Econ 2009

[ewmayer]

Start of this April reminds me of last year - markets rallying on delusional "bottom is in / this looks bad, but is really good news!" herd mentality thinking, encouraged by the CNBC pumptards. Case in point: One of the reasons for today`s rally was that the ISM's manufacturing index rose to 36.3 in March from 35.8 in February, versus forecasts for a rise to 36. Can you say "statistically insignificant? But the financial media were fixated on the 36.3-is-better-than-the-expected-36 aspect, rather than the "anything under 50 indicates ongoing contraction, and under 40 is really awful" aspects. Similarly, March auto sales were horrible, but "better than January and February!!!" by some tiny percentage, as were pending home sales ("Up 2.1%, plus or minus an error range much larger than 2.1%!!!") Sad to see how many retail investors are - once again - getting suckered into this latest "you don't want to miss the market bottom, because it`s up to the sky from here, baby!" bullshit smoke-and-vapor rally. But as the saying goes, "Fool me once - shame on you. Fool me twice - shame on me." I would add, "Fool me three or more times - wow, I must really be a gullible dumbshit who deserves to lose his money."

Sam Stovall, chief market pimp at Standard & Poors, was on PBS Nightly Business Report last night, playing up the bottom-is-in theme. At one point he actually said with a straight face, "Investors should not focus on fundamentals at this point ... the markets tend to anticipate economic recovery by 6 to 9 months ...", i.e. because "the markets have decided" that the worst is behind us, it must be so. He failed to mention the possibility that - just like the last three times in the past 12 months that "the markets decided" that the bottom was in, they were simply, egregiously wrong, and each time anyone paying attention to those oh-so-ignorable fundamentals was not at all surprised, except by the fact that "the markets" kept falling into the same delusional trap, over and over again. Man, when this latest and greatest bear market rally pops, it`s going to be brutal. I can't say what the precise trigger will be for the next wave of panic selling, but I predict it will occur sometime in the next 3 months. But, on to today`s news roundup:


Obama Said to Conclude Bankruptcy Is Most Likely Option for GM, Chrysler: President Barack Obama believes a quick, negotiated bankruptcy is the most likely way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said.


Move to Ease 'Mark' Rule May Subvert Treasury Plan: A new accounting rule set to be approved this week will relax mark-to-market rules for banks sitting on billions of dollars in toxic assets, making it more attractive to keep the assets on their books. Yet those changes may undermine a larger U.S. Treasury plan to rid the banks of those same assets, bankers and accounting experts say.


U.S. Manufacturing Shrinks for 14th Straight Month as Factories Pare Costs: Manufacturing in the U.S. contracted for a 14th straight month in March as factories kept on cutting production amid the economic downturn that this month becomes the longest since the Great Depression.


Asia's Economic Woes Deepen as Japan Tankan Confidence Falls to Record Low: Asia’s economic slump deepened in March as Japanese business confidence plunged to a record low, Chinese manufacturing shrank and South Korean exports fell for a fifth month.

Not that dire economic news ever kept the market bulls from desperately seeking any kind of silver lining ... what`s our excuse to rally today? OK, here you go - note how frequently "rally" these days is accompanied by the word "speculation":

Asian Stocks Climb on U.S. Auto Speculation, Commodity Prices; Honda Gains: Asian stocks rose for the first time in three days on speculation Japanese and South Korean automakers will benefit from the possible bankruptcies of General Motors Corp. and Chrysler LLC.


Hitler's Ghost Goads Bill White to Battle With Greenspan on Crisis Fixes: William White’s tussle with Alan Greenspan is spilling into their retirements as world leaders meet in London to try to prevent the next financial meltdown.

White challenged the former Federal Reserve chairman’s mantra that central bankers can’t effectively slow the causes of asset bubbles when he was chief economist at the Bank for International Settlements.

As heads of state gather for tomorrow’s Group of 20 summit, several former central bankers and regulators are advising them to advance the same arguments White has made for more than a decade: raise interest rates when credit expands too fast and force banks to build up cash cushions in fat times to use in lean years.

“We started worrying about this at the same time that Alan Greenspan started worrying about irrational exuberance” in 1996, said White, a Canadian who has remained in Basel, Switzerland, since retiring from the BIS in June. “The difference was he stopped worrying about it, or at least he stopped worrying about it publicly, and we didn’t.”

