Does it make sense?

Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts. GM on Monday issued a statement disputing the estimates.
Cheap Volt lease offers meant to drive more customers to Chevy showrooms this summer may have pushed that loss even higher. There are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce.
And while the loss per vehicle will shrink as more are built and sold, GM is still years away from making money on the Volt, which will soon face new competitors from Ford, Honda and others.
GM's basic problem is that "the Volt is over-engineered and over-priced," said Dennis Virag, president of the Michigan-based Automotive Consulting Group.

Read more >> Reuters...

Each Chevy Volt sold thus far may have as much as $250,000 in state and federal dollars in incentives behind it – a total of $3 billion altogether, according to an analysis by James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy.

Read more >> CAPCON...

Consumer Reports offered a harsh initial review of the Chevrolet Volt, questioning whether General Motors Co.'s flagship vehicle makes economic "sense."The extended-range plug-in electric vehicle is on the cover of the April issue — the influential magazine's annual survey of vehicles — but the GM vehicle comes in for criticism.

"When you are looking at purely dollars and cents, it doesn't really make a lot of sense. The Volt isn't particularly efficient as an electric vehicle and it's not particularly good as a gas vehicle either in terms of fuel economy," said David Champion, the senior director of Consumer Reports auto testing center at a meeting with reporters here. "This is going to be a tough sell to the average consumer."

Peruse Chevrolet's February sales release, and you'll notice one number that's blatantly missing: the number of Chevy Volts sold. The number – a very modest 281 – is available in the company's detailed data (PDF), but it certainly isn't something that GM wants to highlight, apparently. Keeping the number quiet is a bit understandable, since it's lower than the 321 that Chevy sold in January.

Read more >> autobloggreen...

Read more >> Volt...

When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.
The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.
In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.

Read more >> The Weekly Standard...

Falling home prices have shrunk the equity Americans have in their homes to nearly the lowest percentage since World War II.

Read more >> USA Today...

We all think it’s a panacea. If you don’t have enough money saved for retirement, you’ve got a few ways to close the gap between what you have and what you need in your nest egg: Save more, invest more aggressively, and/or work longer.

Well, it turns out that working longer is indeed an option, according to the Employee Benefit Research Institute latest study. The only problem is that the latest research shows that you’ll have to work much longer than you anticipated. In fact, many Americans will have to keep on working well into their 70s and 80s to afford retirement, according to the study, titled "The Impact of Deferring Retirement Age on Retirement Income Adequacy."

Read more >> MarketWatch.com...

What happened?!?

Analysts who once downplayed the government’s role in causing the financial crisis now have changed their tune, concluding that government regulations that promoted risky loans played a major role in spawning the crisis. In a May 3 note to clients, Michael Cembalest, the Chief Investment Officer of JP Morgan Private Bank, revised his 2009 account of what caused the financial crisis. Under the heading, “Retractions – the primary catalyst for the US housing crisis,” he wrote:
“US Agencies played a larger role in the housing crisis than we first reported. 
In January 2009, I wrote that the housing crisis was mostly a consequence of the private sector… However, over the last 2 years, analysts have dissected the housing crisis in greater detail. What emerges from new research is something quite different: government agencies now look to have guaranteed, originated or underwritten 60% of all “non-traditional” mortgages, which totaled $4.6 trillion in June 2008. What’s more, this research asserts that housing policies instituted in the early 1990s were explicitly designed to require US Agencies to make much riskier loans, with the ultimate goal of pushing private sector banks to adopt the same standards.” (emphasis in original)

Read more >> OpenMarket.org...

And now...

 Economic growth braked sharply in the first quarter as higher food and gasoline prices dampened consumer spending and sent inflation rising at its fastest pace in 2-1/2 years.

Read more >> Reuters...

Comic book budget squabble...

The world had better start paying attention to the US government’s inability to govern. The prevailing mood over this has been strangely complacent. Six months of the fiscal year gone and only now a ramshackle budget? Government brought to the brink of shutdown over trifling disagreements? Absurd, one thinks, but this is Washington. Do as most Americans do, and regard the pantomime with blithe contempt. In the end, out of sheer exhaustion, the actors do their deals and it is business as usual.

Read more >> Financial Times...

Near the bottom...

The US ranks near the bottom of developed global economies in terms of financial stability and will stay there unless it addresses its burgeoning debt problems, a new study has found.

In the Sovereign Fiscal Responsibility Index, the Comeback America Initiative ranked 34 countries according to their ability to meet their financial challenges, and the US finished 28th, said David Walker, head of the organization and former US comptroller general.

"We think it is important for the American people to understand where the United States is as compared to other countries with regard to fiscal responsibility and sustainability," Walker said in a CNBC interview. "Americans are used to rankings and they're used to ranking very high, but frankly in this area we rank very low."

Read more >> CNBC.com...

Purchases of new U.S. homes unexpectedly declined in February to the slowest pace on record and prices dropped to the lowest level since December 2003, adding to evidence the industry is floundering.
Sales decreased 16.9 percent to a 250,000 annual pace, figures from the Commerce Department showed today in Washington. Economists surveyed by Bloomberg News projected a gain to a 290,000 rate, according to the median estimate. The median price fell 8.9 percent from the same month in 2010.

