5. The general fiscal outlook for
the coming decade remains about the same as what CBO projected in March. If the
laws and policies currently in place did not change, the deficit for 2008 would
fall slightly, to 1.1 percent of GDP, and then rise to about 1.5 percent of GDP
for 2009 and 2010, CBO projects. In the years that follow, deficits would give
way to small surpluses as a result of higher revenues associated with the
scheduled expiration of tax provisions originally enacted in the Economic
Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Jobs and
Growth Tax Relief Reconciliation Act of 2003 (JGTRRA). Total
outlays are projected to remain steady at roughly 20 percent of GDP over the
next 10 years. Total revenues are projected to remain close to 19 percent of
GDP through 2010 about their level in 2007 and then rise to more than 20
percent following the scheduled expiration of EGTRRA and JGTRRA.
6. Over the long term, the budget
remains on an unsustainable path. Unless changes are made to current policies,
growing demand for resources caused by rising health care costs and the
nation’s expanding elderly population will put increasing pressure on the
budget. Federal spending on Medicare and Medicaid is expected to total 4.6
percent of GDP this year, and, without changes in law, such spending will rise
to 5.9 percent of GDP in 2017—an increase of nearly 30 percent in just 10
years, CBO estimates. Over the same period, spending on Social Security will
rise from 4.2 percent of GDP to 4.8 percent.
Medicare and Medicaid have increased about 2.5 percentage points faster
per year than has per capita GDP. If
those costs continue to increase at that rate, federal spending on those two
programs alone would rise from 4.6 percent of GDP this year to about 20 percent
by 2050. Demographic changes in the programs can explain only about 2.5
percentage points of that increase, underscoring that the rate at which health
care costs grow, not the aging of the population, is the key determinant of the
nation’s long-term fiscal outlook. A 3
percent cap on annual inflation in health care costs has been proposed to
sustain ably keep the health sector in sync with the economy and eliminate the
corruption driving this disproportionate inflation.
7. Social security revenues represent
6.34% and expenditures 5.77% of the $13.85 trillion gross domestic
product. 162 million workers, 54% of
the 300 million population, had earnings covered by a 13.85% in social security
taxation. Workers and employers each
paid 6.2% OASDI tax on the first $94,200 of earnings and 1.45% Medicare tax on
all wages. Self-employed individuals paid 12.4% on OASDI and 2.9% on Hospital
Insurance. To eliminate poverty SSA
would only need to tax the income of the wealthy. There is an enormous backlog of disability insurance petitions of
700,000 with the Administrative Law Judges and 1.6 million with the
administrative staff of petitioners unhappy with their level of benefits. There seems to be a problem regarding
bio-terrorism stemming from the $66.60 Medicare premium in 2004 that is
corrupting state assistance programs and vulnerable private caregivers. Recent reports indicate that people treated
for mental illness in the public health system are dying 25 years younger than
the national average rather 10 to 15 years younger as in 1990s. SSA fails to uphold the new income
exemptions, discounting the first $20 of income, and the first $65 of
income and one half of income thereafter, whereby any disabled person with a
monthly income less than $1,321 is eligible as Sanders v. Astrue HA-3-6-7.
Plan to Eliminate
the Budget Deficit with the SSA Surplus 2007-2012
Source: HA Chapter 3 HaW
8. CBO recognizes that there is no danger
of insolvency in the trust funds until 2017 when the tax rates will probably
need to be adjusted upwards. In fact it
is the enormous solvency of the trust funds that is disturbing. As of 31 December 2006 OASDI had $2,048.1 billion in savings, $1,844.4 billion in OASI and
$203.9 billion in DI. Having
accumulated the largest savings account in the world at a time when citizens
have ceased to save any money and the federal government is running a deficit
SSA has a responsibility to both the alleviation of poverty and to balance the
federal budget. Having failed to
alleviate poverty as they promise SSA has no excuse to withhold surplus funds
from the cause of eliminating the budget deficit. SSA should make returns to the Treasury equivalent to two
thirds the amount needed to balance the budget not to exceed all tax revenues
in excess of the cost of benefits and one half of their interest earnings so
that SSA would still show a profit and the trust funds would grow, albeit at a
slower rate. Using the Intermediate
projections of the OASDI Trustees in 2007 2/3 of the deficit is $117 billion,
slightly more than the difference between tax revenues and cost plus half
interest earning thereby limiting contributions to the Treasury from SSA to
$115.3 billion, leaving $73.2 billion to bring the trust fund balance to
$2,121.3 rather than $2,236.6 billion at the end of 2007. The deficit is projected to be less or
non-existent in future years in the short term so 2/3 of need is calculated. The accumulation of the OASDI balance is
actually more reasonable after making contributions and the fund crosses the $3
trillion threshold in 2012 rather than 2011 as it would under current
intermediate projections.
