Economic Impact of Terrorist Attacks Fifteen Times Higher Than Previously Thought

by admin on April 26, 2012 14:06 pm · Comments/Link

A new study estimates that a terrorist attack involving the detonation of a dirty bomb in downtown Los Angeles would cost the area $16 billion, mostly in lost revenue. By contrast, the immediate cost of such an attack, loosely defined as the cost necessary to deal with the injured and restore the area to a pre-attack condition along with revenue lost due to temporary businesses closings, is estimated at a little over $1 billion. The rest of the cost would result from the psychological impact of the attack on potential shoppers, diners and employees.

The point of the study was not to generate anxiety, according to researcher William Burns of Design Research, who co-authored the study along with researchers from the University of Oregon, the USC Annenberg School for Communication and Journalism, Brown University, Monash University and ABS Consulting. Rather, the investigators hoped to increase awareness of the potential impact on the public of terrorism and to highlight the importance of establishing effective risk communication as an important part of both disaster preparedness and response.
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Student loan debt continues to climb -– US economy feared to be shaken again

by admin on April 22, 2012 23:03 pm · 1 comment

Due to the economic recession in the United States, the Americans find it very much difficult to get suitable jobs after they complete their education. As such, they are unable to pay off their student loans and are facing financial problems. Student loan debt may cause an economic mess in similarity with the mortgage crisis. As per the study by the National Association of Consumer Bankruptcy Attorneys, the Americans owe more on student loans than on credit cards. The total outstanding loans have exceeded to $1 trillion for the first time in the previous year. The student loan debt is becoming a rising threat to the US economy. It has reached about $870 billion surpassing the credit cards and car loans and these balances are expected to continue rising.
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Europe’s Troubles Suggest Imminent Global Recession

by admin on March 12, 2012 20:45 pm · 3 comments

It appears the eurozone has entered a deeper recession than the one caused by the 2008 financial crisis. The eurozone’s unemployment rate now stands at 10.7 percent, half a percentage point higher than at the peak of the last recession and the highest in the euro’s history. The rates for the most troubled countries are even more shocking, with 19.9 percent for Spain and 23.3 percent for Greece. Unemployment among the young is simply dismal, with rates of 48.1 percent in Greece and 49.9 in Spain for workers under 25 years of age. Carl Weinberg, chief economist at High Frequency Economics, called the numbers “appalling.”

Though world leaders praise the latest bailout for Greece, economists anticipate another global recession arising from Europe’s debt crisis, and a serious one at that. With Europe having a larger population, a larger banking system and more Fortune 500 companies than the U.S., a European financial system crash is sure to send shockwaves through markets around the globe.
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Fiddling while Sacramento burns: California union leaders horrified by use of words “fiscal child abuse”

by Lee on July 25, 2011 22:36 pm · 4 comments

California may be the spot where economic collapse begins and we’re lucky enough have a ringside seat to see it all.

There are days when you wonder if anyone in Sacramento actually comprehends the predicament in which they’ve put the one-time Golden State. Based on a new dispute between legislators, the answer seems to be a resounding no.

Marcia Fritz, CPA and president of the California Foundation for Fiscal Responsibility (which is pushing for major public pension reform) explains:

“I was testifying on problems with using collective bargaining to negotiate pension changes when individuals on both sides gain from benefit changes, and elected officials are bribed through campaign contributions to go along,” Fritz told us. “Since kids can’t vote, and they are the ones who have to pay the unfunded liabilities created by these selfish decisions, it’s a form of abuse.”

So in her testimony, Fritz uttered these words: “It’s tantamount to fiscal child abuse.”

That’s when the feces hit the fan. The state’s social workers are horrified with the supposedy poor choice of words.

“Anyone in the public eye should not be demeaning the plight of victims,” social worker Sarah Taylor says. “It goes against nature, what I see, where the parents are inflicting violence and sexual abuse on children. To compare that to a fiscal system, it’s appalling.”

Of course, the regular cast of characters lined up to denounce Fritz. David Low of the California School Employees Association said Fritz’s simply wants to inflame people’s anger.

California is screwed. Totally, completely, absolutely screwed. No doubt, no question. And yet in these perilous times, a spokesman for the CSEA is worried about offensive words.

What he should be appalled by are the actions of the state legislature.

They’re not guilty of fiscal child abuse. They’re guilty of fiscal murder. First degree.

