The largest bond investor in the world has recently sold of all American government bonds. Bill Gross approves them of »little value«. As a reason he singled out public social programs. The fund manager predicts for the dollar a massive loss of purchasing power.
The PIMCO founder Bill Gross is either a clueless idiot or an outrageous liar. In the headline of the article he says US bonds are worse (»We’re out-Greeking the Greeks«) than Greek bonds. This is lie #1. You can’t compare the monetary system of the US with Greece. The former is fully sovereign in it’s currency. It is the monopoly issuer of a non-convertible, free-floating FIAT currency the US$. By definition the US government is always solvent in it’s currency. The later is part of the Eurozone and relinquished it’s monetary sovereignty to a supra-national institution the ECB. Therefore Greece is revenue constrained and can become insolvent. From a monetary perspective Greece can be compared to a US state but without the backstop of a federal government.
So he sold all US government bonds [SE: who cares?] for what reason? The future costs of Social Security, Medicare and Medicaid. According to his calculation these costs are not accounted for and add staggering 75 trillion US$ — 5 times the US GDP — to the federal debt
mountain. This is lie #2. How crazy is that? It’s like saying Hey we must account for all known future expenses now but we can safely ignore any future income. In other words this is bullshit accounting. Anyway if Bill Gross would be serious in tackling these non-problems (because the US government can always honor it’s liabilities!) he would suggest: For SS to run a surplus indefinitely we need to solve the problem of inequality in the US. Billionaire financial parasites like me must be taxed out of existence. And we need real health-care reform.
Bill Gross then compares all US politicians to Pepe le Skunk (I agree but for different reason.) and mutters all the usual keywords: (hyper?)inflation, devaluation and super-low interest-rates [SE: how self-serving is that argument?]. He complains about pickpocketing from the savers by the government. Is he worried about the savers on main-street? If so it is lie #3. Hmmm … I would also prefer taxing instead of pickpocketing but at least the pickpocketing — if it happens — won’t harm the wrong people.
Bottom Line: The PIMCO founder Bill Gross is either a clueless idiot or an outrageous liar. And he is an ignorant who doesn’t bother to read the stuff produced by his own company PIMCO.
Via New APPS: Art, Politics, Philosophy, Science I’m informed that one of these new dysfunctional US governor robots turned into a Philosophy Terminator. He wants to terminate the department of philosophy at Nevada-Reno. See here and here (PDF). These governor machines get totally out of control.
Here’s my humble advice to start negotiating with governor Sandoval. The signature of Associate Professor Deborah Achtenberg is an offense for any self-respecting GOP governor robot. It needs some editing:
Philosophy (What is this? Who needs that?) Chair Religious (We support real science in Nevada!) Studies Chair Gender (Lesbians in stealth-mode.), Race (We are a proud nation of old white men.), Identity (Get a life!) Faculty Associate
Religious Studies Chair
And please start any correspondence with some reference to the Almighty. That is the way forward! Good luck!
Via Pragmatic Capitalism:
Ideally, you and I own Washington. After all, government is merely an entity that the private sector uses to further its own prosperity. It is not intended to be some sort of competing entity. Government is not to be run for its own benefit, but for the benefit of the people it was created to serve. And over the last 25 years Washington has become increasingly owned by one segment of the population – the FIRE industries.
April 1st I read the »Employment Situation« of the Bureau of Labor Statistics. The BLS summary says: “Nonfarm payroll employment increased by 216,000 in March, and the unemployment rate was little changed at 8.8 percent,”. Then I read on April 4th »Hiring spree beefs up McDonald’s recent boom« on MSN Money. McDonald’s wants to hire as many as 50,000 workers on April 19th. I thought: Wow. How will the US media cover the next “Employment Situation” report for April? Most probable with some Hooray! the economy is improving. And we won’t hear, that “Employment in leisure and hospitality rose by 100,000 over the month,”, which is the noble BLS paraphrase for jobs paying a
decent minimum wage.
Now Tom Hickey reminds me with a blog post over at the Mike Norman Economics MMT (Modern Monetary Theory) blog, that McDonald’s actually added 62,000
slaves workers to its payroll after receiving more than 1,000,000 applications. So for each job opening there were approximate 16 applications? The US is a Burger Economy? But here’s another idea. The NBER should develop a Composite McDonald’s Index as an alternative to the arcane calculations whether the US economy is in a recession. The idea is pretty simple. Stephan’s Golden McDonald’s Rule: If McDonald’s is doing exceptionally well in the US, US workers are in a recession. Now how might such a Index look like? (Don’t even think about it. I’ve already a © for that one.)
