Markets took an anemic step upwards this week. The European Central Bank, the UK CB and the US Fed are all printing and pumping money like mad in anticipation of Greece defaulting, and some of that money is leaking into the markets. Unlike the fall of Lehman Bros, this time the central bankers are out in front. Will they have enough dry ammo? Some on Wall Street are predicting another 15% rise in the S&P by October. Others are predicting a 30% to 50% drop. I'm kinda thinking a drop, soon, but then a recovery and up by October. Don't fight the Fed. We'll see.
The Bank Of England has expanded its Quantitative Easing program by 50 billion pounds to 325 billion pounds, a bit over $500 billion.
Newt Gingrich labeled Obama "the best food-stamp president in American history." What does he mean? In the last four years, Obama has more than doubled food stamp outlays. 2008: $35B 2009: $56B. 2010: $65B. 2011: $75B. Mothers who are on food stamps have 25% more children on average. 2/3 of food stamp children were born out of wedlock. 78% of food stamp mothers don't have a job; 59% live in a household where no one has a job. 1 in 3 black mothers are on food stamps; 1 in 4 Hispanic mothers; 1 in 9 white mothers. 40% of food stamp mothers have never been married. 40% have no high school diploma. 75% of food stamp mothers receive other welfare benefits; over half also receive AFDC. This is a subsidy of uneducated unwed mothers - women who instead, in my opinion, should be subsidized for birth control. Children raised in such households - uneducated mother, no father present - have very little chance in life. Seriously, how many of these kids do you think wind up at Princeton or Stanford? We spend roughly $1000 per year per taxpayer on this program. This is not chump change we're discussing, this is real money taken from my children and given to unwed, uneducated women who can't afford the kids they have, so they go have more. Will it change? 92% of Democrats, 74% of Independents and 63% of Republicans say cuts to the food stamp program are the wrong way to reduce spending. Of course one must remember that roughly 80% of voters think the budget can be balanced by eliminating waste and fraud, and over half of all voters have a net worth of less than $500. Money is not a strong skill of the average American. See census report.
Entitlements are now about 50 cents out of every government dollar. It's widely believed that senior entitlements are "earned," due to years of making contributions. An average working woman who was 45 in 2010, earning $43,500 a year, will pay taxes that will reach a value of $87,000 by the time she retires But on average, the government will then spend $275,000 on her medical care. I'd like to buy four of these policies right now - I'll give the government $350,000 right now, they give me $1,100,000 when I'm 65. It seems pretty easy to predict where this will end: massive cutbacks on entitlements, tax increases, recession, inflation, rationed health care. What's harder to predict is when. Not this year. Not next year either. We still have more time to gut our children's economic inheritance before the bond market police show up with handcuffs.
The United States has closed its embassy in Syria and pulled out all its diplomats. U.S. officials say that deteriorating conditions in the country made it impossible for the embassy to continue operations and for the staff to remain. The United Nations has said that more than 5,400 people, mostly civilians, have been killed in a nearly 11-month uprising against President Bashar Assad. The move does not mean that Washington is breaking diplomatic relations with Syria, it simply means we no longer think we can protect our embassy personnel there.
$26B homeowner bailout? Nah. Where did Obama get the money? Do you really think a republican house just handed him $26B? About $5B goes to people who have been foreclosed, including $1.5 billion to borrowers who were wrongly or illegally foreclosed on between September 2008 and December 2011. Borrowers could receive up to $2,000, depending on the number filing claims. The other $20B goes to banks to shore up their mortgage backed securities. The banks will receive for principal write-downs and other aid to homeowners at risk of default, up to $20,000 per. But the average underwater home is down $50,000. That money will wind up coming from Fannie Mae and Freddie Mac, and then later when they need more money, from the taxpayer. It's just another bank bailout, by another name.
Greece is coming apart. Unemployment is over 20%, almost 50% for the under-25 crowd. There are violent demonstrations daily. It's become clear that no Greek government can force the required levels of austerity and survive. One way or another, there must be a period of no effective government, massive default, a massive recession, wide-spread bank failures, then a new government perhaps can form promising to pick up the pieces. Will they? Can an entire country survive on exports of fancy yogurt? Greece has been civilized for 3500 years, somehow life will go on. But there will be a period, perhaps lasting the better part of a decade, where Greek unemployment is huge, youth pack up and leave, and governments change like I change my shirt. Why is this interesting? It's a roadmap for a possible future for Portugal, then perhaps Ireland, Italy, Spain, and finally even maybe the US. When your government promises benefits like health care, retirements, low taxes and cushy jobs to most of the population then cannot deliver on those promises, the resulting anger can, in the worst case, tear the country apart. Greece is looking more and more like the worst case.
Young Americans are less likely to be employed than at any time since World War II.An analysis by the Pew Research Center, released Thursday, finds: