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Thread: more economic facts that can't be spun ...

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    Banned Melonie's Avatar
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    Default more economic facts that can't be spun ...

    short list ...


    (snip)" ICI reports that the week ended August 11 saw a record 15th weekly outflow from domestic stock mutual funds, this time of $2.1 billion. YTD outflows are now just under $48 billion. Hedge funds are not the only ones who missed the miraculous and completely senseless July stock ramp: retail [ i.e. individual investors - sic ] pulled out $13.1 billion in the same time, and has followed up by redeeming another $4.1 billion in August so far: nothing matters anymore - stocks can go up, they can go down: it is all the same to the one segment of the stock market responsible for the biggest portion of market capitalization. There is no improvement in the trend - retail has no faith in stock valuations, in the SEC, in the possibility that another flash crash won't happen tomorrow"(snip)

    from


    (snip)"A record number of workers made hardship withdrawals from their retirement accounts in the second quarter, Fidelity Investments said Friday. And the number of workers taking loans from their accounts reached a 10-year high, Fidelity says.

    The average age of the workers taking hardship withdrawals is between 35 and 55, their peak earning years."(snip)

    (snip)"The withdrawal and loan trends reflect the financial stress many workers find themselves in as the economy struggles to find sure footing, according to McHugh.

    High unemployment and companies cutting overtime or overall hours have reduced the take-home pay of many workers, she says. "As a result the percentage of individuals initiating hardship distributions is one of the things we're concerned about."

    Fidelity administers 17,000 401(k) retirement plans, with 11 million participants. In the second quarter, some 62,000 workers initiated a hardship withdrawal. That compares with 45,000 in the same period a year ago.

    What's also eye-opening is that 45% of participants who took a hardship withdrawal a year ago took another one this year, McHugh said."(snip)

    (snip)"A key concern is that hardship withdrawals are withdrawals, they are not loans. As a result there can be a significant impact on someone's retirement savings. With a few exceptions, if the worker is younger than 59 1/2, they'll pay a 10% penalty for early withdrawal in addition to taxes."(snip)

    from


    One possible take-away is that a significant number of middle class Americans are now liquidating their investment / retirement assets in order to attempt to maintain their middle class lifestyle in an environment of falling net incomes and rising prices for 'necessities'. Obviously, the future implications are not good !

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    Default Re: more economic facts that can't be spun ...

    and from . For anybody unfamiliar, the Economic Cycle Research Institute is a highly regarded independent research firm to which many US industry leaders look for future economic direction.


    (snip)"The ECRI's micro dead cat bounce is over... or is it? The ECRI Leading Indicator came in at 120.8 W/W, lower from a previous number of 122.4, revised from 122.0. In practical terms, this means that the annualized change is now back to a double dip predictive -10. Which is a deterioration from last week's actual -9.8. Well, not really - the prior number was just revised to -10.2, meaning all those early chants of ECRI improvement were premature (just as we had expected, as this is merely becoming one more in the endless series of downwardly revised series to mitigate the negative data impact). Either way, the weekly chart speaks volumes. And with all input signals into the ECRI once again deteriorating, we expect the second leg down in the ECRI to continue, revised or not. "(snip)

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    Default Re: more economic facts that can't be spun ...

    I have been wondering if the lingering decline is people liquidating their retirement investments. One cannot see millions upon millions upon millions of people thrown out of work for years now, and not think they will start dipping into their retirement funds to keep the lights on and the rent paid. Hell, the government is borrowing into the future all the time - these people are going to be too!

    (This has to happen sooner or later anyhow as the boomers retire and live off of - ahem - "savings.")

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    Default Re: more economic facts that can't be spun ...

    ^^^ so now the boomers A. don't retire because they can't afford to ... meaning fewer new jobs for younger Americans, or B. become totally dependent on Social Security and state social welfare benefits, meaning higher taxes for younger Americans.

    As to these people doing any additional 'borrowing', about the only lender that will approve them is 'themselves' i.e. their own 401k's and IRA's. However, unlike bank loans, failure to pay back one of these loans carries absolutely serious consequences i.e. a 10% penalty plus 33% or whatever federal, state and local income taxes becoming due at the point when repayment doesn't happen. Unlike most banks, the IRS will not hesitate to foreclose on property or freeze assets in order to 'extract' this penalty and additional income tax liability.

    Both of these also share a common long term result ... zero inheritance being passed on to their children !

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    Default Re: more economic facts that can't be spun ...

    WASHINGTON (AP) --

    Figures on government spending and debt (last six digits are eliminated).
    The government's fiscal year runs Oct. 1 through Sept. 30.

    Total public debt subject to limit Aug. 19 13,310,379
    Statutory debt limit 14,294,000
    Total public debt outstanding Aug. 19 13,363,228
    Operating balance Aug. 19 230,177
    Net interest fiscal year 2010 thru July 185,248
    Net interest same period 2009 167,706
    Deficit fiscal year 2010 thru July 1,169,071
    Deficit same period 2009 1,266,963
    Receipts fiscal year 2010 thru July 1,752,541
    Receipts same period 2009 1,739,949
    Outlays fiscal year 2010 thru July 2,921,612
    Outlays same period 2009 3,006,912
    Gold assets in August 11,041

    If you do a little bit of math you'll arrive at the calculation that the amount of 'on the books' US gov't debt now amounts to $44,000 per person ... or something like $85,000 per WORKER given a ~56% labor force 'participation' rate. And even at a 3% interest rate on the US Treasury bonds issued to fund that debt, this still amounts to the first ~$2,500 per year in income tax revenues collected from every single worker being required just to fund interest payments on this US gov't debt, before dollar one can be spent for any other gov't purpose !!!

    Of course, in the real world, some 40-odd percent of American workers don't actually pay income taxes, meaning that the amount of income tax revenues which must be collected from American workers who DO pay income taxes to fund interest payments on gov't debt is more like $4,600 per year !

    Also, these official US gov't debt figures totally do not count 'off the books' US gov't obligations, from Social Security to Fannie / Freddie to gov't / union worker Pension Guarantees etc.

    ~
    Last edited by Melonie; 08-21-2010 at 06:31 AM.

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