Posted on 11/19/2012 6:59:29 AM PST by The Sons of Liberty
U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.
Half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.
Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.
At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms' expansion plans. Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.
Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.
(Excerpt) Read more at online.wsj.com ...
My guess is that the only people who are surprised by all this are those who voted for Obozo and the Obozo administration. If one of my Principles of Econ students couldn’t see this coming, they’d have to retake the course.
It’s not uncertainty that’s a problem. It’s all that we’re pretty sure will happen.
Not only does he inherit another mess, but this one is even worse than the last one.
We are headed into a recession regardless of whether we go off the fiscal cliff or not. The Dems want to go off the fiscal cliff so they can blame the recession on the GOP.
I wanna go off the fiscal cliff because....
the hardest hit will be the lower income workers ( most of who voted for fubo )
and the even lower income workers that did not pay taxes before, are gonna be payin’ em now (most of who voted for fubo)
now it will truly be fair....
let them eat cake
Benghazi-Coward Obama: ” - - - “I don’t think anybody is under any illusion that - - - “
..My Oval Empty Chair is empty again.
...I always run away whenever there is a major problem that Americans expect me to work on.
....My invention of the smoke and mirrors ‘Fiscal Cliff’ was just a gimmick to extract a Bipartisan Cave-In from the RINOs, so that I can keep on spending beyond the means of their ability to generate Federal Income.
.....I really, Really, REALLY enjoy riding around in my private Corporate Jet.
......Running away from problems is the ONLY way that I am able to keep from laughing out loud in public at how much fun I’m having destroying America!
.......This is so EASY!
........Americans are the most gullible people that the World has ever known!
.........Although all folks are not equal today, my Obamanation Communism policies in the next four years will exceed the wildest dreams of me or my Father, whoever he really was.
..........At last! America will FINALLY become a third Country!
_________
LONG LIVE THE TRUE EQUALITY THAT ONLY COMES FROM OBAMANATION COMMUNISM!
Actually, the recession has been over for a while now.
It had turned into a full-fledged depression some time back. Much like the United States in 1936, there were so many people who were not sophisticated enough to realize that further suppression of investment by what were then termed to be “the wealthy” was only to do even greater damage to themselves. As a consequence, the depression was at an even deeper level in 1938 than it was in 1933.
And at the depth of that depression, Social Security was introduced. The promise it offered, that individuals would be able to enjoy their “golden years” without the spectre of poverty, was to be funded by a tax that fell equally on the employer and employee. Only, it ends up that the employee pays ALL the freight on this tax, known as FICA, because it comes out of the amount the employer has set aside for the payment of wages to the individual. Social Security was always a tax program, and existed only to provide additional revenue to the Federal Treasury, as the serious payout from that supposedly “segregated” fund was much lower than the receipts. So naturally, the fund was “borrowed” and put into general revenue.
Except, it has never ever been on any repayment schedule.
And now, as a parallel, the “Patient Protection and Affordable Care Act” is established as a NEW taxation program, only, unlike Social Security, the payout will start much sooner, and the base of the taxable sources will be much more broad than merely wage income. And of course, this revenue will simply go into the general fund, without even a pretense of creating a “segregated” fund.
The playbook never changes. And it always ends the same way, with economic conditions so precarious that nations end up in a worldwide struggle that comes finally to a shooting war.
World War II was a dress rehersal for what is coming. The big players will, willingly or otherwise, include the United States, and very likely the rift between those countries that produce energy, and those who consume it.
Nothing, and nobody, shall be “too big to fail”.
They will blame the Reps if that happens and the reason will be that the Reps would rather the middle class suffer than have the wealthy pay their share. The great unwashed will then take their ire out against the GOP in the 2014 midterms and give the Dems control back over the House.
and this differs from any other day or any other issue how???
time for the voters to reap what they have sown..
let them eat cake
Except, it has never ever been on any repayment schedule.
That is not the way SS works. SS is a pay as you go system, i.e., today's workers pay for the retirement benefits of today's retirees. Whe SS was generating a "surplus," i.e., revenue exceeded benefits paid, the additional revenue was deposited into the General Fund. Treasury issued a non-market, interest bearing T-Bill in the amount of the "surplus" and deposited it into the SSTF.
The SSTF currently contains $2.6 trillion, which is now being used to make up the shortfall between revenue and benefits. SS has been running in the red since 2012. The General Fund must redeem these T-bills and since 42 cents of every federal dollar spent is borrowed, we must borrow 42% of the money to redeem the SSTF T-Bills. The SSTF is included in our $16 trillion national debt and is held under "Intragovernmental Holdings." So the reality is that we owe that money, albeit to ourselves, but the SSTF still represents an unfunded liability.
