually don't see a 'comments' link by clicking on the URL. You may have to click on cheesehead's link in post #277, then click through to go to the series page, then click on the first article of the series to get the referrer information right. Newspapers seem to do that a lot; another trick is to paste the URL into google and click on the first hit, to go to what the google bot sees.

Got it. Thanks.

[URL]http://community.nytimes.com/comments/www.nytimes.com/2010/02/21/business/economy/21unemployed.html[/URL]

This link worked both when I was logged-in and after I logged-off.

The market is experiencing negative feedback. As most of you mathematicians know, negative feedback results in instability.

The overall market is down today with skittish investors pulling money off the table with various excuses given such as a weak euro, overdriven market, weak fundamentals, etc. The plain and simple is that the market has enjoyed an unsustainable run up over the last year. Now it is like a balloon blown hither and yon by any stray breeze.

Corporations are pushing their remaining employees for every bit of production possible so they can avoid hiring. This 'recovery' is so far a jobless recovery. Pundits are still saying that jobs are a lagging indicator but their voices are getting a bit ragged. If we were in a sustainable recovery, then the market would be creating jobs by now. The lack of job creation is a serious indicator that the economy is still fragile and highly susceptible to any disturbance.

I happen to be one of those overworked employees. In the recent past, I've been chewed out for missing an important customer conference call.... that I was not invited to attend. I've been instructed to resolve a problem for a customer immediately.... when I was already working on an emergency situation elsewhere. The lack of backup resources - meaning skilled engineers - means that if one of us takes vacation, the rest of us have to tighten our belts and pull the extra weight. Translate that to mean more overtime.

DarJones