9. Since September 2001, the Congress and the President have provided a
total of $602 billion in budget authority for military and diplomatic
operations in Iraq, Afghanistan, and other regions in support of the war on
terrorism and for related veterans benefits and services. Specific
appropriations, which averaged about $93 billion a year from 2003 through 2005,
have risen to $120 billion in 2006 and $170 billion in 2007. According to
estimates by the Congressional Budget Office (CBO), about $533 billion of the
appropriated sums has been allocated for U.S. military operations and other
activities carried out by the Department of Defense (DoD). Lawmakers have also
provided approximately $30 billion to train and equip indigenous security
forces in Iraq and Afghanistan. In
addition, $39 billion has been provided for reconstruction and relief efforts,
diplomatic and consular operations, embassy construction, economic support, and
foreign aid. DoD reports that it has obligated almost $11 billion per
month thus far in 2007 for operations in Iraq and Afghanistan and for other activities related to the war on terrorism,
an increase of nearly $3 billion compared with average monthly obligations in
2006. Operation Iraqi Freedom accounted for approximately 85 percent of all
reported obligations; Operation Enduring Freedom accounted for another 15
percent. CBO projects outlays of roughly $115 billion
for war-related defense activities in 2007, an average of between $9 billion
and $10 billion a month. Of the funds appropriated for international affairs
activities related to the war close to $25 billion has been spent through 2006
and that another $5 billion will be spent in 2007.
Defense Budget and
Federal Budget Deficit 1990-2006
Source: Office of Management
and Budget Historic Budget
Tables
10. Congress is responsible for
establishing spending limits to reduce the deficit. If waste, fraud and abuse in Defense programs can be reigned in
for a gross aggregate military expenditure of not more than $400 billion it
might be possible to balance the budget this 2007. However neither the President nor Congress have demonstrated a competency to
balance the budget. The experience with balancing the
budget at the turn of the millennium and in FY 2006 reinforce the neo-classical
principle that levies for war cause the government to get into debt and that by
restraining military spending a little bit dramatic progress can be made
eliminating the budget deficit. By
reducing defense spending in FY 2006 to $470 billion from $501 billion the
deficit was miraculously reduced from $320 billion to $250 billion. A considerable amount of this savings,
$30-$50 billion can be attributed to the return of surplus funds allocated the
military, the rest is probably the result of the improved functioning of the
real economy as the result of the flight of military capital although their
interests seem to control GDP statistics.
Throughout the 1990s military spending was kept below the cap of $300
billion, that most people considered too high, in the first decade of the 21st
century all discipline was removed from military spending under the guise of
the levy for the Global War on Terror and more recently the troop surge. It is not too late to restore limits to
military spending and crack down on the laundering monetary instruments under 18USCI(95)§1956.
|
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
|
DoD
|
483.9
|
468.2
|
441
|
464.2
|
483.8
|
493.9
|
504.2
|
|
Total
National Defense
|
505.8
|
491.8
|
463
|
485.2
|
505.3
|
515.3
|
526.1
|
|
S Con Res 21
Budget Authority
|
|
|
619.4
|
648.8
|
584.7
|
545.3
|
551.1
|
|
S Con Res 21
Out lays
|
|
|
560.5
|
617.8
|
626.9
|
572.9
|
558.4
|
|
HA DoD
|
|
|
450
|
400
|
375
|
390
|
400
|
Source: DoD. Table 1-2 National Defense Budget
Estimates FY 2007 March 2006 and S.CON.RES.21.ES
11. A Military
budget of $400 billion after $60 billion reduction in superfluous Cold War
armament and weapons maintenance is possible. In the 2007 defense budget: $111 billion (about 25 percent)
will be spent on the pay and benefits of 1.4 million active duty and 800,000
selected or ready reserve military personnel. (The pay of a reservist who is
mobilized or called to active duty, as 400,000 have been since September 11, is
funded in the supplemental appropriation.) The Pentagon spends $154 billion or
33 percent of its budget on routine operating and maintenance costs for its 21
Army and Marine active and reserve ground divisions, 11 Navy Carrier battle
groups, and 31 Air Force, Navy and Marine air wings. Included in this are pay
and benefits for the 700,000 civilians employed by the Department of Defense.
(The operations and maintenance costs of the forces in Iraq are also covered in
the supplemental appropriation.) Another $174 billion or 38 percent of the
budget goes for new investment. This is broken down into $84 billion for buying
new planes and ships and tanks; $73 billion for doing research and developing
and testing new weapons; and $17 billion for building the facilities for the
troops and equipment. The vast majority of the final 5 percent or $24 billion
is spent by the Department of Energy on maintaining and safeguarding the 10,000
nuclear weapons in our inventory. At
this time, the end of the fiscal year, DoD must return surplus funds in excess
of 25% reserve. Even with the troops
surge spending should not exceed $500 billion.
12. CBO estimates that federal
debt will reach the current limit of $8.965 trillion sometime during the last
calendar quarter of 2007. At the end of 2007, CBO expects, debt held by
the public will total $5.0 trillion and debt held by government accounts will
equal $3.9 trillion. Under the assumptions governing the baseline,
net interest costs are projected to rise from $253 billion in 2008 to a peak of
$292 billion in 2012 an average annual increase of 3.7 percent. After 2012, net interest slowly falls by an
average rate of 1.0 percent a year to $278 billion in 2017. Relative to GDP,
net interest is projected to remain steady at 1.8 percent through 2010 and then
slowly fall to 1.3 percent by 2017.
The federal debt is unsustainable and threatens future generations. The federal government must resolve to
balance the budget, stay out of debt, and in fact make progress paying off the
debt with pretend payments such as achieving targets for Official Development
Assistance in exchange for debt relief.