Source: Orange County Register

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America’s poor are a poor excuse for poor

by Lee on July 24, 2011 20:14 pm · 12 comments

Remember that book titled “The Millionaire Next Door?” It was about ordinary people, perhaps your neighbors, who had worked hard and lived modestly and, as a result, had accumulated millions of dollars despite relatively modest incomes.

I have an on-going argument with my lunatic mother-in-law. Actually, I have many on-going arguments with my lunatic mother-in-law, but the one I’m referring to in this case revolves around the poor. She says America is filled is poor, downtrodden wretches who have nothing. I say America’s poor are the envy of most of the world’s population.

I don’t deny the possibility that both positions are possibly true, but I think my position is reinforced by a new study by the Heritage Foundation:

For decades, the U.S. Census Bureau has reported that over 30 million Americans were living in “poverty,” but the bureau’s definition of poverty differs widely from that held by most Americans. In fact, other government surveys show that most of the persons whom the government defines as “in poverty” are not poor in any ordinary sense of the term. The overwhelming majority of the poor have air conditioning, cable TV, and a host of other modern amenities. They are well housed, have an adequate and reasonably steady supply of food, and have met their other basic needs, including medical care. Some poor Americans do experience significant hardships, including temporary food shortages or inadequate housing, but these individuals are a minority within the overall poverty population. Poverty remains an issue of serious social concern, but accurate information about that problem is essential in crafting wise public policy. Exaggeration and misinformation about poverty obscure the nature, extent, and causes of real material deprivation, thereby hampering the development of well-targeted, effective programs to reduce the problem.

This may describe the current condition of so-called poverty in the United States, but this site is called EconomicCollapse.net and I fear that this may be the high water mark for America’s lower classes.

At the rate we’re going, America’s poor may soon find out what the rest of the world means when it talks about poverty.

Source: Heritage Foundation

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Larry Summers blasphemy: Hitler saved FDR’s ass

by Lee on July 23, 2011 21:16 pm · 6 comments

Larry Summers is often quotable and Charlie Rose is occasionally watchable. Put ‘em together and you get the very definition of a blind sow finding an acorn.

The whole clip is interesting, but the money quote begins a hair after the 21:30 mark when Summers says something about left wing icon FDR that will undoubtedly result in fewer dinner invitations in the Hamptons this summer:

“Never forget, never forget, and I think it’s very important for Democrats especially to remember this, that if Hitler had not come along, Franklin Roosevelt would have left office in 1941 with an unemployment rate in excess of 15 percent and an economic recovery strategy that had basically failed.”

Why next thing you know Summers will be saying that Keynesian ecomomics don’t work.

Clip here to watch the video: CharlieRose.com

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Cheerful headline of the day: “Things are worse than I said”

by Lee on July 22, 2011 2:00 am · Comments/Link

Michael Barone is usually a pretty level-headed guy. He leans conservative (I think), but not so far that anyone would consider him an extremist. That’s what makes his correction of comments in a recent column all the more frightening.

Here’s Barone in Tuesday’s Washington Examiner:

In my Sunday Examiner column I noted that the national debt currently amounts to 62 percent of gross domestic product and I cited Kenneth Rogoff and Carmen Reinhart’s book This Time Is Different for the proposition that economic growth is impaired when debt reaches 90 percent of gross domestic product. However, it has been pointed out to me (see this paper by Senate Budget Committee Republicans) that these two measures of debt are incommensurate: the 62 percent figure refers to public debt outstanding while Rogoff and Reinhart’s 90 percent refers to total debt. This underlines rather than undermines my point, for total debt now amounts to 95 percent of gross domestic product. We may already be at the danger point, rather than heading there fast.

In other words, forget those five-year predictions of doom. Ignore those ten-year windows. Pay no attention to even longer forecasts.

We’re talking watch out, here it comes, get out of the way before it hits you. We’re talking now.

Source: Washington Examiner

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Getting along without government: Can you survive when it all comes crashing down?

by Lee on July 21, 2011 2:00 am · 4 comments

We admit that this is entirely anecdotal and that the Minnesota state government has only been shut down for a few days, but it is nevertheless enlightening to see that chaos doesn’t necessarily ensue when Medium Brother goes away.

The Minneapolis Star Tribune tells what’s happened in the Land of 10,000 Lakes when the state government shut down in a budget dispute between Republicans and Democrats:

Bob Gehlen had a whiskey and Coke in one hand, and a fistful of opinions on the state government shutdown in the other.

