Open thread July 15, 2011 Dan Crawford | July 15, 2011 9:50 am Tags: open thread Comments (51) | Digg Facebook Twitter |
one thing the Consumer Financial Protection Bureau should do is start running adds saying that all folks in financial services are really used car salespersons in disguise, and that you should trust them as much as you would trust a used car salesperson. Include things like if you don’t understand get someone independent to help you, don’t sign it and don’t take the salestypes advice ever. We have signs that at all levels from the consumer level on up to the sophisticated investor that the ethics of the financial services industry are perhaps even worse than that of the sterotypical used car salesperson.(Note the Magentar and other CDO issues at the top).
Assume that the salesperson is out to get you, and doesn’t care what happens to you. Hang up on all telephone solicitations for financial products also. (An aweful lot of folks in Clevland and the like got talked into re-fing nearly paid off homes and lost them, since 75% of subprime was re-fis).
I hope you get heard by everyone. There was a time when what you are saying was basic financial common sense. But that was before the finance industry started offering free courses in the schools on “financial literacy.” Which of course is where the President learned everything he knows about Social Security.
Always good advice.
somewhat related: Is it That Hard to Find a Good Payday Loan? One Woman Paid $900 in Finders Fees
McCain Objects To Pentagon Request To Transfer Cash For F-35s
AWIN First Jul 14 , 2011
Jen DiMascio email@example.com
Sen. John McCain (R-Ariz.) could block the Pentagon’s request to transfer more than $750 million to cover cost increases on the Lockheed Martin F-35 Joint Strike Fighter Program.
But the request raised a red flag for McCain and Sen. Carl Levin (D-Mich.), the top two members of the Senate Armed Services Committee. The senators sent a letter July 14 to the defense secretary outlining their concerns and asking a series of questions:
“(1) What are our legal obligations to pay these increases; (2) what would be the effect if the use of these funds for these contracts were to be denied in the reprogramming; (3) what are the alternatives to reprogramming for these funds; (4) to what extent are these funds on LRIPs 1-3 recoverable now and in future negotiations; (5) what would be our legal obligations and our costs if we were to terminate the F-35 program now; and (6) how does the department intend to prevent excessive overruns in the future and how will the department ensure that taxpayers not have to pay for them?” they say in the letter.
You should see the questions Senators McCain, Scott Brown et al asked the Navy about why the new littoral combat ship is corroding and they “saved” money killing the corrosion prevention system!
There is trillions of dollars in waste to be cut………………………………….
Ok all, just got back from two weeks in Europe with the family. A great time was had by all. Some of the things my wife and I noticed that had changed or not since when we lived over there.
Food has gotten way more expensive. Even at the markets. Feeding 5 at a sit-down restaurant can easily run you $75-100. This was the equivelent of a Chili’s or your local italian place. Forget eating up-scale or near the tourist areas.
Belgium chocolate is even better than we remebered at some of the places we used to get it from. Kids loved it.
Crowds at the tourist places seemed down, even going in the summer. Had no/little waits for the Tower of London, the London Eye, Effiel tower, or Versailles.
The Netherlands seemed to be one giant construction zone. even the kids noticed it. (we lived at the Netherlands/Belgium/German border). Our German friends said the Dutch were going crazy building everywhere. This was also seem to a lessor extent in Belgium.
(As a note, my German friends were still paying the special tax for the integration of East Germany – and are still pissed about it)
Be careful with kids getting lost in Amsterdam, even at lunch-time, as that short-cut may get you an eyeful that is no longer family friendly shall we say…
The amount of women in burkas walking around was startling in Paris and southern Netherlands. Way, way more than before. London on the other hand seemed about the same.
My wife’s number 1 thing was the amount of graffiti. It was unbelievale present everywhere. Anything that could be tagged was – including trains. It didn’t go away until we got south of Frankfurt in Germany. It startled me- especially in Germany.
