The US Census has published its report Income, Poverty, and Health Insurance Coverage in the United States: 2010.
Here is the historical chart:
Interesting highlights from the report:
- The official poverty rate in 2010 was 15.1 percent—up from 14.3 percent in 2009. This was the third consecutive annual increase in the poverty rate. Since 2007, the poverty rate has increased by 2.6 percentage points, from 12.5 percent
to 15.1 percent
- In 2010, 46.2 million people were in poverty, up from 43.6 million in 2009—the fourth consecutive annual increase in the number of people in poverty.
- The poverty rate in 2010 (15.1 percent) was the highest poverty rate since 1993 but was 7.3 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available.
I also found it interesting that by age group the poverty rate is lowest (9%) for people 65 years and older, the only age range for whom the poverty rate has fallen almost consistently since 1959:
For more historical and economical context see US Poverty Rate – How the Great Society Programs Reversed its Decline
Very nice discussion:
Words and language can hold a lot of power. If your task is to destroy the people’s desire for peace and individual liberty, and if you can convince them that the US system over the past century is what free marketers mean when they say ‘capitalism‘, then your job is pretty much done.
But today’s shifts in public opinion seem very clear to me, just from comments I gather here and there: Fewer and fewer people are buying this story. More and more are beginning to try and think for themselves, simply out of plain necessity.
I have been harping on this for about 5 years now: The key concept that public discourse is still missing, the one word that explains all of today’s economic and political troubles is Interventionism.
Is the Euro Worth Saving?
Regardless of what you or I may think, that question is where European voters come in. From that standpoint it does not look pretty.
German Chancellor Merkel, Spanish Prime Minister Zapatero, Italian Prime Minister Berlusconi, and Greek President George Papandreou will all be gone after the next set of elections.
French President Nicholas Sarkozy may bite the dust as well, and if he does it may be to a vehemently anti-Euro candidate.
All it takes is one government to say “to hell with this” and the whole mess unravels.
The current set of politicians all want to “save the Euro”. But what did the Euro buy Greece, Ireland, Spain, or Portugal except misery?
Even German and Finland voters wonder what it bought them.
Eurozone Breakup Inevitable
Merkel’s half-baked proposal raises more questions than answers. The market (and voters) will not possibly wait for details of her proposal to get hashed out. If this is the best Merkel can come up with, a Eurozone breakup is inevitable.
I think that a complete political breakdown of the European Union would be the best thing that could happen to Europeans. Ditch all European political institutions, but maintain the free mobility of persons, capital, and goods across countries, really the only positive aspect of the Eurozone project. Oh, and you want one unified currency that actually works? I know I’ve been saying this over and over again, but … how about a gold standard? Anyone?
This pretty much sums it all up …
Another example of the staggering degree to which western governments are literally dumping armaments into countries that simply can’t afford them:
In an attempt to hide the Afghan government’s military dependency on the United States, the US is sending $2.7 billion of military equipment to the beleaguered, corrupt Afghan government. But neither government can afford it.
Preceding the NATO pull out in 2014, the shipments will include 22,000 US vehicles, 20 Russian helicopters, 120mm artillery guns, and transport aircraft from Italy. It will not include tanks, fighter jets, or Black Hawk helicopters, despite Afghan requests.
Estimates of NATO expenditures on Afghanistan’s security infrastructure are expected to be $11 billion by 2014, and $10 billion for military hardware. It takes approximately $6 billion a year – more than three times the Kabul government’s annual income – to sustain these assets. And the US is unprepared to cover that cost.
The US is finding itself pressured in its attempt to cut costs due to budgetary deficits, while also beefing up Afghan security forces to at least feign some measure of ready independence. A recent congressional report uncovering tens of billions of dollars of waste in Afghanistan warned the losses could continue to accrue if the Afghan is unable or unwilling to sustain US-funded projects after withdrawal.
I’ve said it before. War is a racket, always and everywhere.
About 2.5 years ago I wrote:
The 3% ceiling won’t matter anymore from hereon. Consider the European stability treaty dead. One member state after another will violate the requirements. The fact that a bailout of some Euro states by others is discussed, just shows how torn this European Union really is, how severe its imbalances are. With discrepancies like these, it is completely unfeasible to maintain a currency union. The Euro will keep taking its beating for it.
The breakup of that currency union is now approaching at an ever accelerating pace.
Yesterday Mish issued a nice little note to Trichet:
Hello Mr. Trichet.
The odds 17 sovereign states “get their act together” quickly regarding a fiscal union is zero.
There is no agreement on Eurobonds even from Germany and France, so how are 17 countries supposed to quickly agree on that?
Finland and Austria want collateral, and pray tell why shouldn’t they? Is every country supposed to do exactly what you want?
Greece is going to default and you and your big ego made matters worse by refusing to accept that fact, so much so that you and the ECB failed to plan for it.
You want 17 countries to get their act together. How about one central bank, the ECB, led by you, get its act together and admit your policies have failed? How about the ECB coming up with a legitimate plan for dealing with it this crisis instead of illegally making demands on sovereign nations?
The market gave you fair warning on Greece and you refused to see it. Now the market has said “time’s up”.
Face the facts Mr. Trichet “The Euro has failed.”
Mr. Trichet, you better come up with a plan to deal with the aftermath, because odds of a Eurozone breakup are large and growing.