13. On average, the value of the dollar fell by 2.1 percent against the currencies of the United States’ major trading partners last year, and
CBO expects declines of between 2 percent and 3 percent in 2007 and 2008. On 11 September 2007 shortly after Manuel Antonio Noriega
v. United States of America HA-9-9-07 proceeded to educate the US in civil rights in the context of a European conspiracy the dollar fell to
a new all-time low. The 13-nation euro rose as high as $1.3901 in late afternoon European trading topping its previous record of $1.3852,
reached on July 24, 2007. It almost immediately fell back to $1.3889, compared with the $1.3832 it bought the day before. The dollar was
lower on Wednesday against the British pound, drifting down to $2.0296 from its level of $2.0317 in New York late Tuesday.The U.S.
currency was lower against the Japanese yen, the dollar ambled down to 114.27 yen from 114.30 yen. Reason for this devaluation is that
the BEA estimated economic growth at 4% in the second quarter of 2007 BEA 07-38 30 August. It was not recommended for the dollar to
devaluate with the Euro because the EU was overtly Conspiring to defraud the Government with respect to claims in deprivation of our rights
under color of law. Instead it was recommended for the US to be punished with continuing devaluation with China and Panama as well as
Mexico to provide more incentive for migrant workers to stay at home.
Source:
BEA
14. Real gross domestic product
(GDP) is reported to have increased 4.0 percent in the second quarter,
according to the “preliminary” estimates of the national income and product
accounts (NIPAs); it increased 0.6 percent in the first quarter. The second-quarter
growth rate was revised up 0.6 percentage point from the “advance” estimate.
The acceleration in real GDP growth in the second quarter primarily reflected a
downturn in imports (subtracted in the derivation of GDP), upturns in Federal
Government spending and in inventory investment, accelerations in exports and
in nonresidential structures, and a smaller decrease in residential investment.
In contrast, consumer spending decelerated markedly. Prices of goods and
services purchased by U.S. residents increased 3.8 percent in the second
quarter, the same as in the first quarter. Energy prices accelerated sharply,
and food prices decelerated somewhat. Excluding food and energy, prices
increased 1.6 percent, following an increase of 3.1 percent in the first quarter. Real disposable personal income (DPI)
increased 0.1 percent after increasing 5.4 percent in the first quarter.
Current-dollar DPI decelerated, and prices (as measured by the PCE implicit
price deflator used to deflate DPI) accelerated, resulting in the slowing of
the overall real measure. The personal saving rate, personal saving as a
percentage of current-dollar DPI, was 0.5 percent in the second quarter; in the
first quarter, it was 1.0 percent.
15. According to CBO’s projections, GDP will increase by 2.1 percent in
real (inflation-adjusted) terms this calendar year and by 2.9 percent in
2008. Employment growth, which slowed
slightly in late 2006, is expected to continue to increase moderately, thereby
keeping the unemployment rate near its current 4.6 percent through 2008. Inflation, as measured by the year-to-year
change in the consumer price index for all urban consumers (CPI-U), is
projected to decline from 2.8 percent this year to 2.3 percent next year.
Prices for food and energy, which increased during the first half of this year,
are expected to moderate, keeping overall inflation lower than in the recent
past. In addition, the underlying (or core) rate of consumer price inflation is
expected to be relatively stable, averaging slightly above 2 percent over the
next year and a half. Economic
projections for the near term, however, are subject to significant uncertainty.
Over the 2009–2017 period, CBO projects that real growth will average 2.7 percent
and inflation as measured by the CPI-U, 2.2 percent.
GDP % Change from
Previous Year According the BEA and OMB
Source: Table 7 Gross Domestic
Product: First Quarter 2007 BEA
07-18 and Calculations from Office of Management and Budget Historic Budget
Tables as Studied in Table 2-3 of the 2007 HA Lobbying Activity Disclosure
(LAD)
16. There is always a significant margin
of error when doing macro-economic accounting.
The economy is simply too large to be 100% accurate and in practice a
margin of error of up to 25% should be anticipated. For instance macro-economic accounting of the US Gross Domestic
Product (GDP) has recently come into question.
In the United States economic activity slowed in the middle part of
2006. There was a general economic slowdown in
growth from 5.3% in the first two quarters and 2.4% in the second half. These figures are down notably from
the nearly 3-1/2 percent average pace of the preceding two years.
The slowdown in the growth of real GDP largely reflects a cooling of the
housing market (Bies Nov. 2, 2006).
Economic growth in 2006 is set to reach 2.8% in the European Union and
2.6% in the euro area, up from 1.7% and 1.4% in 2005, according to the European
Commission’s autumn economic forecasts (Bernanke Aug. 31, 2006). In the first quarter of 2007 GDP increased at an annual rate of 1.3 percent in the first
quarter of 2007 (BEA 07-18).
This rate of growth does not explain the change in GDP reported in the
dollar amounts by the either the BEA or the OMB. This discrepancy is however not new, so it is difficult to go
back to a date that one trusts and begin calculating anew.
