This post was published at The Young Turks
Bitcoin has soared this year by more than ten-fold, defying all of the Wall Street veterans who have compared it to the Tulip Bubble and/or a Ponzi scheme. That doesn’t mean that Bitcoin is a legitimate investment; it just means that bubbles have no set expiration date.
The Nobel laureate economist, Joseph Stiglitz of Columbia University, appeared on Bloomberg television yesterday and had this to say about Bitcoin:
‘One of the main functions of government is to create currency. And Bitcoin is successful only because of its potential for circumvention, lack of oversight. So it seems to me it ought to be outlawed. It doesn’t serve any socially useful function.’
Consider the remarks Stiglitz made yesterday to our more detailed assessment along the same lines back in 2014. We wrote:
‘The business writers at Reuters are also dead wrong on Bitcoin being like other currencies whose ‘value depends on people’s confidence in it.’ Let’s take the U. S. dollar. Backing the use of the U. S. dollar as a world currency is the following: a Congress made up of 435 Representatives in the House and 100 Senators in the Senate; 535 people elected from all over the United States who have the power to tax the income of every American receiving wage, dividend, interest or even Social Security income at whatever rate they see fit in order to pay the Nation’s bills and debt obligations to other countries.
This post was published at Wall Street On Parade on November 30, 2017.
But how did things get this bad?
By most measures sun-blessed Spain is an idyllic place to grow old in. Life expectancy is among the highest in the world, and the national pension fund’s payout ratio (pension as percent of final salary) is the second highest in Europe after Greece. But if current trends are any indication, that may soon be about to change.
The country’s Social Security Reserve Fund, which was meant to serve as a nationwide nest egg to guarantee future pension payouts, given Spain’s burgeoning ranks of pensioners, has been bled virtually dry by the government. This started ever so quietly in 2012 when the government began withdrawing cash from the fund. Some of it was used to fill part of the government’s own fiscal gaps while billions more were tapped to cover the Social Security system’s growing deficits. As a result the pension pot has shrunk from over 66 billion in 2011 to just 15 billion in 2016.
To avoid wiping out the fund altogether this year, the Spanish government extended a 10.1 billion interest-free loan to Spain’s social security system, which enabled it to pay out the two extra pension payments due in June and December. That way, only 7-7.5 billion will be tapped from Spain’s public pension nest egg. Emptying the pot altogether this year would have been politically unpalatable, says El Pas. Instead, it will be emptied next year as the social security system racks up yet another massive annual shortfall.
This post was published at Wolf Street on Nov 18, 2017.
With the Republican tax bill looming, we’ve updated this article to include the latest figures and estimates for federal debt and taxes.
Federal debt is defined as “the gross outstanding debt issued by the United States Department of Treasury since 1790” according to It does not include state and local debt, agency debt, nor entitlement programs such as Medicare and Social Security. It does include debt held by the public, debt held in government accounts, and by the Federal Reserve Board. Current federal debt per person is $62,814.
The first chart is a snapshot of federal debt with government forecasts through 2022 with an overlay of tax brackets since the onset of annual federal taxation in 1913.
As the chart clearly illustrates, the tax cuts in the early 1980s coincided with the beginning of an acceleration in real federal debt from a relatively consistent level over the previous three decades.
This post was published at FinancialSense on 11/14/2017.
‘It is not possible to estimate the amount of loss or range of possible loss.’
Equifax reported that revenue ticked up 4% year-over-year in the third quarter to a less-than expected $835 million and that net income plunged 27% to $96 million due to the initial costs related to the most damaging consumer data hack in US history. But it also disclosed in the fine print of its SEC filing just what a legal and financial nightmare it is getting into over what it calls the ‘cybersecurity incident.’
The ‘cybersecurity incident’ occurred in mid-May, was discovered in July, and was first disclosed on September 7. Its dimensions have since expanded. It compromised the personal-data crown jewels, including Social Security numbers, of 145.5 million US consumers, credit card numbers of 209,000 US and Canadian consumers, ‘certain dispute documents with personal identifying information’ for 182,000 US consumers, personal information of 8,000 Canadian consumers, and personal information of at least 690,000 UK consumers.
The initial expenses related to the ‘cybersecurity incident’ were an undramatic $27.3 million. But that’s just the timid beginning.
Then the costs related to the ‘free credit file monitoring and identity theft protection’ will likely range between $56 million and $110 million. And that too is just the beginning.
This post was published at Wolf Street on Nov 10, 2017.
From Peter Dickmeyer:
‘According to Kotlikoff, a long-time activist for fiscal rectitude, the problem stems in large part from the fact that the US government has been spending almost all of Americans’ approximately $795 billion in social security payroll taxes to pay current bills, rather than investing them to fund retirees’ benefits.
