As Denninger shows, it’s really hard to believe the BEA’s “estimate” that personal spending rose more than 1% last quarter when sales tax collections were down more than 8% for the same period. According to the Nelson Rockefeller Institute of government:
The Rockefeller Institute’s compilation of data from individual states shows collections from major tax sources were $119.7 billion in the third quarter of 2009, compared to $134.0 billion for the same states during the comparable quarter of 2008. Overall, tax revenue declined by 10.7 percent in nominal terms. After adjusting for inflation, tax revenues declined by 11.3 percent in the third quarter compared to the same quarter of 2008. Personal income tax declines represented a $6.7 billion loss and the sales tax a $3.8 billion loss for the period. Corporate income tax saw the sharpest rate of decline at 19.4 percent, followed by the personal income tax and sales tax at 11.4 and 8.2 percent, respectively.
ABC News is reporting that on page 432 of Senator Reid’s health care bill, there is a section increasing federal Medicaid subsidies for “certain states recovering from a major disaster.” The section spends two pages defining which “states” would qualify, saying that it would be states that “during the preceding 7 fiscal years” have been declared a “major disaster area.” That language applies to exactly one state: Louisiana.
According to the CBO, those subsidies will cost about $100 million. The bill cannot pass without Senator Landrieu’s support, and Reid is bribing her with $100 million in Federal money to get her vote. This should be ILLEGAL!
Below is the complicated language in the bill. All of it could have been cut down to a few words: “Extra federal funds allocated to the State of Louisiana to BRIBE Senator Mary Landrieu to vote for this bill”.
SEC. 2006. SPECIAL ADJUSTMENT TO FMAP DETERMINATION FOR CERTAIN STATES RECOVERING FROM A MAJOR DISASTER.
Section 1905 of the Social Security Act (42 U.S.C. 1396d), as amended by sections 2001(a)(3) and
2001(b)(2), is amended— (1) in subsection (b), in the first sentence, by striking ‘‘subsection (y)’’ and inserting ‘‘subsections (y) and (aa)’’; and (2) by adding at the end the following new subsection:
‘‘(aa)(1) Notwithstanding subsection (b), beginning January 1, 2011, the Federal medical assistance percentage for a fiscal year for a disaster-recovery FMAP adjustment State shall be equal to the following:
‘(A) In the case of the first fiscal year (or part of a fiscal year) for which this subsection applies to the State, the Federal medical assistance percentage determined for the fiscal year without regard to this subsection and subsection (y), increased by 50 percent of the number of percentage points by which the Federal medical assistance percentage determined for the State for the fiscal year without regard to this subsection and subsection (y), is less than the Federal medical assistance percentage determined for the State for the preceding fiscal year after the application of only subsection (a) of section 5001 of Public Law 111–5 (if applicable to the preceding fiscal year) and without regard to this subsection, subsection (y), and subsections (b) and (c) of section 5001 of Public Law 111–5.
‘‘(B) In the case of the second or any succeeding fiscal year for which this subsection applies to the State, the Federal medical assistance percentage determined for the preceding fiscal year under this subsection for the State, increased by 25 percent of the number of percentage points by which the Federal medical assistance percentage determined for the State for the fiscal year without regard to this subsection and subsection (y), is less than the Federal medical assistance percentage determined for the State for the preceding fiscal year under this subsection.
‘‘(2) In this subsection, the term ‘disaster-recovery FMAP adjustment State’ means a State that is one of
the 50 States or the District of Columbia, for which, at any time during the preceding 7 fiscal years, the President has declared a major disaster under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act and determined as a result of such disaster that every county or parish in the State warrant individual and public assistance or public assistance from the Federal Government under such Act and for which— ‘‘(A) in the case of the first fiscal year (or part of a fiscal year) for which this subsection applies to the State, the Federal medical assistance percentage determined for the State for the fiscal year without regard to this subsection and subsection (y), is less than the Federal medical assistance percentage determined for the State for the preceding fiscal year after the application of only subsection (a) of section 5001 of Public Law 111–5 (if applicable to the preceding fiscal year) and without regard to this subsection, subsection (y), and subsections (b) and (c) of section 5001 of Public Law 111–5, by at least 3 percentage points; and ‘‘(B) in the case of the second or any succeeding fiscal year for which this subsection applies to the State, the Federal medical assistance percentage determined for the State for the fiscal year without regard to this subsection and subsection (y), is less than the Federal medical assistance percentage determined for the State for the preceding fiscal year under this subsection by at least 3 percentage points.
‘‘(3) The Federal medical assistance percentage determined for a disaster-recovery FMAP adjustment State under paragraph (1) shall apply for purposes of this title (other than with respect to disproportionate share hospital payments described in section 1923 and payments under this title that are based on the enhanced FMAP described in 2105(b)) and shall not apply with respect to payments under title IV (other than under part E of title IV) or payments under title XXI.’’.
For 2010 in both the fashion world and for unemployment levels, purple is “in”. The progression below from American Observer shows how the unemployment rate at the county level has turned from tans and yellows (2-5%) to reds and purples (6-11%) over the last couple of years:
New U.S. housing starts in October unexpectedly fell to their lowest level in six months, weighed down by a sharp decline in new construction. Despite or perhaps “to spite” expectations for 600,000 new units, housing starts dropped 10.6 percent to a seasonally adjusted annual rate of 529,000 units, the lowest level since April and the percentage drop was the biggest since January.
Dan Alpert of Westwood Capital tells Tech Ticker that house prices are still too expensive with the large supply of new and old houses:
Here’s a good outline by Australian economist Steve Keen of Minsky’s theory and our current debt situation. Enjoy.
