Deficits

The much maligned New York Times has come up with some wonderful and instructive interactives over the past several months, this one stands among the best.

You are in charge.

Enact your plan to cut the deficit, the interactive does the math for you.

Click the image below to link up the site.

Recommended.

Thanks to Dougy F. for this one.

Here's one reason you can barely do a workout.

In an effort to evade the truth, municipal governments have taken a lessons from the Federal Government and are cooking the books in order to cover up the extent of their promised but unfunded pension liabilities.

Cynical Roany will take this opportunity to point out that by and large, the very same people calling for transparent accounting at the corporate level are lying through their teeth via their own accounting practices at every single level of government ......... federal, state and local.

Click the chart below to catch the very simple three paragraph story that comes with this chart.

Or probably more important to you, this here little gear here will take you to another Clusterstock story which ranks the ten cities in the deepest doo-doo.

I have no idea what either Mid Spread or CPD% means.

But my eyeballs tell me that the state of Illinois has come out of nowhere to both leap into the top ten and overtake the state of California on the latest update to the CMAVision.com list of likely international, municipal deadbeats.

California while having battled valiantly to hold it's position, increased its Mid Spread from 254.01 to a very impressive 353.47, but just could not keep up as Illinois charged (in every sense of the word) all the way to 368.60 with a CPD% of 27.87

You go Illinois. 

Chad Selweski, the local columnist for The Macomb Daily, published an opinion piece in Sunday's edition of that newspaper the beginning of which follows below.

The point of the article being that issues having to do with the deficit are extraordinarily difficult, and the real problem with Tea Party types being that they want to enjoy the services provided by government, they just don't want to pay for them.

Click anywhere below to read the entire article.

I wonder how our local Tea Party activists spent their Saturday afternoon.

How many took advantage of yesterday’s national forum, a teleconference held in 19 cities (including Detroit) and for thousands of individuals online, to seek solutions to the nation’s bulging budget deficit?

Organized by a nonpartisan group, AmericaSpeaks, the unprecedented event provided a sobering view of our country’s $13 trillion debt and the limited options facing Congress if it tries to tackle the problem.

The op-ed ends as follows:

Much of this entire fiscal responsibility issue centers on arithmetic, not politics.

The following is my reply.

To begin with .....

I'm not a member of any Tea Party affiliate.

I do like them and will support them.

I belong to no organized political party, I'm a Libertarian ..... probably.

Having said that.

Here are some ideas which if applied would probably enable principal payments on the deficit in year 1.

Not necessarily in this order.

1.  Remove all American troops and military bases from foreign soil, excepting those troops stationed within embassies.

Leave NATO, abandon Okinawa, and allow Europe, Japan, The House of Saud etc. to defend themselves.

American military personnel are presently posted on some 760 military sites within 63 countries.

I haven't checked it today, but most years our military budget has exceeded that of the rest of the world combined.

Europe is cutting military spending in response to their deficits because we defend them.

Europe, Japan and the rest of the world needs to defend itself.

Their defense ain't our job.

We need to maintain fearsome defensive military power.

We do not need offensive military weaponry such as carrier groups (they are nothing more than big assed targets anyway), long range bombers, etc.

Scrap half of them out.

We do not need to be maintaining military bases on foreign soil, anywhere.

And we damn sure don't need to be defending foreign despots while allowing them to abuse their own people.

Ya listening Faisel?

As an aside.

While you're at it, reduce our payment to the United Nations to a pro-rata share.

Those guys are hopelessly corrupt and largely a waste of skin.

2.  Raise the retirement age to 67 and 71.

From 1950 to 2005, life expectancy for an American male has increased from 65.47 to 75.2 years while the median retirement age has decreased from 66.9 years to 61.7 years.

At it's inception there were 41.9 workers per Social Security beneficiary, we are now pushing toward 3 workers per beneficiary.

As you would expect, we now have over 50 million beneficiaries, 10 million of which are collecting Social Security benefits for disabilities.

While we're on the subject, reviewing every last disability claimant seems prudent.

3.  Rather than paying 100% of medical costs for medicare and medicaid recipients and attempting to fix costs by legislation, provide for the federal government to reimburse 67% of all health care costs for those eligible for medicare and medicaid benefits.

Prudence will reign by virtue of people now being responsible for a third of their own medical expenses.

They can insure or not, negotiate or not, get care or not, but the fact that a third of the cost is skin (so to speak) will save a ton of money and probably improve care.

If you're flat broke, charities can and will pick up the slack.

Hell, you might be able to provide 30% to maybe 50% coverage for everybody else under that kind of an arrangement and still come out ahead.

And while we're on the subject.

4. Loser pays.

As a sop to my many and dear attorney friends, limiting liability is nonsense, but nuisances gotta pay.

5. Deduct the first $20,000 of income for every individual and corporate taxpayer, and apply a flat 20% tax on every dime of income thereafter, from every source, cash as well as the cash value of benefits.