The people everywhere were friendly and helpful. Even when we were way off the beaten path. English speaking people were much more prevelent than before. Every ‘help wanted’ sign, reguardless of country, required English for the job. This may be just a fact of the tourist areas but we saw it in places well away from your typical touri areas.
The Germans still run trains that you can set your watch too. Some things will never change!
Gas is bloody expensive. But that was true before…
That’s about all. It was great!
Islam will change
Senator Mc Cain is also flogging the Air Force for agreeing to pay for 60% of the overruns on the new over sized aerial refueling tanker. At least the overruns are not being paid in Euro’s to the French and Germans.
Welcome back, Buff.
I’m just wondering about the “technicalities” of the actually defaulting on Aug 3. Let’s assume for the moment that there’s a hard limit on Aug 3 (I realize there’s ways to fudge it). Some folks are threatening to not send out SS checks. But technically, the SS (FICA) taxes are supposed to be dedicated solely to SS and there’s more FICA tax collected than SS benefits, so stopping SS checks should be illegal and unnecessary.
But, FICA actually collects more tax money than SS benefits paid. The excess is required by law to be invested in US bonds. But after Aug 3, SecTreas won’t be able/allowed to sell any more additional bonds. So what happens to the excess FICA collections in August? One way or another, a law is going to be broken.
I know the Republicans/Tea Partiers would simply use the excess FICA collections to pay some other govt bills in August such as interest on existing debt or soldiers’ pay. But doesn’t that expose them as actually deliberately stealing the SS surplus, which is what they’ve critized Democrats for doing when they claim the trust fund isn’t real.
Interesting and bizarre stuff.
I used to think maybe Obama got his “financial literacy” by reading Simpson-Bowles. But I happened to pick up Domenici-Rivlin (Restoring America’s Future) yesterday for a re-scan and came away thinking maybe he added in a bit of the so-claimed “Bipartisan Policy Center” too.
Sounds like a good trip.
Glad you are back, really.
They already stole the $2.4T for war and tax cuts.
They includes the dems.
There is no good payday loan, only varying degrees of bad.
Jim Luke, the SSTF doesn’t work quite as you explain. FICA revenues come into the Treasury. They are applied to the SSTF. SS sends the list of authorized expenditure to Treasury. Every Wednesday Treasury then writes the retirement checks from the SSTF balance. Any balance remains in the SSTF. The SSTF now has a balance in the ~$2.6T+ range. The SSTF is carried on the Federal books as intra-governmental debt. This is important, as it explains why SS checks can continue to be written even with the debt ceiling, because the debt represented with those payments is already on the books.
Since the debt is already booked, when Treasury redeems the SSTF special treasuries they do not add to the debt to bust the debt ceiling. Redemption is via the normal Treasury offerings process.
The bottom line for the SSTF redemptions is that the debt just changes status from intra-governmental to publicly owned, but no change in the overall debt.
All of our text books have told us for generations that these kinds of transactions occur via xfers from general revenues or from borrowing. Where they have failed is in describing this kind of special redemption. The SSTF balance represents the prior borrowing from it by the general fund, so it is already borrowed. That’s why these redemptions are just changes in ownership status.
These kinds of transactions apply to most of the other trust funds. Today, Treasury is using the federal employee and military retirement TFs to convert to cash for general fund use, and the ceiling should not be effected.
BTW this is why most knowledgeable people know that Obama lied about not being able to guarantee the SS retirement checks would be issued on 8/3. for therm not to be would have been his political decision.
This video explains that: http://hotair.com/archives/2011/07/13/video-social-security-chief-actuary-confirms-a-decision-to-withhold-checks-would-come-from-the-treasury/
It’s time again for a Global Warming story. If you follow AGW at all the fact the CO2 has a saturation point which is quite low. I ran across an article, not peer reviewed, using solar radiation as a primary driver for estimating future temps. Within the article was this graphic for their theory of CO2 saturation levels and the ensuing impact on temp gains. ( I can not attest to the validity of chart 1 below)
The article also projected a future temperature drop due to the lessening solar flare/spot minima we are seeing this solar cycle. I do not agree with these numbers, but it is provided to show why many scientists have been saying the temps are not rising for the past decade+.