The upshot is that on a net basis, the US government has no money to pay all the benefits that have been promised. Politicians know that defaults will occur, they just haven’t figured out how to finesse this.
However even in the best of cases, Kotlikoff is correct on one crucial point: America is unable to meet its obligations as they become due. That is the definition of bankruptcy.
In a sense, it should hardly come as a surprise that politicians are hiding this fact.’
This post was published at Deviant Investor on October 28, 2017.
America’s 2017 fiscal gap will come in near $6 trillion, nine times higher than the $666 billion deficit announced by the US Department of the Treasury week, says Laurence Kotlikoff, an economics professor at Boston University.
‘Our country is broke,’ says Kotlikoff, who estimates total US government debts at more than $200 trillion, when unfunded liabilities are included. ‘We are in worse shape than Russia, China or any developed nation.’
Worse, says Kotlikoff, who has testified before Congress, government officials are well-aware that many of America’s debts and accruing liabilities are being written off the books.
However, for the most part, they are keeping their mouths shut.
A two-tier reporting system
The upshot is a de facto ‘two-tier’ financial reporting system, in which politicians and insiders have access to key data buried in footnotes about unfunded liabilities, which indicate that there are huge problems in the economy.
The public, on the other hand, in slews of Presidential and Congressional Speeches and publications, is led to believe that while things are tough, overall everything is OK.
According to Kotlikoff, a long-time activist for fiscal rectitude, the problem stems in large part from the fact that the US government has been spending almost all of Americans’ approximately $795 billion in social security payroll taxes to pay current bills, rather than investing them to fund retirees’ benefits.
The upshot is that on a net basis, the US government has no money to pay all the benefits that have been promised. Politicians know that defaults will occur, they just haven’t figured out how to finesse this.
This post was published at GoldSeek on 24 October 2017.
One year ago, the CBO forecasted that the Fiscal 2017 US deficit (for the year ended September 30), would be in the mid-$500 billion range. It was not meant to be, however, and on Friday the Treasury reported that with outlays of $341 billion in the last month of the fiscal year, offset by $349 billion in receipts, the full year deficit grew to a nice, round and very memorable $666 billion in fiscal 2017, up $80 billion or 14% from fiscal 2016. The government ran an $8 billion surplus in September, much smaller than the $33 billion surplus in September 2016. Receipts fell 2% while outlays grew 5% last month compared with the same period a year earlier.
For the full year, federal tax receipts reached a record high $3.315 trillion, thanks to slightly faster growth, according to a Treasury official quoted by the WSJ. But government outlays also hit a record high last year at nearly $4 trillion ($3.981 trillion to be precise), 3% higher than they were in the previous fiscal year, thanks to increased spending on Social Security, Medicare and Medicaid, as well as higher interest payments on the public debt. And that’s with interest rates that were near all time lows. We can’t wait until the $20+ trillion in Federal debt starts really hitting the bottom budget line as the Fed starts pushing rates higher.
This post was published at Zero Hedge on Oct 20, 2017.
What else has Equifax not disclosed yet?
The Equifax hack just keeps getting worse. The first revelations were made on September 7, that Equifax had discovered on July 29 that it had been hacked sometime between ‘mid-May through July,’ and that the crown jewels of consumer data, including Social Security numbers, on 143 million US consumers was stolen. The tally has since been raised to 145.5 million consumers. In terms of quantity and sensitivity, it was the worst consumer data hack in US history.
‘In some instances’ driver’s license data were also stolen, the company disclosed at the time. Driver’s license data includes license number, name, address, data of birth, and basic physical features of the person. This is important and valuable data for identity thieves and other fraudsters and fills in some gaps in the other data that had been stolen.
But without telling consumers, Equifax went around and told its customers – mainly banks and credit card companies – that the tally of driver’s license data that had also been stolen, previously minimized with the phrase ‘in some instances,’ amounted to driver’s licences of 10.9 million consumers.
This post was published at Wolf Street by Wolf Richter ‘ Oct 10, 2017.
After the German elections held on the 23rd of September, the euro started a pronounced decline. But why was there such a sharp fall of the common currency?
At the end, the elections result does not seem to bring dramatic changes. Despite its losses, Merkels party, the CDU, remained the strongest force in the parliament. Merkel will continue to be German chancellor. It is true that the AfD (Alternative for Germany) with both a nationalistic and a libertarian wing won a spectacular 12.6% of the votes and made it into the parliament for the first time. Nevertheless, the euro-critical AfD is light years from being part of the government. All other parties ostracize them for supposedly being extremists.
The next German government will likely be formed by a ‘Jamaica’ coalition of CDU, FDP (free democrats) and the Greens, because the up to now governing social democrats (SPD) will abstain from attempts to renew their coalition with Merkel.