My Comment: Given that the Greenspan Fed, by way of its three-pronged idiocy of (a) lowering interest rates too much and for too long in efforts to mitigate recessions and micromanage the business cycle, (b) following Greenspan`s religious belief in the efficacy of self-regulating markets and (c) being grossly negligent in its charge to oversee lending practices and standards, was the main *cause* of the 2 biggest speculative asset bubbles in history, White`s stance seems entirely reasonable to me. The best way to prevent is to not cause. But lets hear what Greenspan`s crony apologists have to say:

Mark Gertler, a New York University economics professor who has collaborated on research with Fed Chairman Ben Bernanke, Greenspan’s successor, said that the U.S. housing boom and bust weren’t caused by low interest rates in 2003 and 2004. The problem stemmed from the decline in subprime mortgage lending standards and from leaving investment banks essentially unregulated even as they held mortgages and issued short-term liabilities like commercial banks, he said.

“The first-order cause of this crisis was the regulatory system was way out of whack,” Gertler said. “It’s not the case that you can get at this alone with interest-rate policy; it really requires smart regulatory policy.”

My Comment: Here is the table "Purpose of the Federal Reserve" from Wikipedia - I`ve underlined key functions that are directly relevant to Gertler`s whining about "the regulatory system":

Current functions of the Federal Reserve System include:[13][15]

• To address the problem of banking panics
• To serve as the central bank for the United States
• To strike a balance between private interests of banks and the centralized responsibility of government
  o To supervise and regulate banking institutions
  o To protect the credit rights of consumers
• To manage the nation's money supply through monetary policy to achieve the sometimes-conflicting goals of
  o maximum employment
  o stable prices, including prevention of either inflation or deflation[16]
  o moderate long-term interest rates
• To maintain the stability of the financial system and contain systemic risk in financial markets
• To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system
  o To facilitate the exchange of payments among regions
  o To respond to local liquidity needs
• To strengthen U.S. standing in the world economy

I also highlighted the bit about "stable prices" because that is directly at odds with the Fed`s consistently expansionary (i.e. inflationary) monetary policy, because that feeds right back into the theme of the Fed creating asset bubbles:

At one end of the spectrum are economic thinkers, such as those of the Chicago School or the Austrian School, who want the Federal Reserve System abolished.[122] They criticize the Federal Reserve System’s expansionary monetary policy in the 1920s, arguing that the policy allowed misallocations of capital resources and supported a massive stock price bubble.

[cheesehead]

Here's a chance to test the accuracy and insight of one of my favorite sources of geopolitical/military/economic information, Stratfor (http://www.stratfor.com/).

On Monday, before Obama left for Europe, they published an article predicting the various outcomes of the phases of the trip.

"The United States, Germany and Beyond"

http://www.stratfor.com/weekly/20090...any_and_beyond

I'm not going to quote details of their predictions for the first three phases (G-20, NATO summit, EU meeting), which they expect not to produce anything significant for the reasons they set forth in the article, but they _do_ think that important (and surprising to the American public, perhaps) things may well happen at the final stop: Turkey.

Here's their summary:

From our point of view, the talks in Europe are locked into place. A fine gloss will be put on the failure to collaborate. The talks in Turkey, on the other hand, have a very different sense about them.

That summary is preceded by:

But let’s remember that Obama’s trip doesn’t end in Europe, it ends in Turkey. Turkey is a NATO member but has been effectively blocked from entry into the EU. It is doing relatively well in the economic crisis, and has a substantial military capability as well. The United States needs Turkey to extend its influence in Iraq to block Iranian ambitions, and north in the Caucasus to block Russian ambitions. Turkey is thus a prime candidate for an enhanced relationship with the United States. Excluded from Europe out of fears of Turkish immigration, economically able to stand on its own two feet, and able to use its military force in its own interest, it doesn’t take a contortionist to align U.S. and Turkish policies — they flow naturally.

However planned, Obama’s visit to Turkey will represent a warning to the Germans and others in its orbit that their relationship with the United States is based, as Merkel put it, on national interest, and that Germany’s interests and American interests are diverging somewhat. It also drives home that the United States has options in how to configure its alliance system, and that in many ways, Turkey is more important to the United States than Germany is.