End all payroll taxes, they're going into the general fund anyway.

Remove all deductions for mortgage interest, charitable contributions (Americans give because Americans give, the deduction is gravy ... lose it), IRA's, dependants, state and local taxes, depreciation, depletion ..... and every other damn thing.

Bigger incomes pay higher taxes.

Identical incomes pay identical taxes.

Account across the board, Cash in, Cash out.

While you're at it require public companies to account to shareholders exactly as they account to the IRS.

Businesses acquiring buildings and capital equipment can write purchases off in the year acquired (the economy will boom), that's cash out.  If buildings and equipment are sold or scrapped later on, that's cash in.  

Removing mortgage interest as a deductible item will cause huge problems in such a debt infested environment, and as such would probably have to be phased, do it as ruthlessly as possible.

In the interest of financing growth, you probably want interest to be a deductible item for business adventures, but not against personal income, you want to prohibit the LLC from buying the homestead, or at least deducting the mortgage interest.

Dividends should be a deduction at the corporate level (cash out) and income to the recipient (cash in) at the ordinary rate. 

Income from federal debt should be taxed at the same rate as all other income.

Capital gains should be taxed at the same rate as all other income.

6.  Close the Commerce Department, the Department of Education, and HUD, as well as the Department of Homeland Security (it's a joke).

Somebody has been stealing from HUD my entire adult life.

End it.

7.  Sell Fanny, Freddie, Ginnie Mae and whatever acronym handles student loans.

Never guarantee or imply a guarantee of anything or anybody, to anybody, ever again.

8.  Legalize it!  Then tax it.

9.  Tax foreign oil at the border ... big time.

Develop gasified coal (it worked for Hitler, it'll work for us), along with nuclear, wind, solar, etc.

10.  Invest a little money and finish the fence.

Invest a little more to find and deport every last illegal residing in this country.

While you're at it fine employers of illegals, while significantly reducing unemployment benefits.

Think it through.

Jobs will come open, wages will probably increase with subsequent increases in tax revenues and reductions in federal expenses.

That Compton might have to drive out to the fields and pick a little lettuce is a also good thing.

You may choose to disagree with individual items, but that there be one helluva start.

Do the arithmetic!!!

People should listen to their Uncle Roany ... I got answers.

The Economist offers a very brief article, and an outstanding interactive map which seeks to demonstrate the volume of world debt.

Click anywhere below to link to the site.

Highly recommended.

The headlines are all about sovereign debt at the moment.

But that is only part of the problem.

Debt has risen across the economy, from consumers on credit cards, though industrial companies borrowing for expansion and financial companies using debt to buy risky assets.

The interactive graphic below shows the overall debt levels for a wide range of countries, based on data supplied by the McKinsey Global Institute.

In theory there is no maximum level for debt relative to GDP, but Ireland and Iceland (not on this map) found the limit in practice when they hit eight-to-ten times GDP.

The debt is also broken down by sector.

Note the huge size of Britain’s banks relative to its economy, and the high level of Spanish corporate debt.

These figures will worry owners of government bonds since the 2008 crisis showed that governments may be forced to stand behind private sector debt.

From Canada's The Globe and Mail.

Casey's Dispatch is on a roll this morning, as the link to the below map came in the same Casey's Dispatch as did the What Gold Bubble? chart that appears below.

Click anywhere on the map to link to the story.

Just another reason to be buying Gold.

This one has been going around for a while within a number of different presentations.

Having seen it again this PM at Richard Russell's Dow Theory Letter, and lacking the energy to work up any of the other ideas I have percolating, I decided to grab it.

As the great Vince Lombardi almost said,

"Fatigue makes mooches of us all."

Our elected officials are charged with dealing with our national deficit.

Now measured in the TRILLIONS of dollars.

Very few elite mathematicians are able to comprehend the impact of TWELVE ZEROS.

Instead of DOLLARS, let us imagine SECONDS of time:

ONE MILLION -------- 1,000,000 Seconds. ------ 1.65 WEEKS

ONE BILLION -------- 1,000,000,000 Seconds. ------ 31 YEARS, 8 MONTHS, 15 DAYS

ONE TRILLION ------ 1,000,000,000,000 Seconds. ----- 31,710 YEARS !!!

Speigel Online offers a very informative and entertaining piece entitled,

The Hollow Euro

Specter of Inflation Haunts Europe

It's a little long, but pretty easy to read.

Recommended.

Click on any chart to link to the site.

P.S. American taxpayers contribute about $50 billion by way of a 17-20% partnership in the $250 Billion from the IMF. 

I'm searching high and low for a similar treatment of deficits within the states.

Most notably California, New York, Illinois et. al.

Preferably with lots of pretty colors, graphics, etc.

You know what I like. 

If you see something, let me know.