Gross
Domestic Product and National Income Disputes (bill. US Dollars)
|
Statistic
|
2004
|
2005
|
2006
|
|
GDP high
|
11,713
|
12,456
|
13,247
|
|
GDP low
|
10,256
|
10,812
|
11,415
|
|
GNI high
|
9,731
|
10,239
|
10,883
|
|
GNI low
|
8,011
|
8,105
|
8,313
|
Source:
Bureau of Economic Analysis
17. A leading cause of market stress is that the national
projections of GDP and GNI are too high in the US. Real gross domestic product, the output of goods and services
produced by labor and property located in the United States, is estimated to
have increased at the low annual rate of 0.6 through 1.3 percent in the first
quarter of 2007. In the fourth
quarter of 2006, real GDP increased 2.5 percent. In 2005 real GDP grew an estimated 3.75 percent. The slowdown in the growth of real GDP
largely reflects the cooling of the housing market. The slowdown in growth can also be attributed to a long history
of overestimating GDP figures to facilitate the closing of loans to the federal
government. For instance although
growth was estimated at 1.3 percent by BEA it was recorded at 5.5 percent in
the Office of Management and Budget (OMB).
Gross National Income (GNI) is also disputed because of the widening gap
between the rich and poor demonstrated in the increasing inability of
homeowners to afford their mortgages.
By acknowledging these disputes in regards to the national system of
accounts the government can forestall a recession and enjoy greater immunity
from inflation and debt by recalculating GDP and GNI to more realistic, lower
rates, where investors, analysts and consumers would find greater accuracy and
satisfaction.
Home Sales and Foreclosure Estimates 2004-1st
Quarter 2007
|
Year
|
Home Sales (annually adjusted)
|
Change in annual Home Sales
|
Foreclosure Filings
|
Change in Foreclosures
|
|
2004
|
6,778,000
|
N/A
|
677,586
|
N/A
|
|
2005
|
7,076,000
|
4.3%
|
885,000
|
25%
|
|
2006
|
6,478,000
|
-8.5%
|
1,259,118
|
42%
|
|
January 2007
|
6,440,000
|
-0.5%
|
130,511
|
24.4%
|
|
February
|
6,680,000
|
3.1%
|
130,786
|
0.2%
|
|
March
|
6,120,000
|
-5.5%
|
149,150
|
14%
|
Source: Total
Existing Home Sales,
National Association of Realtors; Foreclosures, Realty Trac.
18.
Sales of both new and existing homes dropped sharply after their peak in the
summer of 2005, the inventory of unsold homes has soared, and the number of
single-family and multifamily housing starts has fallen nearly 30 percent since
the beginning of last year. At the same time, homes are appreciating more
slowly and in some markets prices are even declining. After more than a decade of setting one sales record after
another the housing market entered a period of somewhat lower sales and less
robust price gains in late 2005 and early 2006. Existing-home sales peaked at over 7.2 million units in the
second half of 2005 but have declined steadily through the first half of 2006. The number of foreclosure filings
reported in the U.S. last month more than doubled versus August 2006 and jumped
36 percent from July, a trend that signals many homeowners are increasingly
unable to make timely payments on their mortgages or sell their homes amid a
national housing slump. A total of
243,947 foreclosure filings were reported in August, up 115 percent from
113,300 in the same month a year ago, Irvine, Calif.-based RealtyTrac Inc. said
Tuesday. There were 179,599 foreclosure filings reported in July. August's
total represents the highest number of foreclosure filings reported in a single
month since the company began tracking monthly filings two years ago. The
national foreclosure rate last month was one filing for every 510
households. Expressing heightened
awareness of the need for an Adjustable Rate Mortgage (ARM) Ban HA-10-5-07
RealtyTrac Chief
Executive James J. Saccacio said.
"The jump in foreclosure filings this
month might be the beginning of the next wave of increased foreclosure
activity, as a large number of subprime adjustable rate loans are beginning to
reset now."
Outstanding Mortgage Debt 2007
(in millions of US dollars)
|
Type of holder and property
|
2003
|
2004
|
2005
|
2006
|
|
All holder
|
9,368,870
|
10,672,100
|
12,133,840
|
13,315,070
|
|
One- to four-family residences
|
7,168,933
|
8,237,910
|
9,367,860
|
10,199,330
|
|
Multifamily residences
|
555,697
|
609,099
|
680,072
|
731,039
|
|
Non-farm, nonresidential
|
1,510,655
|
1,683,373
|
1,937,991
|
2,221,260
|
|
Farm
|
133,586
|
141,718
|
147,914
|
163,440
|
Source: Statistical Supplement to the Federal Reserve
Bulletin, April 2007, 1.54
19. The rate of house-price appreciation slowed
dramatically in 2006 after nearly a decade of rapid increases, and prices
appear to have moved roughly sideways in the first half of 2007. The
purchase-only version of the repeat-transactions price index for existing
single-family homes published by the Office of Federal Housing Enterprise
Oversight, which tracks sales prices of the same houses over time, rose at an
annual rate of just 2 percent in the first quarter of 2007 (the latest
available data) and was up just 3 percent over the year ending in the
first quarter, compared with an increase of 10 percent over the preceding
year. For April and May combined, the average price of existing single-family
homes sold--which does not control for changes in the mix of houses sold but is
available on a more timely basis--was about 1 percent below that of a year
earlier. On average, sales of existing
homes over the three months ending in May 2007 were 4-1/2 percent below
their average level in the second half of last year, while sales of new homes
were down 10 percent over that period. The further weakening of housing
demand this year likely reflects, in part, tighter lending standards for
mortgages, and it occurred despite mortgage rates that were relatively low by
longer-run standards. The ongoing slippage in sales has made it more difficult
for homebuilders to make much of a dent in their inventories of new homes for
sale.