Obama has made the case for multilateralism. Whatever that means, it does not have to mean continued alignment with all the traditional allies the United States had. There are potential new relationships and potential new arrangements. The inability of the Europeans to support key aspects of U.S. policy is understandable. But it will inevitably create a counter pressure on Obama to transfer the concept of multilateralism away from the post-World War II system of alliances toward a new system more appropriate to American national interests.

As I said, Stratfor explains why they expect nothing spectacular from the first three phases in their article.

But I confidently predict that we'll see Republicans blame Obama for those whiffs, without acknowledging that McCain (or Romney) would have had even less chance of getting anything changed on such a trip. The GOP won't cite all the reasons Stratfor does that have to do with Europe's own internal situations; they'll continue to pretend, at least publicly, that the U.S. still ought to be able to push the rest of the world around (if we had a Republican president, that is).

Not that far-left liberals would necessarily be more perceptive overall, of course. (But I haven't studied that end as much as the right-wing, so I opine less about them.)

- -

Stratfor has to be careful not to make an out-and-out bald straightforward prediction about the Turkey phase, but I have less to risk, so I'll predict:

We will see something new and front-page-worthy come out from Obama's visit to Turkey, something along the lines Stratfor mentions in the article linked from within the first paragraph of the above quote

("Turkey, U.S.: Strengthening Ties as Ankara Rises" at http://www.stratfor.com/memberships/...s_ankara_rises;

You'll get a membership pitch after you request this article be e-mailed to you, but just ignore/skip that. Stratfor will e-mail the article either way and won't bug you later.)

or involving factors mentioned in this companion article:

"Turkey and Russia on the Rise" at http://www.stratfor.com/weekly/20090...nd_russia_rise. (Should involve no membership pitch if you access it in the not-too-distant future)

[garo]

I am not convinced by this article from Stratfor. I too don't expect much from G20 but I find the gloss the Stratfor article puts on the whole issue of relationships with Germany vs. Turkey rather self-serving and inaccurate. More opinion and less facts.

Claim 1: [Turkey] is doing relatively well in the economic crisis.

Is that why they were one of the first countries in line for an IMF bailout? Statistics here http://stats.oecd.org/WBOS/Index.asp...e=View&Lang=en show that Turkey has been in recession since Q2 2008 and its rate of contraction is much greater than Germany.

Claim 2: US needs Turkey to extend its influence in Iraq to block Iranian ambitions.

But that does not mean it is in Turkey's interests to do so. After all the US needed Turkey to allow the use of its airspace for the invasion of Iraq but that did not happen. That was what put a kibosh on US-Turkish ties and we should see a gradual warming of those ties in keeping with the new administration and its multi-lateral approach. To read any more into it would be imprudent in my opinion.

Claim 3: Obama’s visit to Turkey will represent a warning to the Germans...

Maybe, but the important question is if Germany cares. Germany needs the US far less than Turkey does so it is much less likely to subvert its national interest to curry favour with the US. Even then it is a bit of a stretch to suppose that Turkey would want to do that. If anything, the refusal to allow overfly permission during the Iraq invasion and the recent spat between the Turkish and Israeli presidents shows that Turkey is keen to display its independence from the US and NATO. It has a lot to do with the internal politics of the country too but that is the case with every country.

Finally I think that the importance of Western Europe (WE) to the US in terms of strategic alliances has been diminishing for quite a while - since the USSR broke up. The US has tried to create other alliances - such as those in the Caucus and Eastern Europe - with limited success. But Europe remains a far far bigger trading partner than all of these countries put together. So while the US may get servility from Eastern Europe and the Caucus, it should not be seen as a threat to WE but simply a changing reality that WE doesn't need the US any more like it did in the aftermath of WWII.