Note the huge drop they are projecting. I do not expect to see this kind of drop, but a new lower temperature plateau can be anticipated.
Good points, and I agree we get too much subterfuge from Obomber.
Did this guy use a cocktail knapkin?
To get to the issues we need peer reviews of the tissues.
I am beginning to pen and ink with my tonic and gin.
I am starting to think we should worry the frack
And the ten times the effect than complex hydrocarbin
Has on temperature reteining over the run of the mill CO2 track.
But I don’t do GW without a tonic and gin
I forgot the link to the article: http://wattsupwiththat.com/2011/07/13/archibald-climate-forecast-to-2050/
It was a lot of fun. also took the kids to see ‘Wicked’ in London. It was the youngest two’s first exposure to world class theater and they loved it. Hopefully that will sink in and take hold.
Best way yet to get over the jet lag: Dump luggage at the hotel, jump on the on & off tour bus of London, walk the last mile through the park eating hotdogs for dinner, then collapse and sleep until 7 the next morning and your ready to go!
Islam will change
As a note about termination. I believe they are still in court litigating the termination of the A-12 in 1992….
If you’re confused about the debt limit legislative proposal that U.S. Senator Mitch McConnell recommended, you may want to read Keith Hennessey’s thorough explanation. He does a good job.
Understanding the McConnell debt limit proposal
by Keith Hennessey
July 14, 2011
True, longest largest litigation in history.
I was in the business at the time. SecDef Cheney approved the termination for convenience, when termination for default was justified. The crux of the litigation is the US Navy needs the F-35 as stealth so convenience being not applicable is alleged by the successors of McDouglas as reason to overthrow the termination and not repay the progress payments recieved, now over $2B with accrued interest.
In a contemprary article in Naval Institute Proceedings the allegation was made that the Navy always let the failed contracts proceed with more time, money and profit, and that exercising the justified right to terminate changed the (corrupt) business model.
All this is twenty or more years old.
Last round went to the US, with appeal coming.
ilsm: sorry to ruin your weekend
That’s funny considering the advertisement running at the top of Angry Bear’s masthead. I’ll bet Hartford has a hell of an annuity!
rjs, your reference makes this claim: “If the CO2 effect was saturated, adding more CO2 should add no additional greenhouse effect. However, satellite and surface measurements observe an enhanced greenhouse effect at the wavelengths that CO2 absorb energy. This is empirical proof that the CO2 effect is not saturated. at the wavelengths that CO2 absorb energy.”
What the heck is an enhanced green house effect? That is supposed to be measured with a rise in temperatures, or a drop in Long Wave Infrared radiation. That chart in the reference, shown below shows the temp going down? and just the wave lengths at which various molecules intersect with IR. BTW, they conveniently left out the IR range for H2O, and it overlaps many of the molecules shown on the below chart. Inconveniently, H2O makes up ~93% of all GHGs. H2O has a wider range of IR absorption and is far, far more prevalent….
Other than making bald assertions that article says nothing. Worse, it left out H2O, and the Green House theory relies on H2O.
I caveated my reference, because I have yet to see any definitive experiments, but I know they are available because many engineers and radiation physicists have formulas. I’m just unsure that they reflect the data in the article’s chart.
The problem with the special Treasuries in the SSTF is the same as the problem with any Treasury bond issued after the debt limit is exceeded. The President/Secretary of the Treasury may not have the power to issue ANY new bonds or do anything with existing bonds of any type after the limit is exceeded. There is no statute or legal decision saying that they have the authority to continue issuing indebentures. There is no statute or legal decision saying that any such indebentures are valid. In 1995, Secretary Rubin asked for and the Congress passed a law expressly authorizing SS checks to be issued. He had run out of negotiable securities to cash and at that point he had no power to create new debt. That could be Geithner’s situation right now, for all anyone knows.