SS is going broke because it is actuarily unsound, not because of the SSTF and what happened to the "surplus." In 1950 there were 16 workers for every retire; today it is 3.3; and by 2030 there will be just two. And benefits are not linked to revenue. In essence, SS is a Ponzi scheme. Current retirees are getting far more out of the system than what they put in. Future generations will not.
If we go the way of Greece, one can easily imagine, if history is any guide, the rise of a man on horseback, i.e., a strong central authority, will emerge to restore civil order. The federal government will become larger and stronger.
and this is the first step..
fubo wanted tax increases, well, he got ‘em..
pubs wanted spending cuts, well, they got ‘em..
fubo will frame the argument that the mean ol’ pubs are causing a tax increase on the poor...
pubs will frame the argument that the defense industry is taking the brunt of the cuts...
same old, same old..
let them eat cake
I don’t care whom they blame,
as long as they finally experience the consequences of their choices.
Obama bin Lyin’ meet Atlas be Shruggin’
No, it does not.
There is no "trust fund." There is no magic Social Security Vault surrounded by unicorns.
The Social Security "trust fund" contains nothing more than IOUs that have no value beyond a promise to impose higher taxes on present and future workers - period. Social Security, every dime of it, is funded by current taxes on working people and debt.
I agree that if Social Security really had been fenced off from looting (before Johnson and the Democrats got their hands on it), and if SS Disability, SS to Illegals, etc - had been kept out, there would be Trillions in an actual fund today.
But, there isn't - and that is the reality.
We both know that sequestration will never happen. The politicians created the “crisis” and will now be credited for solving it. Neither side wants to cut spending, especially on their special interests. There will be a deal and it will effectively kick the can down the road. Much greater pain to follow.
I think they will keep kicking the can down the road until the whole system breaks down. I think the tipping point will be the first failed Fed auction where the world stops buying our exponentially increasing amount of debt.
The US is borrowing money just to make interest payments. When the amount we have to pay in interest starts going up because our debt is becoming riskier and riskier, the SHTF.
The Social Security "trust fund" contains nothing more than IOUs that have no value beyond a promise to impose higher taxes on present and future workers - period. Social Security, every dime of it, is funded by current taxes on working people and debt.
You are the one creating your own reality. Yes, there is a SSTF. Yes, it contains $2.6 trillion of non-market, interest bearing T-Bills. Yes, it represents the good faith and credit of the USG to redeem them in much the same way that we owe money to the Chinese who hold our T-bills or US Savings Bonds.
There has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government. The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."
Most likely this question comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no effect on the actual operations of the Trust Fund itself.
"Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government. "
I agree that if Social Security really had been fenced off from looting (before Johnson and the Democrats got their hands on it), and if SS Disability, SS to Illegals, etc - had been kept out, there would be Trillions in an actual fund today.
Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.
You are missing the point. Even if the SSTF contained market T-Bills, real transferable assets as distinct from the non-market T-bills, SS would still go broke. It almost did in 1982 when Reagan and Tip O'Neill struck a Faustian bargain to keep the system going. The SSTF was exhausted.
The assets of the larger trust fund (OASI), from which retirement benefits are paid, were nearly depleted in 1982. No beneficiary was shortchanged because the Congress enacted temporary emergency legislation that permitted borrowing from other Federal trust funds and then later enacted legislation to strengthen OASI Trust Fund financing. The borrowed amounts were repaid with interest within 4 years.
We have raised SS taxes more than 40 times since its inception. The payroll cap goes up almost every year. Still, it won't be enough because the baby boomer generation is retiring and people are living longer. In 1983 they raised the taxes and reduced benefits including raising the retirement age for full benefits from 65 to 67. SS is now permanently in the red. The 2% payroll tax holiday for the past two years has reduced revenue into the system requiring more T-bills to be redeemed to make up the shortfall.
Source: CBO "Combined OASDI Trust Funds; January 2011 Baseline" 26 Jan 2011. Note: See "Primary Surplus" line (which is negative, indicating a deficit)
Matters are even worse than this chart shows. In December, Congress passed a Social Security tax reduction. Workers are temporarily paying 2 percentage points less, from 6.2 percent to 4.2 percent, in Social Security payroll taxes this calendar year. Since the government is making up the shortfall out of general revenues, CBO’s deficit projections for the trust funds do not include that. But CBO’s figures predict that the "payroll tax holiday" will cost the government’s general fund $85 billion in this fiscal year and $29 billion in fiscal year 2012 (which starts Oct.1, 2011.) Since every dollar of that will have to be borrowed, the combined effect of the " tax holiday" and the annual deficits will amount to a $130 billion addition to the federal deficit in the current fiscal year, and $59 billion in fiscal 2012.
Social Security has passed a tipping point. For years it generated more revenue than it consumed, holding down the overall federal deficit and allowing Congress to spend more freely for other things. But those days are gone. Rather than lessening the federal deficit, Social Security has at last — as long predicted — become a drag on the government’s overall finances.
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