Europe’s economy is collapsing. There’s been too much spending and too much borrowing. We’re next in line if we can’t get our budgets balanced.
The debt crisis in Europe escalated sharply Friday as investors dumped Spanish and Portuguese bonds in panicked selling, substantially heightening the prospect that one or both countries may need to join troubled Ireland and Greece in soliciting international bailouts.
The draining confidence in Western Europe’s weakest economies threatened to upend bond markets, destabilize the euro and drag out the global economic recovery if it is not quickly contained. It also underscored the mounting problems facing countries that during the past decade have both over-borrowed and overspent, and are now in danger of losing investor faith in their ability to make good on their massive piles of debt.
The perceived risk of debt defaults in Portugal and Spain drove their borrowing costs to near-record highs Friday, with the interest rate demanded on Portuguese bonds at a point where it could effectively cut the Lisbon government off from raising fresh cash to run the country.
Source: Washington Post
*Sigh*. I told you all about this long ago. I’ve been writing this same thing, over and over and over, like a stuck record since 2006. I get tired of writing posts saying the same thing. Just to quote one of my more recent posts on the matter,
Our situation is eerily similar to Greece. As Professor Ferguson points out, the looming crises will jump out of nowhere the second the costs to borrow more money increase due to fears of ballooning debts and deficits. And that sort of thing happens in an instant. That’ll set off a chain reaction and destroy this economy driven by borrowed funds. This is exactly what Alan Greenspan is telling us as well.
Mark my words – this is the EXACT situation the United States is in. The “Great Recession” is not over; it’s just beginning. One day investors will start to panic about our debts as well, and our borrowing costs will shoot way up. Then what are we going to do? Print even MORE money?
These economic problems are hitting people hard. There are record people needing food stamps nowadays.
A new time-lapse video illustrates the depressing rise of food stamp usage throughout the U.S.
The video’s creator, Zero Hedge’s John Lohman, points to the alarming levels — food stamps now feed a record 43 million — and warns that the program is the only thing keeping Americans from going “postal.” Sinatra’s upbeat tune “I’ve Got The World By A String” serves as an especially disturbing soundtrack.
According to a recent Wall Street Journal report, food stamp usage has increased almost 60 percent since 2007.
And this must be because the corporations have no money to hire people, right? No, you’re quite mistaken. While your family is on food stamps, corporate profits are the highest ever recorded.
The nation’s workers may be struggling, but American companies just had their best quarter ever.
American businesses earned profits at an annual rate of $1.66 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or non-inflation-adjusted terms.
Corporate profits have been going gangbusters for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history.
Source: Yahoo finance
Oh, and by the way… I wonder how much longer you’ll have healthcare (assuming you do have health insurance)? Let’s take a look at the cost trajectory given to us by the Congressional Budget Office.
If they can’t get that fixed, you won’t have health insurance for much longer. You’ll get sick and well… die, I guess. Somewhere around ~2019, a Fidelity Investments study predicts that very few corporations will be offering healthcare, retirement plans, and many other benefits we’ve become accustomed to.
I feel like I’m getting old because I think, “2019? That’s a long ways off. Wait, it’s almost 2011? Didn’t I graduate in 2001? Wow. Time needs to slow down!”
Health care costs for employees have been rising for years, but perks and benefits such as cost-of-living increases, pension plans, bonuses, 401(k) contributions and tuition reimbursement are now being looked at as places to save millions of dollars. Given the massive savings for employers, many workers have doubts about when — or if — such items will ever fully or partially return.
On average, companies have sliced up to five employee-oriented spending areas, such as 401(k) matches and tuition reimbursement in the past year says Laura Sejen, global head of strategic rewards consulting at employment consultancy Watson Wyatt.
Job cuts and reduced raises have been commonplace for years, but the desperate economic times have chief executives cutting areas previously considered untouchable.
Employers spent nearly $8 trillion on total worker compensation in 2007, which is the latest full-year data from the Employee Benefit Research Institute, a public policy and education firm. Benefits such as retirement funding and health insurance made up 18.6% of that outlay. Wages and salaries represented the rest.
Health plan coverage alone typically costs employers $5,000 to $15,000 per worker each year, according to Fidelity Investments’ Consulting Services.
Funding retirement plans is also expensive. For every $1 million in total payroll expenses, a company could halt a match of 50% for every dollar up to 6% and save $30,000 a year if every employee were contributing the maximum.
Given the deep savings, slicing that retirement benefit and others can be hard to avoid for company leaders.
Almost half of U.S. employees surveyed by Fidelity predict that benefits such as health insurance, retirement savings plans and pension plans won’t be provided by their employer by 2019.
Most of that group say they’ll be responsible for getting their own benefits. A smaller percentage — 18% — says the government will provide for them.
Watson Wyatt says that 62% of employers are very confident they’ll offer health care benefits 10 years from now, down sharply from 73% last year. It’s the first time in the study’s 14-year history that employer confidence declined.
Health care costs are rising at about 6% to 7% a year, and “if you put that in the context of a difficult economy, most companies aren’t prepared to shoulder all of that burden,” says Tom Billet, a Watson Wyatt senior health benefits consultant.
He says that employees should get used to picking up more of the tab.
In general, the average 401(k) account shriveled 27% in 2008, falling to $50,200 from $69,200 in 2007, according to Fidelity. Without an employer match, workers feel extra savings pressure to shore up their sagging retirement accounts.
Dozens of companies have pulled back on retirement contributions, according to the Center for Retirement Research at Boston College. General Motors, Eastman Kodak and Sears Holdings are among them.
“Traditional pensions in the private sector are on their way out,” says Alicia Munnell, director of the retirement research center.
Yet, she expects 401(k) matches to come back. Many companies that suspended or reduced their matches after the recession of 2001 reinstated their contributions after the economy rebounded, she says.
Less formal perks, such as flexible time off, have taken a hit, as well.
These sorts of lies really annoy me, “Job cuts and reduced raises have been commonplace for years, but the desperate economic times have chief executives cutting areas previously considered untouchable.” What bullshit. They’re earning record profits.
Please join me in screaming as loud as you can from your back porch; that is, if you still have a home.