20. Delinquency rates on subprime
mortgages with variable interest rates, which account for about 9 percent
of all first-lien mortgages outstanding, continued to climb in the first five
months of 2007 and reached a level more than double the recent low for this
series, which was recorded in mid-2005. The rise in delinquencies has begun to
show through to new foreclosures. In the first quarter of 2007, an estimated
325,000 foreclosure proceedings were initiated, up from an average quarterly
rate of 230,000 over the preceding two years; about half of the foreclosures
this year were on subprime mortgages. The decline in credit quality in the
subprime sector has likely stemmed from a combination of several factors,
including the moderation in overall economic growth and some regional economic
weakness. In addition, a substantial number of subprime borrowers with
variable-rate mortgages have faced an upward adjustment of the rates from their
initial levels. When house prices were rising rapidly and rates on new loans
were lower, many of these borrowers qualified to refinance into another loan
with more-favorable terms. With house prices having decelerated and rates
having moved higher, however, the scope for refinancing has been reduced.
Moreover, investor owners may have been tempted to walk away from properties
with little or no equity. Subprime mortgages originated in late 2005 and 2006
have shown unusually high rates of early delinquency, suggesting that some
lenders unduly loosened underwriting standards during that period.
21. The
mortgage industry has been rocked by a surge in defaults, particularly among
borrowers with subprime loans and adjustable rate mortgages that initially had
attractive "teaser" interest rates but then can adjust upward,
resulting in a payment shock. Many of the loans, some of which adjust in as
little as two years, were issued in 2005 and 2006 during the height of the
housing boom. The number of bank
repossessions jumped to 42,789 in August, compared with 20,116 a year earlier.
In July, there were 26,842 bank repossessions. Nevada, California and Florida
had the highest foreclosure rates in the country last month, the firm said.
Nevada reported one foreclosure filing for every 165 households - more than
three times the national average. The state had 6,197 filings in August, an
increase of 21 percent from July and more than triple the year-ago figure.
California's foreclosure rate was one filing for every 224 households. The
state reported the most foreclosure filings of any single state with 57,875, up
48 percent from July and an increase of more than 300 percent from August 2006.
Florida had one foreclosure filing for every 243 households. In all, the state
reported 33,932 foreclosure filings, up 77 percent from July's total and more
than twice the year-ago total. Georgia, Ohio, Michigan, Arizona, Colorado,
Texas and Indiana rounded out the 10 states with the highest foreclosure
rates. Erpenbeck v. US S.D. US.6th Cir. No. 04-3456&7 (2004)
seems to have been the case that burst the bubble after the Erpenbecks were
sentenced to be trafficked from Ohio to Kentucky and Florida where both
prisoners in need Civil Action for Deprivation of
Rights under 42USC§1983
to save fiscal year 2007 are located.
They finally caught the bank robber, he was promoted to Appellate Judge.
22. After fluctuating in the vicinity of 2 percent from 1999 to 2004,
the saving rate subsequently dropped sharply, and it stood at negative
1-1/4 percent, on average, in April and May of 2007. After exhibiting considerable vigor in late
2006, consumer spending slowed somewhat over the first half of 2007. In August,
commodity prices fell alongside stocks as investors pulled their money out of
riskier assets and placed it in safer securities like Treasurys. But they have
since bounced back. Crude oil prices rose above $81 a barrel. Wholesale prices fell in August by the
largest amount in 10 months, reflecting a plunge in the price of gasoline and
other energy products and the fourth straight month of falling food costs. The
Labor Department said Tuesday that wholesale prices fell by 1.4 percent last
month, the best showing since a 1.5 percent fall last October. It was a much
bigger decline than the 0.3 percent drop that had been expected and was led by
a 6.6 percent plunge in energy costs, the biggest drop in more than four years.
Core inflation, which excludes food and energy, was also well under control,
rising by just 0.2 percent. The good price performance should further ease
concerns about inflation and gives the Federal Reserve the leeway to cut
interest rates to guard against the possibility of a recession.
23. Payroll employment weakened in August. Nonfarm payrolls fell 4,000, and private payrolls rose only 24,000, the first outright
decline in four years. Smoothing through the recent monthly numbers, private payrolls increased an average of about 70,000 per
month over the past three months; this is down from gains near 120,000 per month in the first five months of the year and about
165,000 per month in the second half of 2006. As you know, from 1995 to 2000, productivity in the nonfarm business sector
increased at an average annual rate of 2-1/2 percent, well above the lackluster pace of the preceding twenty-five years. Then,
remarkably, productivity accelerated further, rising at an average of about 3-1/2 percent per year for the first three years of this
decade, since the middle of 2004, however, the growth of labor productivity has slowed, registering an average annual rate of
about 1-1/4 percent. Personal income increased $61.9 billion, or 0.5 percent, and disposable personal income (DPI)increased
$57.3 billion, or 0.6 percent, in July, according to the Bureau of Economic Analysis. As measured by changes in the price index
for personal consumption expenditures (PCE inflation), inflation ran at an annual rate of 4.4 percent over the first five months of
this year. Food and beverage costs rose 3.9% in May from a year earlier. Personal consumption expenditures (PCE) increased
$37.8 billion, or 0.4 percent in July. In June, personal income increased $45.7 billion, or 0.4 percent, DPI increased $36.5 billion,
or 0.4 percent, and PCE increased $16.1 billion, or 0.2 percent, based on revised estimates. The forecasts for core PCE inflation are
2 to 2-1/4 percent for 2007 and 1-3/4 to 2 percent in 2008.
