It’s Not Just Jobs that Are Needed
While I write mostly about the need for jobs and long term un and underemployment, there are always a number of related issues bubbling just below the surface for me. The past couple of days, I’ve seen a few articles that are seemingly unrelated but are probably more closely related than most folks realize.
The first article was from today’s (Friday 1/28/11) NY Times on Standard & Poors downgrading Japan’s Long Term Sovereign debt.
S.& P. lowered its sovereign credit rating for Japan to AA- from AA. That is three levels below the highest possible rating, and S.& P.’s first downgrade of Japanese government debt since 2002. With the lower grade, Japan’s debt rating is now on par with China’s, which last year overtook Japan as the world’s second-largest economy, after the United States.
S.& P.’s move came just weeks after both it and its rival ratings agency, Moody’s, cautioned that they might take a more negative stance on the United States. It highlighted just how deeply indebted many of the world’s developed economies remain — despite concerted efforts on the parts of governments to improve their balance sheets.
Yesterday was this from Reuters on Moody’s considering downgrading the ratings for states:
(Reuters) – Some U.S. states face so much pressure to fund pensions for public employees that it could hurt their credit ratings, Moody’s Investors Service said on Thursday.
As concerns grow over the financial health of many states after the 2007-2009 recession and how they will cut spending to cope, the ratings agency combined pension and debt data to rank the liabilities of each state.
In the past, Moody’s evaluated credit risks from pensions and debt levels separately. Lower credit ratings could raise the costs to states of borrowing money.
Interesting isn’t it how suddenly Moody’s has to change how they figure things for rating the states and combine debt AND pension liabilities all of a sudden. One might think they have an ulterior motive in doing so. . . .
I’m really not sure why S&P and Moody’s are given any credence at all these days anyway with all the problems they helped to create and cover up in the blow up of the housing and financial markets but just as the banksters are avoiding punishment, so too have the credit rating agencies managed to avoid any official recognition of how their actions contributed to the near destruction of the global economy. Although there are occasional burps on their way back such as described here from earlier this month (NY Times DealBook of January 5, 2011):
Two weeks ago, Standard & Poor’s put out a news release warning that it was poised to lower its ratings on almost 1,200 complex mortgage securities.
So what? Isn’t that dog-bites-man at this point?
Well, two-thirds of these mortgage bonds were rated only last year, long after the financial crisis. And S.&P. was supposed to have taken the distress of the housing crash and credit crisis into account when it assessed them. But in December, the ratings agency acknowledged that it had made methodological mistakes, including not understanding who would get interest payments when.
So S&P is still screwing up with rating mortgage bonds;. Yet they are still listened to by the Financial and Beltway elites as if they are making pronouncements of great import.
When the ratings agencies start threatening the ratings for the US and the various states because of unfunded pensions (helped along by the ratings agencies having proclaimed Mortgage Bonds as AAA level securities when they are junk), then once again it is time for the financial elites to try to further get their hands on Social Security to continue their looting of the economy.
We’ve long seen and recognized how Pete Peterson has been buying off media outlets with the Social Security is in crisis and we have to kill it to save it themes. Today, it was McClatchy’s turn to take a hack at Social Security, claiming the “strong support is growing weaker” even as it is tied to the deficit (which has nothing to do with Social Security).
Fueling the new worry is a report this week from the nonpartisan Congressional Budget Office that suggests Social Security may be more of a drain on scarce resources — or in need of strengthening — than had been thought previously.
The CBO said that if interest were excluded, the system would run a deficit of $45 billion this year and a total of $547 billion from 2012 to 2021.
Outlays for Social Security, the CBO said, will hit $727 billion this year, 4.8 percent of the gross domestic product. In 10 years, as baby boomers retire in big numbers and benefits increase, the CBO estimates those expenses will reach $1.3 trillion, 5.3 percent of the GDP.
In other words, the program could be a drain on an already-strained federal system, so the Capitol buzz is this: Something has to be done. But it’s difficult: About 53 million people got Social Security benefits last year, and the CBO estimates that will grow to 71 million by 2021.
Now, I am 58 year old. Each year for the last ten to fifteen years, I have received a report from the Social Security Administration with a list of my earnings for all previous years, with the amount of Social Security earnings, the amount of Medicare earnings that have been taxed, the total amounts that I and my employers have paid into each over the years as well as an estimate of what my benefits payment would be if I start collecting at 62, wait until 66, or wait until 70 to collect. My first year of paying into Social Security was 1969 when I had all of $16 of taxed earnings. I didn’t even hit five figures of earnings until 1981 with the occasional year of zero earnings. My highest earnings was in Y2K when I hit $76.2K. And I have zeros showing for every year since 2005. If I can make it to 62, I can start to collect the awesome sum of $1,313 per month. If I can make it to 66, it becomes $1,741 and to make it to 70, it would be $2,299.
The thing is, people like Pete Peterson and all the Beltway and Financial elites want me to work as many years as possible yet they don’t seem to want to do anything about the need for jobs for the millions of people that are un and underemployed today. Just today, the NY Times DealBook reported that Treasury Secretary Timothy Geithner spoke at the Davos gathering in Switzerland
As the highest-ranking American government official to attend the World Economic Forum in Davos this year, the Treasury secretary delivered an upbeat message about the prospects for a continued United States economic recovery, while providing little hope of substantially improved employment numbers.
So I guess this wonderful economy that has him so “upbeat” is going to ignore the roughly 30 million un and underemployed as if we don’t exist. There really is a parallel universe in effect here it seems.
And because I can:
Cross posted from Just A Small Town Country Boy