No one can predict what day of the month the money for FICA or general revenues will come in and no one can predict how much the income from whatever source will be. So, whereas CoRev is absolutely certain about this stuff, I can find no one else willing to be so absolutely sure of any one possibility as he is. I am not willing to leap to this President’s defense as a general rule. But, based on the one previous experience we have with this, I would say that absent Congressional action, no one can say whether the checks would go out.
As far as other lying, to use CoRev’s word for the President’s statements about this whole mess, it’s probably more accurate to say that his and other people’s statements have been ambiguous or subject to unstated conditions. I think I’m looking at some people who have a tiiger by the tail and talk way to much about how easy it is to control raging tigers by hanging on to their tails. I’d rather hear from the tiger on that point.
I hope the lot of them proceed straight to Tophet as soon as they pass a new debt limit. And, I hope Congress has the sense to repeal that stupid law. But, they won’t. NancyO
http://video.nationalgeographic.com/video/player/ Here’s a bird that makes a loud sound with his wings. I had no idea this was possible. Now I know. NancyO
NanO, you forget these are not new debt vehicles, but rewrites of existing debt onto different treasury vehicles. We have been over the debt ceiling limit for weeks, but they continue to borrow using the retirement trust funds. Those monies are actually handed to the GF for spending. That is possible because they have specific legal clauses to allow them to be spent for other than their primary purpose. SSTF treasuries are only being used for their intended purpose.
Since we have already exceeded the debt ceiling, how are they funding the checks every Wednesday when the FICA revenues may not support them? They are doing as I suggest.
I’m sure that your intention is pure, and you beleive what you beleive, and I’m not one to even attempt to convince you one way or the other…but you should do some research on the fellas running the show over at Skeptical Science. I refuse to even go there!
They are not the ones to be citing in reference to the AGW debate, at least if you expect educated people on this particular topic to take you seriously.
No, CoRev. A new Treasury vehicle is a new indebenture. The deal about funding the SS checks now is about using the CSRF and TSP fund, among others, to negotiate on the open market. Deal is–No authority exists in law or by court decision to allow the President/Sec. Treasury to do what has to be done. The 14th Amendment MAY do that, but no one knows for sure. Instead of just disbelieving what I’ve saying, remember that I am a radical by nature, and think that the Executive should just print money and render the Debt Limitation moot, once and for all.
IMHO, it exists in violation of the 14th Amendment. But, that does not answer the question of who can enforce the 14th Amendment against the will of the Congress. Separation of Powers and all that good stuff. No answer exists that I know of and I did try to find out. I am conscientious about this stuff, CoRev and don’t just spout off. Sometimes in error, never in doubt, as Sandra O’Connor says. I say, doubt is a good guide in an absence of law. NancyO
Oh, you know, don’t you, that you have to watch the nature video now. It’s short and interesting. Them’s the rules, CoRev. So, get to it. NancyO
NanO said: “A new Treasury vehicle is a new indebenture.” I presume you meant debenture, but you miss the point that it is not new. It is changed in two ways: 1) ownership – from the SSTF to a public entity, 2) type – from a non-transferable treasury to a ( Treasury bills, Treasury notes, Treasury bonds).
The intra-governmental debt (SSTF) balance is reduced by the amount of SSTF bonds converted to treasuries for sale and then after sale is added back to debt but identified as owned by the public. Treasury then has enough money to issue the SS checks. Overall debt is unchanged, and the debt ceiling is not breached by redemption.
If you think it happens otherwise, then show how the SSTF redemption is not double counted, or how the debt is affected.
That’s just mean!