Source: Bankrate.com
24. In response to FRB’s half percent reduction in interest rates from 5.33 to 4.92 percent on 18 September the Dow Jones industrial
average rose 64.71, or 0.48 percent, to 13,468.13. The broader stock indexes also advanced. Standard & Poor's 500 index rose 6.43,
or 0.44 percent, to 1,483.08, while the Nasdaq composite index gained 6.18, or 0.24 percent, to 2,587.84. Bonds fell, with the yield
on the benchmark 10-year Treasury note rising to 4.49 percent from 4.47 percent while the New York Mercantile Exchange to a new
record. The dollar fell against the euro Tuesday and pound but rose versus the yen. Advancing issues outnumbered decliners by nearly
2 to 1 on the New York Stock Exchange, where volume came to 184.2 million shares. In European trading, Britain's FTSE 100 rose
0.99 percent, Germany's DAX index rose 0.61 percent and France's CAC-40 rose 1.56 percent. In Asia, Japan's Nikkei index fell
2.02 percent and Hong Kong's Hang Seng Index fell 0.09 percent. Doing a round of interviews to promote his new book, Greenspan,
who was Fed chairman for 18 1/2 years, said Bernanke was "doing an excellent job" and he doubted that he would have done anything
differently. Greenspan told The Associated Press that the odds of a recession have grown since earlier this year, even though "the
economy is not doing badly at this stage." He put the odds of a recession at greater than one in three. "But best I can judge it is less
than 50 percent" he said. Greenspan's one-in-three prediction earlier this year rocked Wall Street.
Souce: Badiali,
Matt. America to Stop all Oil Imports from the Middle East. Stansberry
& Associates. 2006
25. Oil futures reached record
highs. Of the 2 trillion barrels of proven oil in the Green River Formation
between 800 billion and 1.2 trillion barrels are recoverable. That’s the amount
of oil we can actually get out and use.
It’s estimated that tapping U.S. oil shale would decrease domestic oil
prices by as much as five percent a year.
Light, sweet crude for October delivery fell 2 cents to $80.55 a barrel
on the New York Mercantile Exchange, fluctuating after rising to a record
$81.24 overnight in electronic trading.
October gasoline fell 1.16 cents to $2.0326 a gallon on the Nymex, while
heating oil futures fell 2.08 cents to $2.2079 a gallon. October natural gas
fell 37.5 cents to $6.278 per 1,000 cubic feet. Natural gas prices have been
volatile in recent days as tropical weather threats to critical gas and oil
infrastructure in the Gulf of Mexico have grown or subsided. In London, October
Brent crude fell 42 cents to $76.56 a barrel on the ICE Futures exchange. At
the pump, meanwhile, gas prices slipped 0.1 cent overnight to a national
average of $2.787 a gallon. Retail prices, which typically lag the futures
market, peaked at $3.227 a gallon in late May.
Crude inventories fell by 1.5 million barrels, on average, in the week
ending Sept. 14, while gasoline supplies fell by 1.3 million barrels. Refinery
utilization likely fell by 0.5 percentage point to 90 percent of capacity, and
distillate inventories, which include heating oil and diesel fuel, rose by 1.1
million barrels. Last week, prices rose despite OPEC's decision to boost production
by 500,000 barrels a day this fall. Many analysts and investors saw that
increase as too little. Oil prices drew
additional support from new comments by Organization of Petroleum Exporting
Countries officials that suggested the oil cartel won't increase production to
push oil prices below $80 a barrel, Abdullah bin Hamad Al Attiyah, Qatar's oil
minister said,
"OPEC has done what it can. I see
no need for additional oil supply that the market won't absorb."
26. The U.S. current international trade account deficit expanded
sharply in the latter part of the 1990s and the first half of the present
decade. In 1996, the U.S. deficit was $125 billion, or 1.6 percent of
U.S. gross domestic product (GDP); by 2004, it had grown to $640 billion, or
5.5 percent of GDP. The U.S. current account deficit has widened further
in the past two years. The
international trade deficit rose from $640 billion in 2004 (5.5 percent of GDP)
to $812 billion in 2006 (6.2 percent of GDP), although it fell a bit in the first
quarter of this year, to $770 billion at an annual rate. The U.S. current
account deficit is certainly not sustainable at its current level. Globally, national current account deficits
and surpluses must balance out, as deficit countries can raise funds in
international capital markets only to the extent that other (surplus) countries
provide those funds. In China, rates of both saving and investment rose,
but saving rates rose more, leading to an increase in that country's current
account surplus of about $60 billion.
Outside of developing Asia, oil exporters in the Middle East and the
former Soviet Union were also important contributors to the large increase in
emerging-market current account balances. The combined current accounts
of the two regions increased from a surplus of $20 billion in 1996 to a surplus
of $162 billion in 2004, an increase of about $140 billion.
