September 2011

CPI up 0.4% for August 2011

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The August Consumer Price Index, which measures inflation, increased 0.4% from last month. Food increased 0.5% and energy 1.2%. Core CPI, or price increases minus food and energy costs, rose 0.2%. Core CPI is a Federal Reserve inflation watch number. For the year, not seasonally adjusted, the Consumer Price Index for all Urban Consumers (CPI-U) has risen 3.8%. In July CPI also increased by 0.5%.

August 2011 PPI was 0%

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The Producer Price Index, or wholesale inflation, did not change, or zero for August 2011 finished goods. Food trumped gas as foods increased 1.1% while gas dropped -1.0%. Core PPI, which is finished goods minus food and energy, increased 0.1% and is the 9th month in a row for an increase. While this is wholesale, tire shoppers beware, 20% of core's increase was tires, up 1.4% from July.

46.2 Million People in Poverty for 2010

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The Census released a comprehensive report on poverty, income and health insurance coverage in the United States for 2010. There were 46.18 million people living in poverty, in the United States. The Census population for 2010 was 305,688,000. This means that 15.1% of people in the United States are below the poverty thresholds, or one in 6.6 people.

 

2009 Student Loan Default Rate Jumped to 8.8% from 7.0%

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A sign of the times. Student loans default rates for 2009 increased to 8.8% from 7.0%. For profit schools had the worst jump, from 11.6% to 15%. Private universities and colleges had the lowest, but also increased from 4.0% to 4.6%. Public higher education had a 7.2% default rate, up from 6.0%. These numbers are only for a two year time window. Defaults after that 24 month period are not part of this tally.

From the Department of Education:

The rates announced today represent a snapshot in time, with the FY 2009 cohort consisting of borrowers whose first loan repayments came due between Oct. 1, 2008, and Sept. 30, 2009, and who defaulted before Sept. 30, 2010. More than 3.6 million borrowers from 5,900 schools entered repayment during this window of time, and more than 320,000 defaulted.

Even more horrific these numbers had the new repayment option incorporated where one could scale and cap student loan payments based on their income.

Since the time when the borrowers in the FY 2009 cohort enrolled, the Obama Administration has expanded flexible loan repayment options for borrowers through the income-based repayment plan (IBR). This plan makes loan payments more affordable by capping the monthly payment at an amount based on income and family size.

These numbers are also after another policy change. Schools with high default rates are sanctioned and can lose eligibility for federal student loans. There were actually 5 schools cited in the press release with high default rates:

How Obama is Going to Pay for a $245 Billion Cut to Social Security Contributions

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out of work free cardWe all know the United States needs jobs. We need jobs right now! Last week Obama proposed a new Stimulus plan, which we did a first pass on. Unfortunately most press is busy covering superficial politics instead of what is in the bill, how it would be paid for and most importantly, the effectiveness, or lack thereof.

USA today claims the plan is to tax the rich as they put it, or as we put it, close loopholes and tax hedge fund managers, currently living living high off the hog at a 15% tax rate.

Here's the gist of how Obama plans to pay the $447 billion his plan costs.

  • Limit on itemized deductions ($200,000 individuals, $250,000 families) - $400 billion
  • Carried interest would be treated as "ordinary income" rather than at capital-gains rate - $18 billion
  • Oil- and gas-company tax breaks - $40 billion
  • Corporate-jet depreciation would change - $3 billion

Greece on the Verge of Default

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greek dominoesThe rumors are swirling that a Greek Default is imminent:

Despite strong denials that the country is heading for a default, rumours have grown that the end game is approaching. Wolfgang Schäuble, the German finance minister, has insisted that a sixth, €8bn (£6.8bn) instalment of aid will not be released unless Greece enacts corrective measures to kickstart its economy and improve competitiveness. Experts from Washington and Brussels will fly into Athens this week to assess whether Greece is sticking to its programme of drastic spending cuts and tax rises, amid fears that its creditors could be ready to pull the plug.

Literally there are talks about seizing Greek assets, by force.

Germany’s EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets.

Greece, assuming in response, announced a new property tax, collected through electricity bills:

The tax is €4 per square meter (about $0.50 per sq. feet). The government is projecting this levy will make up for the revenue shortfall due to the sharper than expected contraction in the Greek economy.

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