Daily Digest 1/20 - How to Fix Social Security, Rising Gas Prices, Brazil Slams Brakes to Curb Inflation
- How To Fix Social Security: A 4-Point Plan That Faces the Brutal Realities
- Socially Responsible Investing: A Small Step Toward a Better World
- Social Security Is in Far Worse Shape Than You Think
- Rising Gas Prices Bring Spending Trade-Offs
- Brazil Slams Brakes To Curb Inflation, Risking Hot Money Tsunami
- Tossing The Consumer Under The Bus
- Spain To Bail Out Cajas, More Billions In Taxpayer-Funded Risk Transfer
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There is no mystery why the system's revenues are collapsing: 9 million jobs have vanished, and millions more have slipped from full-time to part-time or temporary.The Social Security payroll tax (including the Medicare sliver) is 15.3% of payroll. So as total payroll plummets, so does Social Security's revenue. Roughly 8% of all private-sector jobs have vanished for good, despite what various cheerleaders project. Another 8% have slipped to "part-time for economic reasons," and another 15% are self-employed/free-lance/contract workers who have seen their incomes decline by 5%.
The newest expression of SRI is impact investing, an ethics based investment fad that is gaining momentum because of the attention it is receiving from some big name philanthropists. Impact investing is a niche play for now but could become much bigger as interest snowballs. The idea is to play the venture capital angle within so-called positive investing: namely, fund responsible new era corporations rather than placing money into the hands of those who entered the SRI betting pool early.
The annual report of the Social Security Trustees, published in August 2010, forecast that the primary Social Security program, the Old Age and Survivors Insurance Trust Fund (OASI), would not exceed its tax receipts until 2018. Unfortunately, it happened in fiscal 2010, which ended in October. That year's outlays for the OASI fund were about $580 billion, while receipts came to only $540 billion -- a whopping $40 billion shortfall.
Americans are starting to watch their spending more carefully as gasoline prices reach levels not seen since October 2008.Diane Swonk, chief economist at Mesirow Financial, says Thursday's government report on retail sales indicates that consumers are skipping a restaurant meal or a movie because they have to spend more to drive....For every penny the price at the pump increases, it costs consumers overall an additional $4 million, according to Cameron Hanover analyst Peter Beutel. If the price goes up a dime, it means consumers pay $40 million more each day that 10-cent hike is in place.
The inflows have turned the real into Latin America’s "Swiss franc", driving it up 39pc against the dollar and almost as much against China’s semi-fixed yuan over the past two years. Rising rates make it almost impossible to stop the tsunami of capital, though the authorities are defending a line in the sand at 1.67 to the dollar for now by direct purchases of US assets.
Tossing The Consumer Under The Bus (pinecarr)
So while publicly denying the existence or even the possibility of a housing bubble --- the Fed was privately laughing about its imminent and apocalyptic end. Jokes on us. The result of this meltdown is 22% unemployment, 43 million people on Food Stamps, 1 in 5 kids going to bed hungry at night, millions of homeless people resulting from foreclosures, millions of Americans watching as their largest investment (their home) tanks, local governments who rely on property taxes left struggling and a few failed bond auctions away from shutting down or being “bailed out”.
Even with Spain's Cajas, or savings banks, completing the country's most aggressive sector restructuring in history, after nearly 90%, or 39 out of 45 merged or participated in some form of "cold fusion" and benefiting from the financial assistance of the Spanish central bank, there has been precious little written about the actual holdings of this most aggressive lender of mortgage to Spain's 20% unemployed population. Until today: a new report by CreditSights' David Watts indicates that investor worries about the Spanish banking system are very well founded and likely underestimate just how bad the true situation actually is.
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