Safety net programs, Medicare, Medicaid & Social Security now = 55% of spending vs. 38% in '87 and 16% in '62 (pre-M'care).

And notice that spending on federal debt interest dropped by half since '87 (thanks, Fed!). If interest rates spike, we're in big, big trouble.

If we're going to live longer (we are) & receive more care & benefits while we do (we are) we are ALL going to have to pay more. Period.

Public pension debt may be as high as $4 TRILLION. That's 100% of all state & local tax collection for 2 years

If the debt ceiling is raise we might have a credit down grade again. The interest on our debt can go up

In 2010 alone our trade deficit with China cost over 566,000 jobs http://bit.ly/XzIFJR This is unsustainable for the American worker.

"can"?

Treasury yields on 30 year bonds January 2011 4.39%; December 2011 3.51%

Treasury yields on 30 year bonds January 2012 3.51%; December 2012 2.95%.

The US economy is on the cusp of a big uptick IMHO. The Dow was just up for 10 days in a row and is at an alltime high, the pace of job creation is picking up with over 200K a month even as Congress has done nothing but threaten the recovery with its brinksmanship.

Spent the morning reading some economic projections from private industry like Goldman and Citi and also loking at some FED data. Everybody is increasing their growth projections for the year.

Things are looking up.

Are they hiring like they should be hiring. In fact they are down sizing again. My son runs the east coast for a firm you would know. It is very big in Europe. He cut 70 percent of his work force.

He saw the hand writing on the wall even for him. He resigned last week and is starting a new job on Monday. They actually think they can run most of their USA business from England.

On the housing market people are starting to buy again. How many of those mortgages are conventuals where you have to put 30to 25 percent down none.

The housing bubble burst because I'd salli Mae has that problem ever been fixed? Not that I know of so it can continue to fail.

Since the job market is not good you can not be tied down to an area when looking for work. So buying a house in this economy in my opionion at least is a big mistake.

How much is Obama care going to cost when it fully kicks in do we know that yet. Some people say it is going to help destroy the economy. Another entitlement that we can't pay for.

Well I will be dead in the near future so some one else will have to worry about it

I know tons of succesful companies that run their American operations from overseas. And the opposite is also true.

Obamacare actually decreases the deficit and debt over the longterm.

The job market is not going to magically start producing a million new jobs a month, it takes time to build momentum. It is always much easier to downsize, fire workers, or close up shop than it is to do the opposite.

People with college degrees are generally the ones that are ripe to bear the fruits of the improving economy. It is actually a great time to buy a house now if you have a stable job given that rates are historically at their lowest.

Can anyone be sure their job is stable?

Obama care decreases the deficit snd debt over the long term?

Tell me that again 2 years from now

No, it cant be!

David Stockman, Ex-Reagan Budget Director: George W. Bush's Policies Bankrupt The Country

"A former adviser of Ronald Reagan has some choice words for George W. Bush.

David Stockman, Reagan’s budget director from 1981 to 1985, slammed Bush and his former boss in an op-ed in The New York Times Sunday. Stockman argued in the piece that Reagan’s view on the deficit “created a template for the Republicans’ utter abandonment of the balanced-budget policies of Calvin Coolidge.”

“(Reagan’s deficit policies) allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy,” Stockman wrote.

Stockman, also a former Republican congressman from Michigan, resigned from Reagan’s administration in 1985 in protest over deficit spending. Bush and Reagan aren’t Stockman’s only targets in the piece; he attacks lawmakers, Federal Reserve and Treasury officials and Wall Street for a combination of easy money and deficit expanding policies that he argues will lead to another Wall Street bubble explosion in the near future.

Stockman may have a point when it comes to Bush’s policies, at least. The cost of the wars in Iraq and Afghanistan combined with the Bush-era tax cuts for the wealthy will account for nearly half of the debt the U.S. will owe by 2019, according to a February analysis from the Center on Budget Policy and Priorities, a left-leaning think tank.

Bush isn’t the only Republican leader to draw Stockman’s ire in recent months, though. During the 2012 presidential election, Stockman called Republican candidate Mitt Romney “a master financial speculator who bought, sold, flipped, and stripped businesses.” He also attacked Vice Presidential Candidate Paul Ryan’s budget, arguing that it was “devoid of credible math or hard policy choices.”

http://www.nytimes.com/2013/03/31/opinio...;pagewanted=all

More propaganda from the NY Times, Dapper when we get you in office I'm making sure the NY Post is our only subscription! Now that's what you call "Fair and Balanced"

How can an opinion piece from a Republican be liberal propaganda? Try again. Dont believe everything the NY Post tells you, god knows their predictions of Republican wins were right the last two presidential elections. Republicans usually have an allergic reaction to living in a fact-based numbers world.

It's dumping on the Republican! And give me a bit of credit if you think I believe anything in the NY Post or anything in print for that matter. But we can still get one for our campaign office no? If you want to understand my dedication toward you just watch Taxi Driver, I'm going to be just like DeNiro!