Take the number of hours worked by the crew (McDonald’s lingo) per week plus the number of units sold of typical subsistence products — the McDonald’s poor man basket excluding luxuries like coffee, … Index this composition to a year in which the US economy was doing pretty well. Find a threshold which indicates that the US main-street economy goes South. Voila. Once the Composite McDonald’s Index is above our threshold US workers are fucked.
Ha … The next headache — brouhaha — for our hysterical right wing US friends. Superman is unAmerican. He wants to renounce his U.S. citizenship. I don’t know what is more of a problem: To have a President born in Kenya or a Superhero raised in Kansas giving up his citizenship? The indispensable right-wing propaganda pamphlet Weekly Standard:
All of these stories work because Superman believes in, and is part of, America. Once he’s a “citizen of the universe” what, exactly, will he believe in? Heck, what does “citizen of the Universe” even mean? Will Superman now adhere to the Tamaran code of honor? Will he follow the Atlantean system of monarchy? Does he believe in liberté, égalité, fraternité, or sharia? Does he believe in British interventionism or Swiss neutrality? You see where I’m going with this: If Superman doesn’t believe in America, then he doesn’t believe in anything. (HT: Guardian)
I’m right now reading the new Superman Sequel “Grounded”: Feeling a responsibility to his adopted homeland, he begins a long journey where he will walk across the United States to reconnect with the everyday people he is committed to protecting. Very interesting from an economic perspective. Once I’m done I must post something about Superman and The Great Recession.
(HT for the post: Bill Mitchell)
… doesn’t mean you know a lot of every subject you’re talking/writing about. So David Leonhardt of The New York Times started his quiz »O.K., You Fix the Budget«. And nearly 9,000 readers worked the puzzle. Mike Keller is totally excited:
Nearly 9,000 readers worked the puzzle. Individually, they were all over the map. But as a group, they accomplished the goal by splitting the difference: almost exactly half the savings came from tax increases, half from spending cuts. Collectively, readers seemed to realize that the hole we’re in is too deep to be filled by tax increases alone or spending cuts alone.
The problem here: there’s no hole. The federal government of the United States of America is the issuer of its currency — the US$. It can produce any amount of US$ it wants by simply crediting bank accounts. Theoretically it can mark up private sector bank accounts with US$ = infinity - 1 US Cent. (Granted: there are some stupid self-imposed rules like the debt ceiling and issuing debt 1:1 for any US$ spent by the government.)
Now here’s my issue with this New York Times propaganda. This whole debt/deficit debate is only a waste of time and a distraction. David Leonhardt should ask his readers how do you think can we annihilate the unemployment rate of 9%. How can we put 25% of US teenagers who want to work in jobs? What can we do about education to avoid that all these students of private sector institutions accumulate mountains of debt for non-education only to be indentured laborers for the rest of their life?
The Bureau of Labor Statistics released today its Employment Situation Report for April. “Nonfarm payroll employment rose by 244,000 in April, and the unemployment rate edged up to 9.0 percent,”. That does not sound very good.
Now what I’m wondering is: Because The Burger Economy is booming McDonald’s alone added 62,000 people to its payroll in April? So either Ronald McDonald is responsible for approximate 25% of the new jobs or something is seriously wrong with the BLS figures.
To those who say that our expenditures for Public Works and other means for recovery are a waste that we cannot afford, I answer that no country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order. Some people try to tell me that we must make up our minds that for the future we shall permanently have millions of unemployed just as other countries have had them for over a decade. What may be necessary for those countries is not my responsibility to determine. But as for this country, I stand or fall by my refusal to accept as a necessary condition of our future a permanent army of unemployed. On the contrary, we must make it a national principle that we will not tolerate a large army of unemployed and that we will arrange our national economy to end our present unemployment as soon as we can and then to take wise measures against its return. I do not want to think that it is the destiny of any American to remain permanently on relief rolls.
— FDR, Radio-Chat
Very fitting for the day of another depressing BLS employment report. Created by order of President Franklin Delano Roosevelt, the Work Progress Administration (WPA) was funded by Congress with passage of the Emergency Relief Appropriation Act of 1935 on April 8, 1935. But this time is different, yes? The US infrastructure is first-class and unemployment is only 9% and structural anyway. Plus there’s a president who has the courage ordering to execute sleepy old bearded men in pajamas.