Billionaire hedge fund investor Jim Chanos is cited by Politico as arguing that China is another “trust me story” – like Enron. The basic idea is that the facts, like gasoline consumption and electricity consumption, do not support the Chinese government’s “reports” of 8+% GDP growth. Very similar to the American story, the “growth” being reported is a result of artificial demand from massive government spending. However, unlike America, the government spending has been much more effective in stimulating production, but not private demand. The reasoning proceeds that the glut of production will eventually result in even the government pulling in its horns to allow the glut to work off…a collapse in the making:
Chanos and the other bears point to several key pieces of evidence that China is heading for a crash.
First, they point to the enormous Chinese economic stimulus effort — with the government spending $900 billion to prop up a $4.3 trillion economy. “Yet China’s economy, for all the stimulus it has received in 11 months, is underperforming,” Gordon Chang, author of “The Coming Collapse of China,” wrote in Forbes at the end of October. “More important, it is unlikely that [third-quarter] expansion was anywhere near the claimed 8.9 percent.”
Chang argues that inconsistencies in Chinese official statistics — like the surging numbers for car sales but flat statistics for gasoline consumption — indicate that the Chinese are simply cooking their books. He speculates that Chinese state-run companies are buying fleets of cars and simply storing them in giant parking lots in order to generate apparent growth.
Another data point cited by the bears: overcapacity. For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.
This, Chanos and others argue, is happening in sector after sector in the Chinese economy. And that means the Chinese are in danger of producing huge quantities of goods and products that they will be unable to sell.
The Pivot Capital report was extremely popular in Chanos’s office and concluded, “We believe the coming slowdown in China has the potential to be a similar watershed event for world markets as the reversal of the U.S. subprime and housing boom.”
And the bears also keep a close eye on anecdotal reports from the ground level in China, like a recent posting on a blog called The Peking Duck about shopping at Beijing’s “stunningly dysfunctional, catastrophic mall, called The Place.”
“I was shocked at what I saw,” the blogger wrote. “Fifty percent of the eateries in the basement were boarded up. The cheap food court, too, was gone, covered up with ugly blue boarding, making the basement especially grim and dreary. … There is simply too much stuff, too many stores and no buyers.”
Governments can print money indefinitely, but contrary to popular belief, in real terms, they can run out of ability to purchase real production. Ultimately, government’s ability to “stand in” for private sector demand depends on government’s ability to force the private sector to give it the real resources it needs to purchase what the private sector will not voluntarily purchase on its own. Whether the government forces that transfer of real resources from private to public hands through taxation, monetary inflation or borrowing, the source for that transfer – the private sector well - is running dry and collapse of the artificial demand appears imminent.
There are only two ways that the available supply of any good or service can be rationed out. The first is the American way – price. Those willing and able to pay the price get the supply. Those unwilling or unable to pay the price go without. The second is the Obamunist way – waiting lines. In the old Soviet Union, those who were willing and able to wait in long lines for hours got the available bread supply. Those at the end of the line or those who gave up and dropped out of line received no bread. The Obamunists way is to ration the available supply of health care with waiting lines. Those who are unable or unwilling to pay the new “price” of waiting in line for health care will never get any. Moreover, the Obamunists want to decide who gets to cut to the head of the line, that is, they will decide who gets health care and who does not. Page 26 of the Obamunists’ House Bill has the provision for waiting lists:
“If the Secretary estimates for any fiscal year that the aggregate amounts available for payment of expenses of the high-risk pool will be less than the amount of the expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit, including reducing benefits, increasing premiums, or establishing waiting lists.”
That’s the Obamunist way, but it’s not the American way. The American way is to allow price to ration the available supply and to spend every effort increasing that available supply so the price will be low and everyone can afford it. We need more physicians, nurses, hospitals, clinics, medical research and non-government subsidized insurance companies – not less. How do we get more of these things? The Obamunists will promise to increase the available supply by putting more of these people on the government payroll and by creating government subsidized and government controlled insurance providers. But will they really spend more to increase the available supply so we don’t have to wait in their line very long? It’s doubtful, since the easy way out - the path of least resistance – is to simply decide not to spend on certain groups who then die or are too sick to go to the polls and vote them out of office. The Obamunists won’t give you the choice to pay the price of private health care. Instead, they will decide who pays little and who will receive no health care and thus pay the ultimate price. If you vote against them or speak out against them – don’t expect to go the the head of the line. The Obamunists have a special “economy healthcare package” just for you.
From the DOL:
The advance number for seasonally adjusted insured unemployment during the week ending Oct. 24 was 5,749,000, a decrease of 68,000 from the preceding week’s revised level of 5,817,000.
So…great!… those 68,000 people found jobs? Nah…as Denninger points out
90,239 fell off the government’s “official statistics” and rolled into “extended programs.” That means that net-on-net the picture got worse by 22,239. It gets even better than this, however, as we are now far enough into the mess that people are rolling off even the extended benefit programs in many states! There is no current tabulation of that count, but any number greater than zero simply adds to the malaise.
Don’t be fooled it’s getting worse – not better.
(ht Zerohedge) Congressman Ron Paul reports that Congressman Mel Watts, a Democrat from North Carolina, has eliminated “just about everything” while preparing Ron Paul’s legislation for formal consideration. Watt is chairman of the panel’s domestic monetary policy and technology subcommittee. What will be the bankster’s quid pro quo for Watt’s selling the American people down the river? More importantly, what will be the American people’s reaction to Mr. Watts?