Read more >> Bloomberg...

Brother, can you spare a dime?

WASHINGTON (AP) — Unemployment rose in nearly all of the 372 largest U.S. cities in January compared to the previous month, mostly because of seasonal changes such as the layoff of temporary retail employees hired for the holidays.
The Labor Department said Friday that the unemployment rate rose in 351 metro areas, fell in only 16, and was unchanged in 5. That’s worse than December, when the rate fell in 207 areas and increased in 122.

Read more >> USA Today...

Everything costs more...

Wholesale prices jumped last month by the most in nearly two years due to higher energy costs and the steepest rise in food prices in 36 years. Excluding those volatile categories, inflation was tame.

The Labor Department said Wednesday that the Producer Price Index rose a seasonally adjusted 1.6 percent in February - double the 0.8 percent rise in the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January's 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

Read more >> The Island Packet...

Trade Deficit

A surge in oil prices and rising demand for foreign cars and machinery helped push imports up at the fastest pace in 18 years in January, giving the country the largest trade deficit in six months.
The January deficit increased 15.1 percent to $46.3 billion, the Commerce Department said Thursday.
Exports rose 2.7 percent to an all-time high of $167.7 billion. But imports rose at nearly twice the pace of exports, to $214.1 billion. A big jump in demand for a variety of foreign goods from industrial machinery and telecommunications equipment to autos drove the increase. America's foreign oil bill rose 9.5 percent, underscoring concerns that higher oil prices could slow the economic growth.

Read more >> The Associated Press...

Former Federal Reserve Chairman Alan Greenspan said a surge in U.S. government “activism,” including fiscal stimulus, housing subsidies and new regulations, is holding back the economic recovery.

Read more >> Bloomberg...

Duplication...

The U.S. government has 15 different agencies overseeing food-safety laws, more than 20 separate programs to help the homeless and 80 programs for economic development.

These are a few of the findings in a massive study of overlapping and duplicative programs that cost taxpayers billions of dollars each year, according to the Government Accountability Office.

A report from the nonpartisan GAO, to be released Tuesday, compiles a list of redundant and potentially ineffective federal programs, and it could serve as a template for lawmakers in both parties as they move to cut federal spending and consolidate programs to reduce the deficit. Sen. Tom Coburn (R., Okla.), who pushed for the report, estimated it identifies between $100 billion and $200 billion in duplicative spending. The GAO didn't put a specific figure on the spending overlap.

Read more >> The Wall Street Journal...

WASHINGTON (AFP) – China's holdings of US bonds reached $1.16 trillion at the end of December, almost $270 billion more than previously estimated, new data showed Monday.
Beijing, which has converted much of a huge trade surplus with the United States over the past two decades into buying up US treasuries and other securities, held 26.1 percent of the total of $4.44 trillion held by foreigners, the Treasury said.
The figures came as the US government recalculated its data on foreign holdings of US securities from June 2010.
Chinese-held Treasuries have fallen since hitting a high of $1.18 trillion in October, under the revised figures. Japan remained by far the second largest holder of US government debt, with $882 billion in December, around $1.3 billion less than original estimates.
Britain was third at $272.1 billion.

Who's picking up the tab?

Less than two years after entering bankruptcy, General Motors will extend millions of dollars in bonuses to most of its 48,000 hourly workers as a reward for the company's rapid turnaround after it was rescued by the government.

Read more >> AP...

Slow train wreck coming...

Barack Obama may lose the advantage of low borrowing costs as the U.S. Treasury Department says what it pays to service the national debt is poised to triple amid record budget deficits.
Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010 with the government forecast to run cumulative deficits of more than $4 trillion through the end of 2015...

Read more >> Bloomberg...

P.O. Blues...

The U.S. Postal Service warned Wednesday that it may default on some of its financial obligations later this year after reporting yet another quarterly loss.
The USPS, a self-supporting government agency that receives no tax dollars, said it suffered a loss of $329 million in the first quarter of federal fiscal year 2011. That compared with a loss of $297 million a year earlier.

Read more >>  CNNMoney...

Interest rates are now hovering near record highs, at an average rate of 14.72%. And if your credit is bad enough, you could even end up with a rate as high as 59.9% APR.

Read more >> CNNMoney...

Another new record!

The Congressional Budget Office is estimating that the federal budget deficit will hit $1.5 trillion this year, another new record.

Read more >> USA Today...

Bad and getting worse...

It was the most startling of warnings. If the US does not get its finances in order “we will have a European situation on our hands, and possibly worse”, claimed Paul Ryan, the new Republican chairman of the House of Representatives budget committee.
The consequences of not tackling the country’s mounting debt burden would be dire, he last week told an audience of leading budget experts and economists at a gathering in Washington. “We will have the riots in the streets, we will have the defaults, we will have all of those ugliness problems,” he said, referring to “French kids lobbing Molotov cocktails at cars, burning down schools because the retirement age will be moved from 60 to 62”.
As it stands today, the US borrows about 40 cents of every dollar it spends. Curbing the budget deficit has been the stated mission of Mr Ryan, a rising Republican star, for several years. But such calls for action have multiplied in Washington in recent months, igniting what some say is the fiercest debate over fiscal and budgetary policy in decades.
The risks are big. If the government rushes into austerity, cutting too much and too quickly, it could stunt economic recovery. But if the political system cannot forge some kind of consensus on steps to restore US deficits to sustainable levels, the danger is potentially even greater: a sovereign debt crisis in the world’s largest economy.