“I think we ought to shut down the government for a year,” said the former Marine, standing at the Elks Lodge bar on bingo night. “It really hasn’t had any impact.”

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Moody’s: Mitch McConnell’s debt reduction Plan B ain’t gonna fly

by Lee on July 20, 2011 12:27 pm · Comments/Link

Craven Republican Senator Mitch McConnell, whose proposed Plan B debt reduction was applauded by more Democrats than fellow Republicans, will no doubt be disappointed to learn that Moody’s has also greeted his concept with something that can best be described as lack of enthusiasm.

A complete lack of enthusiasm, in fact.

Reuters has the unfortunate, but not unexpected information:

A U.S. government backup debt plan to raise the country’s debt ceiling and avoid imminent default could still lead to a downgrade of U.S. ratings in the next year or so, Moody’s said on Tuesday.



Senator Mitch McConnell’s “Plan B,” increasingly seen as a “Plan A” in Washington, would avoid any immediate downgrade of the coveted U.S. triple-A rating, Moody’s analyst Steven Hess told Reuters in an interview.



”But the numbers that are being discussed in terms of any possible deficit reduction coming out of this plan don’t seem to be very large,” Hess said. “Therefore this plan might result in a negative outlook on the rating.”

Time for Plan C. As in cadaverous.

Source: Reuters

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It’s come to this: Vladimir Putin rails at Ben Bernanke’s printing press recovery

by Lee on July 19, 2011 18:35 pm · 1 comment

Do yourself a favor. Do not invite both Vladimir Putin and Ben Bernanke to your next dinner party. Choose one and only one. If social obligations demand that you invite both, please make sure they are seated at opposite ends of the table.

Russia is a barely more than a thugocracy, yet the head thug has a firmer grasp on economic reality than the head of the Federal Reserve:

In a speech before the of economic experts at the Russian Academy of Sciences, the Russian prime minister had the following to say: “Thank God, or unfortunately, we do not print a reserve currency but what are they doing? They are behaving like hooligans, switching on the printing press and tossing them around the whole world, forgetting their main obligations.”
What appears to have angered the former KGB spy is the end of QE2.

According to RIAN: “Putin’s comments came in the wake of the completion of the US’ quantitative easing (QE) 2 program on June 30, in which the Federal Reserve bought $600 billion worth of its Treasury bonds. The Fed’s first round of QE, which ended in March last year, amounted to less than half the size of QE2.” We can’t wait to hear what expletive Putin will usher once Bernanke launches QE3.

After the break-up of the USSR, Russia’s economy was smaller than South Korea’s and we were the world’s sole super power. Now we’re being lectured by a thug.

And we’re sad to say he’s right.

Source: Zero Hedge

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Expert advice: Sell American dollars. Buy gold, art and jewelry

by Lee on July 18, 2011 17:33 pm · 1 comment

Some critics say we’re like the Joe Bfstplk character in the old L’il Abner comic strip. Joe walked around with his own personal dark cloud hanging over his head.

We defend ourselves by saying, “You don’t understand. It’s probably worse than we than we think and we think it’s pretty damn bad.” Now it appears that a big-time Wall Street mover and shaker is singing our song:

There may be another round of quantitative easing in the U.S. and Europe remains volatile. What’s an investor to do? Get into gold, art and jewelry, Scott Minerd, chief strategist at Guggenheim Partners, told CNBC Wednesday.

“We’re in a ‘beggar thy neighbor’ era. Paper money is garbage at the end,” he said. “It’s a matter of relative values, about which garbage do you own.”
There’s gold, of course, but “I don’t want to get labeled as a gold bug,” Minerd said. “I’m in favor of any asset class which is a store of value, which gets you away from currency risks,” and that would include art, collectibles and diamonds. Over his long-term horizon, “all of these noncurrency-related assets are probably superior investments than looking at financial assets.”

Watch the entire interview. When Wall Streeters begin agreeing with the doom and gloomers at EconomicCollapse.net, it’s a sure sign that the apocolypse is nigh.


Source: CNBC

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Reuters/Ipsos poll: Americans are pessimistic, but they’re not stupid

by Lee on July 18, 2011 2:00 am · Comments/Link

Americans have always been known for their sunny optimism and firm belief that tomorrow will be better than today.

Let us just point out that any Americans who still feel optimistic about the future must be completely unconscious in the present.