[ewmayer]

Another huge rally! rally!! rally!!! day, on hopes that the G20 summit will prove to be more than huge waste of oxygen and expensive food and drink, and news that the Financial Accounting Standards (lowering) Board (FASlB) signed off on changes to accounting rules for "hard to value" assets, replacing the old mark-to-market (M2M) standard - which most of the insolvent banks had been doing their best to circumvent anyway - with a looser "mark to model" standard, giving the banks much more leeway to "use their own judgment" in the kinds of "modeling" they use to value their own worthless assets. Another attempt to delay the inevitable revelation that emperor has no clothes (i.e. that most of the banks pushing for this are insolvent), but the Wall Street gamblin` crowd appears to think this kind of accounting flummery magically improves the real bottom line for the banks. I must say, I`m going to enjoy seeing this mightily orchestrated house of cards come tumbling down, and the ensuing hundreds of desperate and borderline analphabetic (and in all-caps, to boot) posts on the Yahoo message boards for Citigroup and Bank of America, with titles like (this is for Citi, based on recent pricing) "BOT THIS POS @4.00 - WAT TO DO PLZ HELP!!!"

Now on the real news, all that "fundamental stuff" the market pumpers want you to ignore as you run out and use your 201(k) money to bid up the price of insolvent companies:

GM, desperate to boost its dismal sales by any means necessary and apparently with little to lose, has given its GMAC financing arm the go-ahead to resumed subprime lending:

GMAC Financial Services said it will resume making car and truck loans to subprime borrowers and will lower inventory financing costs for cash-strapped auto dealers, part of a series of moves intended to spur sales at General Motors Corp.

The moves announced Wednesday come as the embattled automaker races to restructure and get customers back into its showrooms amid growing risk that it will be pushed into bankruptcy by the Obama administration.

GM, whose U.S. sales plunged 51 percent in the first two months of this year, also began rolling out a program that will cover some payments for customers who lose their jobs after buying a car, an incentive intended to bring back shoppers worried about job security amid the recession.

My Comment: Note that you and I (i.e. the American taxpayer) is now on the hook for these kinds of desperate gambles by failed-but-kept-alive-as-zombie corporations. As Mish notes, "This is exactly the kind of economic stupidity one should expect to see when government interferes in the market."


Record high in jobless claiming benefits: The number of people filing initial claims for unemployment benefits unexpectedly rose last week, while those filing continuing claims hit an all-time high for the 10th straight week, according to a government report released Thursday.


Home-Equity Loan Delinquencies Hit Record on Job Cuts, Deepening Recession: Late payments on home-equity loans rose to a record in 2008’s fourth quarter as job losses and the deepening recession put a strain on borrowers, the American Bankers Association reported.


Former AIG chief: Bailout not working: Former AIG Chief Executive Maurice "Hank" Greenberg, blaming his successors for the mistakes that led to the company's failure, told Congress Thursday that the government's plan to unwind the giant insurer is not working and threatens its ability to pay back the billions it has received in taxpayer funds.


G-20 Agrees to Executive-Pay Limits, Pledges $1 Trillion for World Economy: World leaders agreed on a regulatory blueprint for reining in the excesses that fed the worst financial crisis in six decades and pledged more than $1 trillion in emergency aid to cushion the economic fallout.

The Group of 20 policy makers, meeting in London, called for stricter limits on hedge funds, executive pay, credit- rating companies and risk-taking by banks. They also boosted the resources of the International Monetary Fund and offered cash to revive trade to help governments weather the economic and social turmoil. They sidestepped the question of whether to deliver more fiscal stimulus in their own economies.

My Comment: Notice all the weasel words: "blueprint"..."pledge"..."called for"..."offered" - so basically "we pledge to offer a blueprint which will call for" something or other really-great-for-the-world-economy, then? I feel convinced this will solve all our problems already.


And lastly for today, Barry Ritholtz has an interesting post about The real reason newspapers are dying - and it`s not the internet, he claims.

[cheesehead]

Originally Posted by garo

I am not convinced by this article from Stratfor.

Fine. I never expected anyone to be "convinced".

The main point I made is about the article's prediction about an event that has not yet happened -- Obama's meeting in Turkey. How would you expect anyone, let alone yourself, to have been "convinced" by a prediction that cannot yet be compared to actual outcome?

I didn't argue that I was, or anyone should be, convinced by this article's predictions, before the events referred-to actually take place! When I write of my own opinion of Stratfor, it is on the basis of cumulative experience of comparing what they say to what has happened over a few years, not any single article.

So, I ask: Of just what would you have been "convinced" if you had already been "convinced" by the time of your posting?

I too don't expect much from G20 but I find the gloss the Stratfor article puts on the whole issue of relationships with Germany vs. Turkey rather self-serving

How do you mean "self-serving"?

