Social Security Trust Fund
The 2015 annual report from the Social Security Board of Trustees shows that the program’s disability component is in immediate trouble. Data from the latest report show that the disability fund will be depleted as soon as next year and unable to pay full benefits to beneficiaries.
It has hardly been a secret that the unprecedented level of pollutants in the Chinese air would impair life expectancy and lead to extensive health problems, but even we were surprised to find out the quantification of China's air problem: according to one study, an average of 4,000 people a day are killed in China, as a result of the dense smog.
... the long-term deficit and debt that we have accumulated is unsustainable. We can't keep on just borrowing from China, or borrowing from other countries because part of it is, we have to pay interest on that debt. And that means that we're mortgaging our children's future with more and more debt, but what's also true is that at some point they're just going to get tired of buying our debt. And when that happens, we will really have to raise interest rates to be able to borrow...
The black line's trend is nobody's friend.
In the great fiscal scheme of things, October 22, 1981 seems like only yesterday. That’s the day the US public debt crossed the $1 trillion mark for the first time. It had taken the nation 74,984 days to get there (205 years). What prompts this reflection is that just a few days ago the national debt breached the $18 trillion mark; and the last trillion was added in hardly 365 days.
Phantom wealth cannot possibly fund unprecedented retirement and healthcare promises. Only real wealth can do that, and central bank liquidity and the asset bubbles it inflates are not real wealth.
Paying for unproductive friction with borrowed money has generated the illusion that free to me is actually free - it isn't. We all understand how friction slows our progress: flatten the tires on a bicycle and it becomes much harder to maintain speed. If a brake pad is rubbing against one wheel, it gets even harder. If we pile on additional sources of friction, eventually forward motion stops. In systemic terms, the system freezes up and collapses. We see the same systemic friction in the U.S. economy.
It doesn’t take a rocket scientist to figure out that an unsustainable debt burden soundly tolls the death knell of a nation’s economy, and its government. Unfortunately, it can sometimes take a rocket scientist to figure out what the real numbers are; governments have a vested interest in not being transparent about their debts and interest payments. Obligations are obligations, no matter who they’re owed to. Taking this into account, total US interest payments in Fiscal Year 2013 were a whopping $415 billion... This means they actually spent approximately 26% of their available tax revenue just to pay interest last year.. much higher than the 1868 Ottoman Empire at the end of its reign...
President Obama released his 2015 budget proposal this week...and as expected, it contained even more language about his MyRA initiative. As we’ve discussed so many times in the past, IRAs are an irresistible kitty for such a bankrupt government. The US government itself estimates that over $5 trillion is tucked away in American retirement accounts. They need that money. Your money. The US government is struggling to come up with new funding sources… and retirement accounts are by far the easiest target. Why? Because the majority of retirement accounts at trapped at big Wall Street banks, which are all de facto agents of the government. All the Treasury Department has to do is make a phone call. Yesterday’s budget announcement constitutes the next phase: automatic enrollment.
On the heels of the President's State of the Union address, in which he announced his new executive order to raise the minimum wage by nearly 40% for those employed by federal contractors, Barack Obama is now peddling said promises to the heartlands. While discussing the rightness or wrongness of such a move is frustrating, and we're sympathetic to those who earn $7.24/hour, a simple thought entered our minds once again; a thought that often crops up whenever we hear a politician make such a magnanimous and grandiose claim - how is this going to be paid for?
2013 already saw violent unrest in some of the most stable countries in the world like Singapore and Sweden, all underpinned by absolute disgust for the status quo. Whether today or tomorrow, this year or next, there will be a reckoning. The system is far too broken to repair, it must be reset. It’s simply absurd to look at the situation objectively and presume this status quo can continue indefinitely... that this time is different… that we’re somehow special and immune to universal principles.
“Truth. noun. The quality of state of being in accordance with fact or reality.” This is how the dictionary defines truth: it can be ‘fact’. But it can also mean ‘reality’. The people who control the system have figured this out - if they can change someone’s reality, they control the truth. This is also the case in finance and economics. For example, I heard the following statements just in the last 48-hours while visiting the Land of the Free: “America will never default on its debt.” , “The debt doesn’t matter because we owe it to ourselves.” Again, these statements are totally unsupported by the facts. The notion that the US government won’t default on its debt is simply historically inaccurate. Such close-mindedness is dangerous, especially in economics. People’s lives and livelihoods depend on an objective understanding of the facts, not this altered reality.
If S&P had any guts it would lower the US another notch.
Don't believe those Press headlines that paint a rosy picture for SS. There's no good news in this report card.