Where is the US economy headed?

hawkeye10 wrote:

considering that the run on the banks was caused by a crisis in confidence in the economic system, and nothing had been done to address the underlining problems so the lack of confidence continues.......yep.

FYI: This happened during Bush's watch. He was responsible for the worst recession since the great depression. Mustn't forget this simple fact, because conservatives want Obama to cure everything in his first year in office.

2007
*06/23"Two Bear Sterns hedge fund groups collapse due to their mortgage investments.
*08/09" President Bush requests Congress pass a reform package for Fannie Mae and Freddie Mac.
*12/06" President Bush warns Congress of need to pass legislation reforming GSEs.

2008
*03/14"J.P. Morgan and the Federal Reserve recognize extent of Bear’s toxic assets, including sub-prime mortgages, and credit default swaps, and interconnection with other banks.
*03/14"At Economic Club of New York, President Bush requests Congress take action and reform Fannie Mae and Freddie Mac.
*04/14"President Bush issues a plea to Congress to pass legislation reforming Fannie Mae and Freddie Mac.
*05/03"President Bush issues a plea to Congress to pass legislation reforming Fannie Mae and Freddie Mac.
*05/19"President Bush issues a plea to Congress to pass legislation reforming Fannie Mae and Freddie Mac.
*05/31"President Bush issues a plea to Congress to pass legislation reforming Fannie Mae and Freddie Mac.
*06/06"President Bush issues a plea to Congress to pass legislation reforming Fannie Mae and Freddie Mac.
*07/11"Senator Chris Dodd says: "There’s sort of a panic going on today, and that’s not what ought to be. The facts don’t warrant that reaction, in my opinion … Fannie Mae and Freddie Mac were never bottom feeders in the residential mortgage market. People ought to feel comfortable about that. "

ftp://ftp.bls.gov/pub/suppl/empsit.cpseea1.txt
2009: .......Employed
January......142,099,000
February.....141,748,000
March........140,887,000
April........141,007,000
May..........140,570,000
June.........140,196,000
July.........140,041,000
August.......139,649,000
September......138,864,000

The Decrease in Employment from the end of January to the end of September 2009 + (142,099,000-138,864,000) = 3,235,000.

Yes, on Obama's watch, more than 3 million jobs were lost since the end of January 2009.

You blew it! The proper code word is "speculators", not "investors."

Ican, Jesus. The credit crisis was not caused by Fannie and Freddie. Plain and simple. It was caused by a lack of regulation of the financial markets, and unrestrained greed on the part of investors.

Ican, Jesus. The credit crisis was not caused by Fannie and Freddie. Plain and simple. It was caused by a lack of regulation of the financial markets, and unrestrained greed on the part of investors.

Cycloptichorn

Cycloptichorn wrote:

Ican, Jesus. The credit crisis was not caused by Fannie and Freddie. Plain and simple. It was caused by a lack of regulation of the financial markets, and unrestrained greed on the part of investors.

Cycloptichorn

Face it, part of the meltdown of bad loans and spiraling real estate prices that plummeted was the practice of the government dictating loans to people with poor credit

and the banks ability and practice of bundling the loans and selling them to Fannie and Freddie

and those two entities hold a huge percentage and a huge total in terms of trillions of the home loan market. Not only did it greatly expand the numbers of people that had poor credit to end up with loans, it also greatly inflated demand and therefore price for real estate.

Any dummy can figure that out

so I am surprised that you still deny that the government injecting non-market forces into a market as huge as real estate does not have huge unintended consequences. We are still waiting for those responsible to be held to account, and also the people that were responsible for cooking the books at Fannie and Freddie, we will continue to wait for an accounting of that, but I would not hold my breath waiting as long as the Dems are in Congress.

WASHINGTON " President Barack Obama’s economic recovery program saved 935 jobs at the Southwest Georgia Community Action Council, an impressive success story for the stimulus plan. Trouble is, only 508 people work there.

About two-thirds of the 14,506 jobs claimed to be saved under one federal office, the Administration for Children and Families at Health and Human Services, actually weren’t saved at all, according to a review of the latest data by The Associated Press. Instead, that figure includes more than 9,300 existing employees in hundreds of local agencies who received pay raises and benefits and whose jobs weren’t saved.

The administration now acknowledges overcounting in the new numbers for the HHS program. Elizabeth Oxhorn, a spokeswoman for the White House recovery office, said the Obama administration was reviewing the Head Start data “to determine how and if it will be counted.”
But officials defended the practice of counting raises as saved jobs.
“If I give you a raise, it is going to save a portion of your job,” HHS spokesman Luis Rosero said.