It's dumping on two Republicans by a Republican, dont blame the paper for printing the truth regardless of who says it.



Good to hear, I enjoy the pictures and the funny headlines in the Post. LOL

Regardless of who states it, there is no bankrupting the federal government. The federal government's debt gets continually refunded and the only annual liability is for interest payments which the US Treasury's cash flow can well handle now and for the forseeable future.

No doubt.

It's almost become a term over used and it just doesn't scare anyone like it use too! Like everything else it's been verbiage abused by politicians! Dap we will not use the term in our offices! East is banning it from all your campaign rhetoric!

I admit when I was wrong. Don't tell your local macro newsletter a-hole, but the federal deficit is shrinking faster than we thought. http://www.calculatedriskblog.com/2013/04/update-federal-and-state-improving.html

Been massive Treasury paydowns last week after tax increases. Positive before tax increase. Stable and more positive after tax inc. No reduction after sequester either.

Glad to see im not the only one who has looked at these charts.

Of course the analysts are more bullish than the strategists - the analysts talk to management.

Dow 15000: What It Means, What It Doesn’t Mean

Stuff I'm Reading this afternoon....

Bloomberg News chief Matt Winkler apologizes to terminal users. Will it be enough? (NYT)
http://www.nytimes.com/2013/05/13/busine...l&_r=3&

Nasdaq comes upon some really critical, old school levels. (iBankCoin)
http://ibankcoin.com/chessnwine/2013/05/11/back-to-little-bighorn/?utm_source=feedly

Goldman says they now seeing the beginnings of “the fear trade” on Apple (ValueWalk)
http://www.valuewalk.com/2013/05/apple-inc-aapl-fear-trade-in-beginnings-goldman/

Does the "Rule of 20" make stocks expensive or cheap here? (PragCap)
http://pragcap.com/u-s-equities-and-the-rule-of-20?utm_source=feedly

Bill Gates on his last visit with Steve Jobs, heartbreaking. (TheVerge)
http://www.theverge.com/2013/5/13/4325906/bill-gates-details-his-last-visit-with-steve-jobs

Noah Smith: Of course hedge funds lose money, why does this surprise you? (Noahpinion)
http://noahpinionblog.blogspot.com/2013/05/of-course-hedge-funds-lose-money.html

Kevin Roose: ...and yet - and yet - people just can't seem to get enough of hedge funds, no matter what. (NewYorkMag)
http://nymag.com/daily/intelligencer/2013/05/are-hedge-funds-bulletproof.html

The truth about why the old hedge fund managers hate the Fed aka the Washington Super-Whale. (BradDeLong)
http://delong.typepad.com/sdj/2013/05/th...nke-hatred.html

There is zero correlation between the Fed printing and the money supply. Deal with it. (BehavioralMacro)
http://markdow.tumblr.com/day/2013/05/12

Our Algorithms Can Predict Future Disasters — Now What? (Wired)
http://www.wired.com/threatlevel/2013/05/newitz-disasters/

Employment is on pace to take out its pre-recession peak
by July 2014, 78 months later. http://stks.co/iVdg (Not wages, though..)

Don't get Too Excited about the New, Smaller Deficit. --Josh Barro http://bloom.bg/YW0zxq

Stuff I'm Reading this Morning...

Futures are ripping higher this morning from Japan to Europe. (BusinessInsider)

Hilsenrath: The Fed’s real challenge now is managing expectations. (WSJ)

Everyone wants to be long the dollar now. (Money Beat)

Goldman Sachs visits with Tesla Motors...here are their key takeaways. (ValueWalk)

Barry Ritholtz on the problem with hedge funds. (WaPo)

Here’s a rare example of financial innovation benefiting all investors, large and small. (AbnormalReturns)

There's a whole mess of economic data due this week. (RealTimeEconomics)

With correlations dropping, are long/short strategies due for a comeback? (AdvisorOne)

Fifty-year-old television clip of Warren Buffett explaining market psychology unearthed. (ValueWalk)

Ten names being snatched up by the Ultimate Stockpickers. (MorningStar)

Frank_Nitti, are you an investor/dabble in the market? Reason I ask is that I see you referencing articles from Morningstar and other related areas.

Yeah still in it, DD. Though after days like today glad only in a limited role. It's jarring to be experiencing genuine volatility in both stocks and bonds for the first time in what seems like half a year. Although if this is The Correction, it certainly hasn't been very ferocious so far.

Stuff I'm reading this afternoon...

Larry Swedroe on using momentum, value and quality metrics in portfolio construction. (Index Universe)

Jeff Gundlach's slides from last night's DoubleLine presentation. (Business Insider)

10 ways advisers add value (aside from selecting index funds, lol). (Above the Market)

About that big merger between RIAs Banyan and Silver Bridge... (Financial Planning)

Phil Harris (Personal Capital) closes $25 million round of financing to bring financial advice to the middle market. (VentureBeat)

Your daily burst of inspirational optimism, via Morgan Housel. (Motley Fool)

Before pushing that latest-and-greatest floating rate product, make sure your clients are suitable... (Advisor One)

Stuff I'm Reading this Morning...