Americans are deeply pessimistic about the future as economic concerns rise and White House talks on raising the U.S. debt limit sputter, according to a Reuters/Ipsos poll released on Wednesday.

The number of Americans who believe the country is on the wrong track rose to 63 percent this month, up from 60 percent in June, with stubbornly high unemployment and prolonged gridlock in Washington dashing hopes of a swift economic recovery.

22% of the work force draws paychecks from state and federal governments. If your put us in a hammer lock and forced us to take a guess, we’d venture to say that they comprise a high percentage of those who feel optimistic about the future.

And why shouldn’t they? Their wages are high. Their odds of getting fired are nil. And their pensions are sweeeet.

As for the rest of you, your pessimism is completely justified.

Source: Reuters

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How do you say “junk” in Gaelic? Moody’s cuts Ireland’s credit rating

by Lee on July 15, 2011 11:00 am · Comments/Link

It’s like watching a magician at work. If you want to see how the trick works, watch everything except what the magician wants you to watch.

In this case, ignore the debt ceiling dispute in Washington, DC and keep your eyes on the rapidly deteriorating situation in Europe and the Euro.

Bloomberg reports:

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Cracks in the facade: Leading Chinese Communist warns of major social problems

by Lee on July 15, 2011 2:00 am · 1 comment

We normally don’t excerpt blocks of copy as large as the one in this story, but we’re making an exception in this case.

Zhou Ruijin is the former editor of the official People’s Daily. He’s a powerful pro-reform elder in the Chinese Communist Party. So it seems wise to pay attention to his words when he warns his cohorts about the potential “loss of government credibility and disintegration of popular support.”

The China Media Project translates Ruijin’s dire warning:

Lately I’ve had a deep sense of anxiety as I’ve watched one occurrence after another of tensions between governments and people at the local level, which have become more an more acute. A number of officials at the local government level have abused their powers, again and again trampling the human rights, right to life and rights of property of ordinary people. Those affected turn to petitioning, make contact with the media, or go online to report their stories. If they turn to legal proceedings and other like methods in an attempt to protect the legitimate rights granted them in the constitution, they find that these channels for voicing their interests are blocked. What’s more, local governments will level such charges as “slander” (诽谤) or “extortion of the government” (敲诈政府) to go after them, “arresting them across provincial borders” (跨省抓捕) or simply locking them away in mental hospitals claiming that they are “psychological unsound.” Not long ago, Wuhan petitioner Xu Wu (徐武) was lucky enough to escape from a “mental hospital” after being locked up for four years, but then was openly dragged away by Wuhan police from the courtyard of Guangdong’s Southern Television (TVS) and again committed to a mental hospital. There was a buzz of public opinion around the country, but authorities in Hubei simply responded by suppressing media reporting.

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And so it begins: Moody’s puts United States on review for possible downgrade

by Lee on July 14, 2011 2:00 am · Comments/Link

Hydra was the terrifying, many-headed monster of Greek mythology. When one of the heads was cut off, two new ones sprouted. For our purposes today, class, let’s think of the problems facing the United States economy as the Hydra.

For those of you who may think the use of anything Greek in this situation is an unfortunate error on our part, feel free to go with a Whack-A-Mole analogy. You can swing that hammer all you want, because the mole is going to pop up somewhere else as soon as you do.

Either analogy works to describe the situation in which the United States currently finds itself. And Moody’s just looked down the hole we dug for ourselves and said, “Sure is deep.”

Moody’s Investors Service put the U.S. under review for a credit rating downgrade as talks to raise the government’s $14.3 trillion debt limit stall, adding to concern that political gridlock will lead to a default.

The Aaa ratings of financial institutions directly linked to the U.S. government, including Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the Federal Farm Credit Banks, were also put on review for cuts, Moody’s said in a statement today.

The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

“It certainly underscores the importance of passing the debt ceiling and not putting us in default status, and making sure there’s a longer term fiscal plan to contain spending and the deficit we’ve been running up over the last few years,” said Anthony Cronin, a Treasury bond trader at Societe General SA in New York, one of the 20 primary dealers that trade with the Federal Reserve. “Maybe it’s the impetus to say we’ll need more of a concession.”

Please allow us to translate the phrase “more of a concession”:

“The Americans are about to begin paying through the teeth. We just don’t know if those teeth belong to the Hydra or the mole.”

Source: Bloomberg

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