… actually, in my opinion the best thing that could happen to the Eurozone would be to for it to break up, and take those bureaucratic, corrupt, and destructive leviathans of the European Parliament, the Commission, the Council, and the ECB right with it and thus off the backs of Europe’s sovereign nations once and for all.
The US government has issued an ultimatum to Swiss banks over tax evaders:
US authorities have given Switzerland time until Tuesday to transmit data from tax evaders in the United States who have stashed assets away in Swiss banks, the SonntagsZeitung reported on Sunday.
The United States has asked for detailed information on US nationals who have hidden their money in Switzerland, the paper said, basing its report on a three-page letter from the US deputy attorney general James Cole, dated August 31, addressed to the Swiss authorities.
The letter concerned Switzerland’s second biggest bank, Credit Suisse, as well as around another 10 banks, notably Julius Baer, Wegelin, and the cantonal banks of Zurich and Basel, the Sunday paper said.
US authorities want all the data concerning private customers and US foundations which have deposited at least $50,000 (around 35,000 euros) in Switzerland between the period of 2002 and July 2010.
This latest request is not the first by US officials. Switzerland’s biggest bank UBS was forced to disclose the names of 4,450 US clients for whom it had offered to conceal funds from the eyes of the US tax inspectors.
The bank paid a fine of 780 million dollars to avoid losing its banking licence in the United States.
According to an anonymous banker quoted by SonntagsZeitung, Swiss banks risk a fine of around two billion Swiss francs (USD 2.5 billion) to settle this latest tax evasion affair.
… when you’re in a cash crunch, you’re going to turn over every rock for money. One could consider this yet another deflation symptom, but that may be a stretch. Just throwing it out there …
During recent months, a lot of people have been talking about solutions/causes/issues related to government spending, taxation, and the public debt.
In following all such debates there are but a few simple historical stats that one should be aware of in my opinion, so as to make an assessment whether or not the proposed solutions to existing problems are actually new and untried solutions, or if they are just a dull repetition of past patterns:
Taxation in the US
Over the past century, government revenue in the US has increased from 7% in 1902 to just over 30% today:
In absolute terms, adjusted for inflation in constant 2005 Dollars, US government revenue has grown from $32.91 billion in 1902 to now around $4,481.27 billion, a 13,516% increase:
The share of income taxes paid by the top 1% income earners has increased from 25% in 1986 to 40% in 2007:
By the way, total income earned by the top 1% was around $1.6 trillion in 2010.
Government Spending in the US
In terms of absolute numbers, adjusted for inflation in constant 2005 dollars, government spending has grown from $12.9 billion in 1900 to now $5848.77 billion.
US government spending on education, for example, has grown from less than 0.01% of GDP in 1900 to now 6.3% of GDP:
US Government Debt
Total government debt in the US has grown from 10% of GDP in 1900 to now 120% of GDP:
Manage your Canadian income taxes with TurboTax from Intuit.
In absolute terms, inflation adjusted in constant 2005 Dollars, the public debt has grown from $43.86 billion to now $16,898 billion:
Here are some theories that I’ve been voicing or working with that seem to be supported by the facts presented above:
- In the long run, raising taxes does not seem to be a valid solution to battle deficits and the ensuing debts as can be evidenced by the correlation between a rising ratio of tax collections to GDP on the one hand, and a virtually permanent and accelerated increase in the absolute inflation adjusted level of the public debt.
- “Taxing the rich” does not seem to be a valid solution in battling deficits and debts as can be evidenced in the fact that from 1986 through 2007 the share of taxes paid by the rich doubled while the absolute inflation adjusted level of the public debt even more than doubled, and the debt to GDP ratio increased from 60% to 80%
- In fact, increasing the tax revenue seems to supply the state with additional collateral to use to borrow against future incomes. This could explain the long term correlation between tax revenue and public debt.
- Raising taxes is not a solution to the problems with government budget deficits, but rather the very admission of failure to attack the problems associated with those deficits.
I have been consistently bullish on US Treasurys.
PIMCO now says that betting against US debt was a mistake:
Showing a more bearish view on the U.S. economy, Gross said PIMCO had initially dumped all of its U.S. debt holdings in March as he expected economic growth to be higher, resulting in inflation down the road.
That decision greatly undermined the performance of PIMCO’s Total Return Fund. As Treasuries prices rallied, the fund lost 0.97 percent in the past four weeks, while the benchmark Barclay’s U.S. Aggregated Bond Index rose 0.23 percent in the same period, according to Lipper data.
So far this year, the fund has returned 3.29 percent, less than the 4.55 percent recorded by the Barclay’s benchmark index.
“When you’re underperforming the index, you go home at night and cry in your beer,” the Financial Times, in its online edition, quoted Gross as saying. “It’s not fun, but who said this business should be fun. We’re too well paid to hang our heads and say boo hoo.”
Gross, who oversees $1.2 trillion at PIMCO, said it was “pretty obvious” he wishes he had more Treasuries in his portfolio right now.
Like I’ve said many times before, I think Treasury yields will stay low for much longer than people expect. Global flight to safety, over indebtedness, credit deflation or rather outright deflation, recessions, depressions … all these are bullish for cash and near-cash assets (of the world’s reserve currency), such as Treasury Bonds/Notes/Bills, and of course the mother of all cash … gold.
PIMCOs announcement above may be a nice contrarian indicator to get out of Treasurys for a little while … but then why would you want to daytrade such an investment … relax :)