Total OASDI benefits for August is ~61b. Of that, about $52b was collected from FICA. So the August deficit will be around $9b (same as last year)
So if there is a shortfall it should only be $9b. But the suggestion from O is that all of the payments may not be made. Interesting to me. There may or may not be a problem with the $9b, but there should not be a problem with the $52b. I’m confused by that.
One might conclude from this:
FICA taxes are assets of Treasury. Treasury gives them to SS every month. But when push comes to shove they don’t give SSA credit. This is about as far away from a “lock box” as you could get.
Sorry I missed this last night.
Coincidently, I was just thinking at dinner, that the money “lost” from killing unreliable, so unreliable they are not tested to see if they “function”, weapons is usually small.
Compared to the money saved by walking away from the junk.
My friends in the Defense Acquisition University, turning out the managers of the inept systems, say that less than 10% of weapon costs are developing them (note, F-35 is only at 5% of the trillion or so in life costs), delivering the junk is another 20% and trying to make it work takes 70% of the total costs.
So, dumping $300M in ships in 85, saved about $600M, and the benefit to the taxpayer is the same, just not war profits plundered.
Dismally, the DoD program managers don’t look at future savings they make wrong decisions to keep from “losing” the 5% spent that shows the 95% is going to be inefficient.
Old problem in investing too, hold onto to the dog stock until 80% price decline then sell………
The Senate appears to have only passed one appropriation out of committee. Status can be found here:
What’s on your mind…And yet you make no comment on Watts Up With That? I think your bias is showing.
ilsm, the longest and largest litigation in U.S. history involves the asbestos lawsuits. The first lawsuits against asbestos manufacturers were filed in 1929 and continue to this day. The estimated total litigation costs in the U.S. are projected to reach $200 billion or more.
Nice effort, CoRev. This is worthy of a main post.
AB readers should compare the efforts of the current U.S. House to what occurred during Pelosi’s last year as Speaker.
The Senate under Reid is sitting on its collective butt. Many of the Democrat Senators are displeased with Reid’s total lack of performance on budget appropriations. Again, that is.
Angry Bear could track the actions on the FY2012 Federal Budget as you’ve done. AB would be well ahead of the other econ blogs as none of them have ever shown any strengths on Federal Budget department and agency authorizations and appropriations.
Working people frequently ask retired people
what they do to make their days interesting.
Well, for example, the other day, Bev, my wife,
and I went into town and visited a shop.
When we came out, there was a cop writing out
a parking ticket.
We went up to him and I said, “Come on, man,
how about giving a senior citizen a break?” He
ignored us and continued writing the ticket. I
called him an a–hole. He glared at me and
started writing another ticket for having
So Bev called him a s–t head. He finished the
second ticket and put it on the windshield with
the first. Then he started writing more tickets.
This went on for about 20 minutes. The more
we abused him, the more tickets he wrote.
Just then our bus arrived, and we got on it
and went home.
We try to have a little fun each day now that
MG, I’m not sure of a main article as it would just be a snap shot of progress. But, it make sense to track progress on a weekly basis. Maybe some of us can keep updating appropriation bill status in the Open Thread.
Last week the house passed the pentagon budget, $649B is mostly waste.
Who are the deficit hawks?
The senate with Mc Cain roasting Navy over Littoral Combat SHip violations of law required to pass “milestones”, AF for trying to co pay overruns on the oversized Boeing tanker (good thing the overruns are in dollars and not Euros), and the joint program euphemistically called Lightning II which is trying to reprogram funds for another $750M in overruns, with no tests.
Good thing the senate is doing nothing!
CoRev nice job. Potentially useful to uncover budget battles at multiple levels. For example, I found this general overview regarding Frank Wolf’s Appropriation Committee bill for Commerce, Justice, Science and Related Agencies: “In total, the legislation contains $50.2 billion in funding. This is a reduction of $3.1 billion or 6% below last year’s level, and $7.4 billion or 13% below the President’s request for these programs. This amount is also 3% below the pre-stimulus, pre-bailout level of 2008.” Makes me wonder about specific differences (devil in the details) and how the other draft bills compare to this year and the President’s request.