How does the article self-serve Stratfor, other than as a quite legitimate way of demonstrating that they analyze the situation correctly (by publishing their predictions ahead of the events predicted, rather than waiting until afterward)?

[cheesehead]

Perhaps in my references to Stratfor I have failed to mention that I am NOT a paying subscriber. I'm simply on their mailing list for about-weekly free articles. I could get the same content by browsing their website weekly, but of course this is more convenient.

I'm not recommending that anyone else pay to subscribe (nor am I recommending that anyone else NOT subscribe to their paid service). I suggest that if you find their (free) articles useful, as I have, then you might want to subscribe to their mailing list for free articles, as I have, or else simply check their website once in a while (just as Ernst is a regular reader/quoter of Mish -- although I don't actually know that Ermst is NOT a paying subscriber to Mish, but it seems unlikely).

[garo]

OK perhaps my choice of words was not good enough. But I'm still not convinced that Obama's visit to Turkey will be a big deal. We'll soon see!

But going back to the article, could you comment on the substantive points I made? I find that a lot of your posts are so full of quibbling over minor things that the main issue gets buried. So let's get back to that.

[__HRB__]

Originally Posted by garo@cheesehead

But going back to the article, could you comment on the substantive points I made? I find that a lot of your posts are so full of quibbling over minor things that the main issue gets buried. So let's get back to that.

ROFL! Good luck.

[cheesehead]

Originally Posted by garo

Claim 1: [Turkey] is doing relatively well in the economic crisis.

Is that why

I have no great expertise about Turkey. Whether Turkey's doing better-than-average or not, so be it.

Claim 2: US needs Turkey to extend its influence in Iraq to block Iranian ambitions.

I agree.

But that does not mean it is in Turkey's interests to do so.

No, but so what? Country-to-country negotiation often involves finding, and agreeing to, a we'll-do-something-you-want if you'll-do-something-we-want tradeoff.

After all the US needed Turkey to allow the use of its airspace for the invasion of Iraq but that did not happen. That was what put a kibosh on US-Turkish ties and we should see a gradual warming of those ties in keeping with the new administration and its multi-lateral approach. To read any more into it would be imprudent in my opinion.

Perhaps Stratfor's analysts are aware of a wide range of things that the U.S. could potentially do for Turkey in exchange for asking Turkey to help us with Iraq? Seems to me that the most powerful nation on Earth would usually have lots of unobvious options it hasn't revealed publically. The Obama administration probably has different views on that range of options than the Bush administration had, so who knows how many things not offered to Turkey in the past might turn out to be available under a new administration?

What seems imprudent to me is to categorically rule out any surprising results ahead of time.

Claim 3: Obama’s visit to Turkey will represent a warning to the Germans...

Maybe, but the important question is if Germany cares.

Oh, come on ... Of course it does.

Germany needs the US far less than Turkey does so it is much less likely to subvert its national interest to curry favour with the US.

(What was it someone said about opinions versus facts?)

Are you saying that you know that there are no possible diplomatic tradeoffs the United States could offer, such as I suggest above with Turkey, to which Germany could agree without "subverting" its national interest?

There's a wide spectrum of options out there, with various pros/cons.

Of course, Germany will weigh its options, and US moves with Turkey may adjust those weights a bit. It's not just b&w. So what if there's no single identifiable thing Germany would fall all over itself to do to "curry favor"? The point is that the US could figuratively rest a thumb on one side of Germany's scales by striking deals with Turkey.

Even then it is a bit of a stretch to suppose that Turkey would want to do that. If anything, the refusal to allow overfly permission during the Iraq invasion and the recent spat between the Turkish and Israeli presidents shows that Turkey is keen to display its independence from the US and NATO.

Yes, it is.

But did the article claim that anything Turkey could do for the U.S. in Iraq would necessarily have to be done out in the open for all to see? Did it?

Subtlety and covertness do exist as properties of some of any country's options.

Finally I think that the importance of Western Europe (WE) to the US in terms of strategic alliances has been diminishing for quite a while - since the USSR broke up. The US has tried to create other alliances - such as those in the Caucus and Eastern Europe - with limited success.

... and you've determined, somehow, that the only possible future is a linear continuation of the past?