Current Account Balances (Billions of U.S. dollars)
|
Country or region
|
1996
|
2000
|
2004
|
2005
|
2006
|
|
Industrial
|
31.1
|
-304.7
|
-296.5
|
-502.5
|
-607.3
|
|
United
States
|
-124.8
|
-417.4
|
-640.2
|
-754.8
|
-811.5
|
|
Japan
|
65.7
|
119.6
|
172.1
|
165.7
|
170.4
|
|
|
|
Euro
area
|
77.3
|
-37.0
|
115.0
|
22.2
|
-11.1
|
|
France
|
23.4
|
22.3
|
10.5
|
-19.5
|
-28.3
|
|
Germany
|
-14.0
|
-32.6
|
118.0
|
128.4
|
146.4
|
|
Italy
|
36.8
|
-6.2
|
-15.5
|
-28.4
|
-41.6
|
|
Spain
|
-1.4
|
-23.1
|
-54.9
|
-83.0
|
-108.0
|
|
|
|
Other
|
12.9
|
30.0
|
56.6
|
64.4
|
45.0
|
|
Australia
|
-15.4
|
-14.9
|
-38.5
|
-41.2
|
-40.9
|
|
Canada
|
3.4
|
19.7
|
21.3
|
26.3
|
21.5
|
|
Switzerland
|
22.0
|
30.7
|
50.4
|
61.4
|
69.8
|
|
United
Kingdom
|
-10.5
|
-37.6
|
-35.4
|
-53.7
|
-88.3
|
|
|
|
Memo:
Industrial excl.
United States
|
155.9
|
112.7
|
343.7
|
252.3
|
204.2
|
|
|
|
Developing
|
-82.8
|
124.7
|
296.5
|
507.9
|
643.2
|
|
Asia
|
-40.2
|
77.0
|
172.4
|
245.1
|
352.1
|
|
China
|
7.2
|
20.5
|
68.7
|
160.8
|
249.9
|
|
Hong
Kong
|
-4.0
|
7.0
|
15.7
|
20.3
|
20.6
|
|
Korea
|
-23.1
|
12.3
|
28.2
|
15.0
|
6.1
|
|
Taiwan
|
10.9
|
8.9
|
18.5
|
16.0
|
24.7
|
|
Thailand
|
-14.4
|
9.3
|
2.8
|
-7.9
|
3.2
|
|
|
|
Latin America
|
-39.1
|
-48.1
|
20.4
|
34.6
|
48.7
|
|
Argentina
|
-6.8
|
-9.0
|
3.2
|
3.5
|
5.2
|
|
Brazil
|
-23.5
|
-24.2
|
11.7
|
14.2
|
13.6
|
|
Mexico
|
-2.5
|
-18.7
|
-6.7
|
-4.9
|
-1.5
|
|
|
|
Middle
East
|
15.1
|
72.1
|
99.2
|
189.0
|
212.4
|
|
Africa
|
-5.2
|
7.2
|
0.6
|
14.6
|
19.9
|
|
Eastern
Europe
|
-18.5
|
-31.8
|
-58.6
|
-63.2
|
-88.9
|
|
Former
Soviet Union
|
5.2
|
48.3
|
62.6
|
87.7
|
99.0
|
|
|
|
Memo:
Developing Asia
excl. China
|
-47.4
|
56.5
|
103.7
|
84.3
|
102.2
|
|
|
|
Statistical discrepancy
|
-51.6
|
-180.0
|
0.0
|
5.4
|
35.9
|
27. Real exports picked up in the second quarter,
increasing 7.6 percent after increasing 1.1 percent. Exports of goods
accelerated and contributed 5.10 percentage points to growth in real exports of
goods and services. The acceleration reflected upturns in industrial supplies
and materials and in nonautomotive capital goods and accelerations in
automotive vehicles, engines, and parts and in foods, feeds, and beverages. In
contrast, “other” exports turned down, and nonautomotive consumer goods slowed.
Exports of services accelerated, mainly reflecting accelerations in other
private services and in travel services. Passenger fares turned up. Real imports
turned down, decreasing 3.2 percent after increasing 3.9 percent. Imports of
goods turned down, mainly reflecting downturns in petroleum and products, in
nonautomotive consumer goods, and in “other” imports. Nonautomotive capital goods
decelerated, largely because of a downturn in imports of computers,
peripherals, and parts. In contrast, imports of industrial supplies and
materials turned up. Imports of services turned down, primarily reflecting a
larger decrease in travel services and downturns in direct defense expenditures
and in passenger fares.
28.
The U.S. trade deficit declined slightly in July as record exports of farm
goods, autos and other products offset a big jump in foreign oil prices. The
deficit with China hit the second-highest level ever, reflecting strong demand
for Chinese-made goods despite a string of high-profile recalls. The Commerce
Department that the trade deficit edged down 0.3 percent in July to $59.2
billion (euro42.91 billion), compared with $59.4 billion (euro43.06 billion)
the month before. So far this year, the
deficit is running at an annual rate of $711 billion (euro515.4 billion), down
from $758.5 billion (euro549.84 billion) in 2006. Economists believe the trade
balance will finally shrink this year after setting five consecutive records as
American exporters benefit from strong economic growth in many countries
overseas and a weaker dollar against many currencies. That makes U.S. products
cheaper on foreign markets and imports more expensive for American consumers.