PJR, nice catch. That’s another data point we should be following. Cuts or not, in what areas, and compared to which baseline?
NanO, confirmation of what I have said would happen. From here: http://patdollard.com/2011/07/treasury-oks-bill-that-would-protect-social-security-payments-if-debt-ceiling-not-raised/
The money lines: “
The panel, in a study, noted that roughly $50 billion of Social Security payments are due in August and that the Treasury was expected to bring in between $170 billion and $200 billion that same month.
The analysis also said that, if Treasury used $50 billion in cash on benefits for August, the department could also get rid of that same amount of debt in the Social Security Trust Fund and borrow that sum without breaching the debt limit.“
But think of how many lawyers have been kept employed and off of welfare.
They’ve had a winning streak with that one.
PJR – “Makes me wonder about specific differences (devil in the details) and how the other draft bills compare to this year and the President’s request.”
Good point. The House Appropriations Committee appears to be making those comparisons relatively easy thus far in the narratives, assuming the statements are correct. Still, the President’s FY2012 Budget proposal is available for comparison.
Here’s some info that should be noted as well:
The House Budget Committee (HBC) has released two interesting reports regarding comparisons of discretionary spending for fiscal years 2008, 2009, 2010, and now 2011. Once you get beyond the nasty titles and partisan narratives, the data is summarized by department/agency. I compared the new HBC report released Friday to the OMB historical tables data, but all FY2011 data is still projected. I haven’t found OMB updates for the historical tables and the OMB mid-session review hasn’t been released.
The HBC comparisons are important if undertaking this type of analysis. But this only covers discretionary spending by department/agency which doesn’t cover all of the spending by those departments and agencies as mandatory spending is everywhere.
House Budget Committee (HBC) publications
HBC discretionary spending analysis, July 15, 2011
HBC discretionary spending analysis, Feb 3, 2011
OMB Budget Historical Tables
OMB Historical Table 4.1—Outlays by Agency: 1962–2016
OMB Historical Table 8.7—Outlays for Discretionary Programs: 1962–2016
MG, I’ve found this table to be very interesting. Karl Rove has cited an 84% rise in spending. Now I can see where he is getting that number. More meaningful numbers are found in the totals columns. They key is that the budget has been cut by 3.8% in 2011 since the republicans have controlled the house.
The better numbers are: 17% increase in the budget (without stimulus) in Obama’s first two years in office. A 47.9% increase in the budget (with stimulus) in Obama’s first two years in office.
Table 2 from the July 14 HBC report only addresses budget authority (BA) outlay growth or reduction in discretionary spending for the fiscal years reflected. The report didn’t cover known or projected mandatory spending growth that occurred. As such, Table 2 doesn’t represent total budget outlay growth or reduction for any of the fiscal years.
It is not possible to determine what percentage of total FY2011 budget outlays that discretionary spending or enacted budget authority represent without knowing the actual or projected spending for mandatory outlays. The OMB FY2011 mid-session report would provide an idea of where we’re headed, but it hasn’t been released. Similarly, the U.S. Treasury’s FY2011 Financial Report of the United States Government won’t be released until December 15, 2011. Now, one can pull the FY2011 data from the President’s FY2012 budget proposal, but there is no way of knowing whether the mandatory spending estimates are reasonably accurate. Yet, it would be a way to establish an estimate for discretionary spending authority’s share of the FY2011 budget and the projected overall growth or reduction in the fiscal year budget relative to previous fiscal year budgets.
Table 2 states that it is a record of CBO scored non-emergency budget authority (BA) for discretionary spending. I am not of the opinion that the table data necessarily represents actual discretionary spending for any fiscal years indicated. That doesn’t appear to be the purpose of the table, which is why it needs to be scrubbed against actual discretionary spending outlays for FY2008-2011.