So with Merkel remaining chancellor why did the euro take such a large dive in the wake of the election? The answer is related to French Presidents Emmanuel Macrons speech only two days after the German election, in which Macron argued in favor of a new foundation for Europe. Among other proposals, Macron called for a European financial transaction tax and for the harmonization of social security and corporate taxes within the European Union. His statist proposals also include a common budget for the 19 Eurozone member as well as a Eurozone finance ministry and eventually some sort of Europe-wide taxation.
This post was published at Ludwig von Mises Institute on Oct 3, 2017.
Their doom-and-gloom scenario: Consumers suddenly becoming prudent. ‘Let’s face it, 143 million frauds won’t be perpetrated right away; it will take some time to filter through,’ Steve Bowman, chief credit and risk officer at GM Financial, the auto-lending subsidiary of General Motors, told Reuters.
He was talking about the consequences of the Equifax hack during which the most crucial personal data, including Social Security numbers, of 143 million American consumers along with equivalent data of Canadian and British consumers, had been stolen. These consumers have all at once become very vulnerable to all kinds of fraud, including identity theft – where a fraudster borrows money in their name.
The day Equifax disclosed the hack, I urged affected consumers to put a credit freeze on their credit data at the three major credit bureaus – Equifax, TransUnion, and Experian – to protect themselves against these frauds. Soon, the largest media outlets and state attorneys general urged consumers to do the same thing. Financial advisors are recommending it. Even Wells Fargo jumped on the credit freeze bandwagon.
As a result, consumers have flooded the websites of the three credit bureaus to request credit freezes in such numbers that the sites slowed down, timed out, or went down entirely for periods of time. This credit freeze frenzy is scaring the credit industry – not just the credit bureaus, but also lenders and companies that rely on easy credit to sell their wares, such as automakers and department stores with instant credit cards.
This post was published at Wolf Street on Sep 30, 2017.
And the hits just keep coming for Equifax, the once-trusted credit-monitoring firm that has been embroiled in one of the biggest corporate public-relations disasters in recent memory since disclosing that hackers had penetrated its cyber security defenses and absconded with sensitive personal and financial data belonging to 143 million Americans. Because of the types of data that were stolen, including drivers’ license, social security and credit-card numbers, experts have described the hack as possibly the most damaging corporate hack yet.
As if this weren’t enough to permanently sully the firm’s reputation (amid cries of ‘you had one job!’) – the staggering irony of a credit monitoring firm inadvertently divulging the sensitive information that it was supposed to safeguard hasn’t been lost on consumers) a series of subsequent disclosures have portrayed the firm’s executives as bungling, at best, and nefarious, at worst.
In the nearly two weeks since the story broke…
This post was published at Zero Hedge on Sep 21, 2017.
As Hurricanes Harvey and Irma wreaked their havoc over the past couple of weeks, several interconnected questions popped up, the answers to which make us look, to put it bluntly, like idiots.
Why, for instance, are there suddenly so many Cat 4 and 5 hurricanes? Is this due to man-made climate change and is this summer therefore our new normal? The answer: Maybe, but that misses the point. There have always been huge storms (like the one that wiped Galveston, TX off the map in 1900, long before global warming was a thing), and barring another ice age there always will be. So the US east coast will remain one of Mother Nature’s favorite targets.
A second (and vastly more pertinent) question is why we’ve been encouraging millions of people to move into this bulls-eye in recent decades. Since 2000, Houston and surrounding Harris County have added 1.2 million people. Since 1980 Florida has added 10 million people – most of them in the coastal corridor from Miami to Fort Lauderdale.
Seems a little unwise, doesn’t it, to put tens of millions of people and millions of houses and cars where they’re guaranteed to be damaged or destroyed by inevitable future storms. But it’s not an accident. Government programs actively encourage this migration by picking up part or all of the tab for homes that are flooded by storms. The result: A massive and growing liability for future damage on top of all the other massive and growing liabilities for Medicare, Social Security, underfunded state and local pensions, etc. From last week’s Wall Street Journal:
One House, 22 Floods: Repeated Claims Drain Federal Insurance Program
Brian Harmon had just finished spending over $300,000 to fix his home in Kingwood, Texas, when Hurricane Harvey sent floodwaters ‘completely over the roof.’
This post was published at DollarCollapse on SEPTEMBER 19, 2017.
No-one Cares… ‘No one really cares about the U. S. federal debt,’ remarked a colleague and Economic Prism reader earlier in the week. ‘You keep writing about it as if anyone gives a lick.’
We could tell he was just warming up. So, we settled back into our chair and made ourselves comfortable.
‘The voters certainly don’t care about the federal debt,’ he continued. ‘They keep electing the same spendthrifts to office. And the politicians know the voters don’t care. They also know that making more and more promises is the formula for getting reelected.