Read more: Financial Times...

Wildlife Die-Offs

Large wildlife die-off events are fairly common, though they should never be ignored, according to the U.S. Geological Survey scientists whose preliminary tests showed that the bird deaths in Arkansas on New Year’s Eve and those in Louisiana were caused by impact trauma.

Preliminary findings from the USGS National Wildlife Health Center's Arkansas bird analyses suggest that the birds died from impact trauma, and these findings are consistent with the Arkansas Game and Fish Commission's statement. The State concluded that such trauma was probably a result of the birds being startled by loud noises on the night of Dec. 31, arousing them and causing them to fly into objects such as houses or trees. Scientists at the USGS NWHC performed necropsies—the animal version of an autopsy—on the birds and found internal hemorrhaging, while the pesticide tests they conducted were negative. Results from further laboratory tests are expected to be completed in 2-3 weeks.

"Although wildlife die-offs always pose a concern, they are not all that unusual," said Jonathan Sleeman, director of the USGS NWHC in Madison, Wis., which is completing its analyses of the Arkansas and Louisiana birds. "It's important to study and understand what happened in order to determine if we can prevent mortality events from happening again." 

In 2010, the USGS NWHC documented eight die-off events of 1,000 or more birds. The causes: starvation, avian cholera, Newcastle disease and parasites, according to Sleeman. Such records show that, while the causes of death may vary, events like the red-winged blackbird die-off in Beebe, Ark., and the smaller one near Baton Rouge, La., are more common than people may realize.

Read more: USGS...

Up. Up, and Away...

The latest posting today of the National Debt shows it has topped $14 trillion for the first time.

Read more: CBS NEWS...

Where we've been. Now where are we going?

Hans Rosling tells the story of the world in 200 countries over 200 years using 120,000 numbers - in just four minutes.

Click on the picture to view video...

The U.S. government fell deeper into the red in fiscal 2010 with net liabilities swelling more than $2 trillion as commitments on government debt and federal benefits rose, a U.S. Treasury report showed on Tuesday.

Read more: Reuters...

IRS in action...

The Internal Revenue Service is making it a bit riskier to cheat on your taxes.

The tax agency increased the number of returns it audited by nearly 11 percent this year, statistics released Wednesday show. Wealthy taxpayers and big businesses were most likely to be targeted.

The IRS also stepped up audits of charities and other tax-exempt organizations.

Read more: npr.com...

Budget Gap

WASHINGTON - The United States recorded a larger-than-expected US$150-billion budget gap in November, the largest shortfall for any November, Treasury Department data showed Friday.
Economists polled by Reuters had predicted around a US$132-billion shortfall in November after posting a US$120-billion shortfall in November a year earlier.
The government has now posted a budget deficit for 25 straight months, the longest on record, the Treasury Department said.

Read more: Financial Post...

Wikileaks

Trust.

It’s a simple, one syllable word. If you think about it, trust is all that stands between us and terrible circumstance, whether that’s the breakup of a family or total, nuclear Armageddon.

Trust is vitally important to the operations of nations and governments, as well. Not everyone, for example, is entrusted with America’s nuclear codes. Not everyone is entrusted with the command of virtually independent nuclear ballistic missile submarines. And not everyone is entrusted with secret government documents.
For many things, trust has to be selective. It’s not a good idea, as an example, to put controlling nuclear weapons on the honor system. My friends worry enough when I get around a good fireworks store or wax poetic about plasma torches — they wouldn’t feel comfortable if I had nukes.
Yet, we have to trust some people. It’s not possible to do everything yourself. Working parents must trust someone to watch their newborn. Bosses who can’t do everything themselves, or be in multiple places at once must put some trust in their employees.
Because the United States is a large nation with many interests all over the world, our military and diplomatic leadership must put some trust into the lower-level men and women who move and analyze tremendous amounts of information the world over. Even if they’re only 22.
And so it came to be that the great nation of the United States of America entrusted Bradley Manning — a young Private First Class of the U.S. 10th Mountain Division in Iraq, a former school dropout and pizza greeter — with handling message traffic considered confidential and not for foreign eyes.

Read more: zdnet.com...

Why are we going nuts?

More than 45 million Americans, or 20 percent of U.S. adults, had some form of mental illness last year, and 11 million had a serious illness, U.S. government researchers reported on Thursday.

Young adults aged 18 to 25 had the highest level of mental illness at 30 percent, while those aged 50 and older had the lowest, with 13.7 percent, said the report by the Substance Abuse and Mental Health Services Administration or SAMHSA.

Read more: cnbc.com...

Click HERE for a quick course in Government Economics...