I'm hearing all the time that many other countries now have a different view of their possible relationships with the U.S. than they did before Obama's election. Am I a victim of propaganda in that regard? If not, why isn't it possible that the future may be different from the past?

But Europe remains a far far bigger trading partner than all of these countries put together. So while the US may get servility from Eastern Europe and the Caucus,

Do you see all international relationships as a matter of subversion and servility? Can you imagine that servility is not necessarily the objective in all regards?

but simply a changing reality that WE doesn't need the US any more like it did in the aftermath of WWII.

One moment you're arguing that the future will be a linear continuation of the past; the next you're saying that reality is changing!

[garo]

@cheesehead: Obviously we will have to wait and see. In the meanwhile, anal-ysts from Stratfor who may or may not be privy to some non-public information are saying that it will be a big deal. And you agree with them saying that the deal to be struck may happen behind closed doors so we the public won't really find out if some super-duper deal goes on in the background and shows Germany which side their bread is buttered on. So we have no quantifiable way of knowing whether these anal-ysts will be right or wrong. Meanwhile the anal-ysts make elementary mistakes such as being dead wrong about the impact of the recession on Turkey.

Sounds suspiciously like the super-duper Geithner stress tests. We won't reveal the results but we are confident it will lead to Good Things(TM).

PS:

Do you see all international relationships as a matter of subversion and servility? Can you imagine that servility is not necessarily the objective in all regards?

Not in all but in most regards, yes international relationships of the US with weaker nations have had servility as the objective. And I might add the same was true for the former USSR and currently for China.

http://www.guardian.co.uk/world/cart...elations-puppy

[ewmayer]

Mish comments on the recent news about the U.S. Social Security "Trust Fund":

Social Security: There Is No Trust; There Is No Fund: Social Security is back in the limelight where once again its problems will no doubt be ignored.

Please consider Recession Puts a Major Strain On Social Security Trust Fund.

The U.S. recession is wreaking havoc on yet another front: the Social Security trust fund.

With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund's annual surplus is forecast to all but vanish next year -- nearly a decade ahead of schedule -- and deprive the government of billions of dollars it had been counting on to help balance the nation's books.

The Treasury Department has for decades borrowed money from the Social Security trust fund to finance government operations. If it is no longer able to do so, it could be forced to borrow an additional $700 billion over the next decade from China, Japan and other investors. And at some point, perhaps as early as 2017, according to the CBO, the Treasury would have to start repaying the billions it has borrowed from the trust fund over the past 25 years, driving the nation further into debt or forcing Congress to raise taxes.

[Mish] Comment: Therein lies the rub. There is no fund per se. It's all been spent, and then some.

"It suggests we better get working on Social Security and stop burying our heads in the sand," said Sen. Judd Gregg (N.H.), the senior Republican on the Senate Budget Committee. "The Social Security trust fund, though technically in balance, is going to put huge pressures on taxpayers very soon."

[Mish] Comment: There is negative money in the fund so it's complete nonsense to claim it is "technically in balance".

Many liberal analysts reject the notion that Social Security needs fixing, arguing that the system is projected to fully support payments to beneficiaries through 2041 -- so long as the Treasury repays its debts.

[Mish] Comment: "...So long as the Treasury repays its debt" And exactly how likely is that? Has anyone looked at Obama's budget?

The trust fund has long taken in more in revenue from payroll taxes and other sources than it pays out in benefits. Last August, the CBO predicted that surplus would exceed $80 billion this year and next, then rise to around $90 billion before slowly evaporating by 2020. But the rapidly deteriorating economy -- particularly the loss of more than 4 million jobs -- has driven those numbers much lower much faster, with the surplus expected to hit $16 billion this year and only $3 billion next year, then vanish entirely by 2017.

In his budget, Obama predicted that the trust fund surplus would hit $30 billion this year, according to Mark Lassiter, a spokesman for the Social Security Administration.

But that number, too, is far less than the $80 billion the trustees had forecast for 2009. In addition to declining revenues, Lassiter said the system is likely to incur higher expenses due to big jumps in new retirement and disability claims. Both are expected to rise by at least 12 percent this year compared with 2008.

[Mish] Comment: Can we stop with the nonsense? Revenues exceed payouts but that does not mean there is a fund. Every penny and then some has been borrowed and spent. And even the so called surplus is falling like a rock, a decade faster than expected.