‘Deep down, the aging masses know they need massive amounts of government debt to pay their social security, medicare, and disability checks. On top of that, many of the so-called gainfully employed are really on corporate welfare; they hang their hats on government contracts to fund their paychecks.
‘You know as well I do how this crazy debt based fiat money system works. The debt must perpetually increase or the whole financial system breaks down. The best we can hope for is that the ongoing currency debasement merely leads to a subtle erosion of living standards. That’s the best-case scenario.
‘But, again, no one except maybe a handful of your readers’ gives a rip about the federal debt. Plus, if you’re gonna keep writing about it you need to use better terminology. The federal debt has grown at such a rapid rate that standard dollar units no longer capture what’s going on. The debt numbers are so large it is difficult to distinguish between hundreds of billions and tens of trillions of dollars.
This post was published at Acting-Man on September 19, 2017.
Talk about a nightmare. It is being reported that criminals were able to hack into Equifax and make off with the credit information of 143 million Americans. We are talking about names, Social Security numbers, dates of birth, home addresses and even driver’s license numbers. If this data breach was an earthquake, we would be talking about a magnitude-10.0 on the identity theft scale. We have never seen anything like this before, and to say that this will be ‘disastrous’ for the credit industry would be a massive understatement.
What really disturbed me about this story is that this hack reportedly occurred between ‘mid-May and July of this year’…
Credit monitoring company Equifax has been hit by a high-tech heist that exposed the Social Security numbers and other sensitive information about 143 million Americans. Now the unwitting victims have to worry about the threat of having their identities stolen.
The Atlanta-based company, one of three major U. S. credit bureaus, said Thursday that ‘criminals’ exploited a U. S. website application to access files between mid-May and July of this year.
So why didn’t we learn about this until September?
This post was published at The Economic Collapse Blog on September 17th, 2017.
This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Recent hurricanes Harvey and Irman have caused massive destruction in Texas and Florida, respectively. And then we have Jose which may strike New York City. [Check Ventusky for the forecast map].
But none of these hurricanes have the potential to impact as many people as Hurricane Equifax, the massive breach of 143 million Americans’ personal information (Social Security numbers, credit card numbers, birthdates and other information).
According to the Washington Post, ‘The tale began on July 29, when the company’s security team detected suspicious network traffic associated with the software that ran its U. S. online-dispute portal. After blocking that traffic, the company saw additional ‘suspicious activity’ and took the portal’s software offline.
At this point, Equifax’s retelling grows cloudy. The company said an internal review then ‘discovered’ a flaw in an open-source software package called Apache Struts used in the dispute portal, which it then fixed with a software patch. It subsequently brought the portal back online.
This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 17, 2017.
Third largest US bank reaches out to its customers. A mass credit freeze would have a huge impact.
No one knows yet how the Equifax hack – during which Social Security numbers, birth dates, addresses and, ‘in some instances,’ driver’s license numbers of 143 million consumers had been stolen – will wash out for Equifax, or for the other credit bureaus.
But it increasingly looks like a far bigger and broader mess not only for the credit bureaus but for the overall consumer-based US economy whose grease is easy and often instant consumer credit.
People are trying to put a credit freeze on their data at the three major credit bureaus to protect themselves from identity theft. Victims of identity theft get caught in years of a Kafkaesque nightmare where debt collectors hound them for debts incurred in their name by someone else.
A credit freeze is the best protection against identity theft. It has now been recommended by State Attorneys General, the US Government, the biggest mainstream media outlets, and numerous other outfits including from the first moment on – the evening of September 7 when the hack was disclosed – my humble site. In over 400 comments on my three articles (here, here, and here), readers have shared tips and frustrating experiences trying to deal with overloaded websites that crashed, sent people in wrong directions, or failed in other ways to produce results.
This post was published at Wolf Street on Sep 17, 2017.
They’re terrified a mass credit freeze will crush revenues.
Shares of Equifax dropped another 4% today, including after-hours, to $92.70. They’re now down 35%, or $50, from the happier era that ended at 5pm EST on September 7, with the confession that it had found out six weeks earlier that the most crucial personal data – ‘primarily names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers’ – of 143 million consumers had been stolen.
This was promptly followed by chaos and egregious missteps, such as trying to profit from its victims. So far, at 120.4 million shares outstanding as of June 30, the six trading days have cost investors $6 billion. No one cares about consumers. They’re just the product. But $6 billion matter.
Now heads are rolling. Oh no, not CEO Richard Smith. He is not leaving the company to spend more time with his family. Instead, Equifax announcedFriday evening that it sacked two lower level executives. I mean, not sacked. Chief information officer, David Webb, and chief security officer, Susan Mauldin, ‘are retiring,’ it said, ‘effective immediately.’
And they had it coming.
This post was published at Wolf Street by Wolf Richter ‘ Sep 15, 2017.