29. After nearly half a year of recalls from China, more
Americans are left to wonder how and where they can find products made and
grown in the USA. Retailers must make
an effort to sell American products to American consumers. With the devaluation and appreciation of the
Euro and Chinese yuan American made goods should be cheaper and easier to sell
in both domestic and foreign markets.
The USA should appreciate Latin American currencies, particularly the
Mexican peso. The USA must care for
their labor and redress the housing market with a decisive ARM Ban. In 2007 the
USA managed to beat the trillion dollar account deficit, defined as the sum of
the budget and international trade deficits.
Since 2004 the account deficit has been over a trillion dollars. In 2004 it was –$1077 billion, in 2005
–$1183 billion, in 2006 the trade deficit began to decline at the end of the
year to –$1007 billion, this 2007 it is down to an estimated –$868
billion. The trade deficit has
declined to a lucky -$711 billion and the budget deficit is estimated between
-$150 and -$200 billion wherefore the account deficit is between -$861 and
-$911 billion. The US became aware of
the trillion dollar account deficit in 2006, although for all their complaints,
neither the Fed or ECOSOC have done the math, and resolved to Buy American
Goods HA-1-12-06, succeeding in bringing the account
deficit below one trillion dollars. This is sustainable development.
Balancing
the Trillion Dollar Account Deficit in billions 2000 – 2010 with HA 2007-2010
|
Table 1-1
|
Int’l
|
Def
|
OASI
|
Rev
|
Exp
|
Fed Sav
|
Int. Trade
|
Acct Def
|
Debt
|
GDP
|
|
2000
|
12
|
294.50
|
411.68
|
2,025
|
1,788
|
87
|
-452
|
-365
|
5,628
|
9,719
|
|
2001
|
14
|
305.50
|
434.06
|
1,991
|
1,860
|
-33
|
-427
|
-460
|
5,770
|
10,022
|
|
2002
|
15
|
349.56
|
440.54
|
1,853
|
2,011
|
-317
|
-483
|
-800
|
6,198
|
10,339
|
|
2003
|
35
|
388.87
|
447.81
|
1,782
|
2,157
|
-375
|
-547
|
-922
|
6,780
|
10,828
|
|
2004
|
15
|
437.12
|
457.12
|
1,880
|
2,292
|
-412
|
-665
|
-1077
|
7,355
|
11,552
|
|
2005
|
17
|
444.07
|
479.89
|
2,052
|
2,479
|
-400
|
-783
|
-1183
|
8,058
|
12,227
|
|
2006
|
25
|
470
|
507.09
|
2,407
|
2,655
|
-248
|
-759
|
-1007
|
8,451
|
13,065
|
|
2007
|
30
|
463
|
537.85
|
2,577
|
2,771
|
-158
|
-711
|
-868
|
8,899
|
13,721
|
|
2008
|
35
|
485.2
|
568.09
|
2,771
|
2,925
|
-155
|
|
|
9,364
|
14,401
|
|
2009
|
40
|
505.3
|
599.95
|
2,855
|
3,071
|
-215
|
|
|
9,905
|
15,120
|
|
2010
|
50
|
515.3
|
635.31
|
2,950
|
3,071
|
-255
|
|
|
10,501
|
15,881
|
|
HA
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
50
|
450
|
422.6
|
2,577
|
2,550
|
27
|
-711
|
-679
|
8,890
|
13,721
|
|
2008
|
65
|
400
|
493.5
|
2,771
|
2,663
|
108
|
-700
|
-562
|
8,700
|
14,401
|
|
2009
|
75
|
375
|
511.5
|
2,855
|
2,710
|
145
|
-625
|
-445
|
8,650
|
15,120
|
|
2010
|
90
|
390
|
531.7
|
2,950
|
2,825
|
125
|
-500
|
-335
|
8,500
|
15,881
|
Source: CBO, BEA and HA
30. The US has succeeded in bringing the
account deficit below one trillion dollars but the budget and international
trade continue present a significant challenge to economists and
lawmakers. The US must continue to make
progress in import substitution and government budgeting. Deficits are not acceptable. The President must propose a balanced budget
in the beginning of the year and Congress shall enforce spending limits and
deficit targets. To balance the budget
the military and social security will have to bear the brunt of cut-backs
whereas they are the accounts with the largest surplus. Social security will solvent until 2017 when
taxes would begin to rise and largely transparent but uncooperative and must be held to a pay as you go strategy
and obligated to return up to half of their un-administrated profits. Medicare needs to improve their oversight of
unnecessary and excessive treatment and restrain the annual inflation of health
care costs to no more than 3% to earn a raise in the tax rate from 2.9 to
3.0%. The military needs the fiscal
discipline imposed by the goal of $400 billion annual spending to continue
making progress and must return surplus funds in excess of 25% reserve to the
treasury. The HA budget is balanced and
presides over the end of year negotiations of a Congress that is victorious
against the trillion deficit. The
international trade balance is reliant upon liberty from injustice, persecution
and discrimination against US nationals all we need to do is love our fellow
Americans and the fruits of their labor and balance will be restored.
Bibliography