That also extends to the health plan that really doesn't tell us the long-term cost vs any savings to be realized. We've heard of $900 billion cost and relative savings, but I've not really seen anybody prove these numbers.

You can't prove projections, CI. You can only make plans based on your best attempts at projection, and see how they turn out.

You can't prove projections, CI.

Medicare

As we reported last year, Medicare's financial difficulties come sooner"and are much more severe"than those confronting Social Security. While both programs face demographic challenges, rapidly growing health care costs also affect Medicare. Underlying health care costs per enrollee are projected to rise faster than the earnings per worker on which payroll taxes and Social Security benefits are based. As a result, while Medicare's annual costs were 3.2 percent of Gross Domestic Product (GDP) in 2008, or about three quarters of Social Security's, they are projected to surpass Social Security expenditures in 2028 and reach 11.4 percent of GDP in 2083.

The projected 75-year actuarial deficit in the Hospital Insurance (HI) Trust Fund is now 3.88 percent of taxable payroll, up from 3.54 percent projected in last year's report. The fund again fails our test of short-range financial adequacy, as projected annual assets drop below projected annual expenditures within 10 years"by 2012. The fund also continues to fail our long range test of close actuarial balance by a wide margin. The projected date of HI Trust Fund exhaustion is 2017, two years earlier than in last year's report, when dedicated revenues would be sufficient to pay 81 percent of HI costs. Projected HI dedicated revenues fall short of outlays by rapidly increasing margins in all future years. The Medicare Report shows that the HI Trust Fund could be brought into actuarial balance over the next 75 years by changes equivalent to an immediate 134 percent increase in the payroll tax (from a rate of 2.9 percent to 6.78 percent), or an immediate 53 percent reduction in program outlays, or some combination of the two. Larger changes would be required to make the program solvent beyond the 75-year horizon.

The projected exhaustion of the HI Trust Fund within the next eight years is an urgent concern. Congressional action will be necessary to ensure uninterrupted provision of HI services to beneficiaries. Correcting the financial imbalance for the HI Trust Fund"even in the short range alone"will require substantial changes to program income and/or expenditures.

Part B of the Supplementary Medical Insurance (SMI) Trust Fund, which pays doctors' bills and other outpatient expenses, and Part D, which pays for access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet next year's expected costs. However, expected steep cost increases will result in rapidly growing general revenue financing needs-projected to rise from 1.3 percent of GDP in 2008 to about 4.7 percent in 2083-as well as substantial increases over time in beneficiary premium charges.

It is expected that about one quarter of Part B enrollees will be subject to unusually large premium increases in the next two years. This occurs because it is projected that the other three-quarters of Part B enrollees will not be subject to premium increases in those years due to low projected Social Security benefit COLAs and a "hold-harmless" provision of current law that limits premium increases to the increase in Social Security benefits.

Social Security

The annual cost of Social Security benefits represented 4.4 percent of GDP in 2008 and is projected to increase to 6.2 percent of GDP in 2034, and then decline to about 5.8 percent of GDP by 2050 and remain at about that level. The projected 75-year actuarial deficit in the combined Old-Age and Survivors and Disability Insurance (OASDI) Trust Fund is 2.00 percent of taxable payroll, up from 1.70 percent projected in last year's report. This increase is due primarily to the recession, slightly lower estimates for real GDP after the economy recovers in 2015, and faster reductions in mortality rates. Although the combined OASDI program passes our short-range test of financial adequacy, the Disability Insurance Trust Fund does not; DI program costs have exceeded tax revenue since 2005, and trust fund exhaustion is projected for 2020. In addition, OASDI continues to fail our long-range test of close actuarial balance by a wide margin. Projected OASDI tax income will begin to fall short of outlays in 2016, and will be sufficient to finance 76 percent of scheduled annual benefits in 2037, after the combined OASDI Trust Fund is projected to be exhausted.

Social Security could be brought into actuarial balance over the next 75 years with changes equivalent to an immediate 16 percent increase in the payroll tax (from a rate of 12.4 percent to 14.4 percent) or an immediate reduction in benefits of 13 percent or some combination of the two. Ensuring that the system remains solvent on a sustainable basis beyond the next 75 years would require larger changes because increasing longevity will result in people receiving benefits for ever longer periods of retirement.

Conclusion

The financial difficulties facing Social Security and Medicare pose serious challenges. For Social Security, the reform options are relatively well understood but the choices are difficult. Medicare is a bigger challenge. Its cost growth can be contained without sacrificing quality of care only if health care cost growth more generally is contained. But despite the difficulties"indeed, because of the difficulties"it is essential that action be taken soon, particularly to control health care costs.