Credit Suisse laughs at your End of QE concerns, raises S&P year-end target to 1730. (MoneyBeat)

The advance/decline line is hitting extreme lows, usually good for a reversal. (Bespoke)

Joe: Commodities have been hilariously bad versus stocks, here's why: (BusinessInsider)

What to expect for tomorrow's May Jobs report. (USA Today)

Raise your hand if you're a hedge fund manager who is NOT shorting the Aussie Dollar. (MoneyBeat)

Oh relax, Bond Bears - we're not even close. (PriceActionLab)

Jamie Dimon: The volatility beatings will continue until morale improves (or rates go up). (CNNMoney)

Japanese stocks crossover to the dark side. (ZeroHedge)

E.S. Browning on the market's addiction to easy money. (MoneyBeat)

I would be VERY afraid. Yes the underlying numbers all look good... consumer confidence, unemplouyment, car production and the stock market, but I think there are a lot os smoke and mirrors that could turn this recovery into a catastrophe.

First and foremost, the stock market is due for a "correction" and we may be seeing the beginning of it right now. With the Fed hlding interest rates to virtually zero, and with the dismal situation in the Euro zone, there are few better placrs for investors to put their money. Nobody wants cash sitting around making 1%, and there is no stampede to buy up land or stocks in Greece or Spain (although if I had cash I would buy property there cause it will come back).

In the US it is true unemolpyment is down, but the level of employment is not all that great. Incomes are not rising fast enough, and people may be "employed" but many are under-employed, and the median household income does not but what the median household income bough in the 1950's.

If the market starts dropping, irrational thinking could tank it, and then we might see people out there trying to put what they can in bonds, while others start trying harder to borrow, which in turn would mean the rates would go up and therr would be hyper inflation. Throw in the debt to China, and the fact that china seems to be buying everything that is or is not nailed down on the planet, and we could have a real mess on our hands.

In short, we are not out of the woods by any means.

Tomorrow's job numbers will be important. But you said it, dt. People are moving into the Bond market which is getting ready to pop, and I look forward to it. I'll be happy to exchange my bonds eventually for the super high interest of the 1970s. I plan to keep bonds until the interest rates (and yields) are starting to go significantly up. Investments like deferred fixed annuities and bank CDs do great when interest rates (and inflation) shoot up. Zero interest forced everyone out of CD's which was one of the reasons for low interest; push people into more formal investing.

When the Fed stops printing money and interest rates rise not only will there be more volatility in bonds, it will certainly affect short term debt that pays for annual (unfunded) spending as well. And rates will increase, but hopefully it won't be a pop, more like a gradual letting the air out over time, and hopefully that won't happen until the economy is much better. We are talking about 1 year before they start to rise and hopefully a few years before it is really noticeable.

However just a 1% increase in interest would add somewhere between 160 and 170 billion to the annual deficit (assuming the debt stays where it is). If projections are accurate, then a 1% increase in interest would add 220 billion or so to our annual deficit in 4 years or so. A rise in interest rates of 7-8% would mean simply paying our interest would be more expensive than our welfare programs.

EDIT - Dollar falling through the floor today, while the Yen, Euro and Gold all rally. Never sell Gold short.

Stuff I'm Reading this (bearish) Morning...

Big call on Citi - analyst Charles Peabody says the bank could be down $7 billion on currency losses. (Bloomberg)

The new Apple iOS is better and worse at the same time. (TheVerge)

Small business confidence hits one year high. (Reuters)

Hedge funds across strategies are lowering net long exposure to stocks. (FINalternatives)

Joseph Stiglitz on Japan: It's a model, not a cautionary tale. (NYT)

Three reasons emerging market stocks are getting slammed. (BusinessInsider)

The German bank employee who took a nap on a keyboard and transferred millions of euros. (France24)

That long SPY short EM trade everyone has one has worked too well, time for a reversal. (DragonflyCapital)

Gavyn Davies on equities: "In the longer term, what matters is real factors, like the forward path for corporate earnings, and the interest rate at which they should be discounted." (FT)

Why am I still on Facebook?" (because you're a tool who still thinks about high school all day and loves reading inspirational quotes) (TIME)

Stuff I'm Reading this Morning...

Is this the worst ETF in existence right now? (ETFTrends)

Just when you thought you could bank on the S&P 500 vs Yen correlation. (Bespoke)

Contextualizing the recent volatility. (TBP)

Big banks at it again - this time traders admit to manipulating FX rates. (Bloomberg)

Joe Donahue: Stop being a global macro dipshit. (UpsideTrader)

Charting Hedge Funds’ Long Term Gains (MoneyBeat)

Goldman vs the Fed on job creation. (MarketWatch)

Jim O'Neill: Prepare for bond market pain. (TheTell)

The truth about why investors are sprinting away from bonds. (Atlantic)