The rising cost of healthcare is cutting into Americans’ ability to contribute to their retirement accounts and save for other long term expenses, 63% have experienced this and of those 30% have decreased the amount they save for retirement, and more than 50% have reduced household savings.
This will be one of the significant issues in the next election. Spending is expected to hit $4 trillion in 2015 or 20% of GDP, which is astounding. Ninety percent of employees support an employer mandate, and nearly half said all employers, regardless of size, should be required to provide and contribute to health insurance coverage for staff. Employees will make less, but they want medical coverage and with a Democrat Congress that will happen.
Homebuilders will take until the end of 2009 to clear present inventory, so that means two years of little or no building.
As California was engulfed in an inferno Governor Schwarzenegger was signing notes due in 8 months to help pay its bills until tax revenue comes in, this is the largest note, $7 billion, the largest short-term loan since he took office and five times more than last year. Debt is increasing after cash receipts fell $777 million below the state’s projections. The rise in IOU’s is an early sign the finances are deteriorating after four years of revenue growth won credit-rating upgrades and spurred gains of more than 20% on California bonds. The governor is in deep financial trouble as the economy slows, real estate collapses and the state continues to be overwhelmed by illegal aliens that pay no taxes and are destroying the state’s infrastructure. This has been going on since 1985 and it is now crunch time. California is in worse financial condition now than they were in 2003. California has just started major foreclosures over the past few months and they will increase for the next few years. If you wanted to leave California now is the time to do it. Their tax base is being destroyed and has been in a state of destruction for 20 years.
Sales of previously owned homes fell 8% in September to a record low of 5.04 million units, the lowest since 1999 when tracking began.
Ron Paul will appear on Jay Leno’s show on October 30th.
Durable goods orders have fallen for the second straight month by 1.7% in September after a 5.3% decline in August. Excluding defense, orders rose 0.7% and excluding a 6.3% drop in transportation orders, orders rose 0.3%. Shipments declined 2% followed by a 1.9% drop in August. Inventories increased 0.4% and unfilled orders rose 1.9%. Despite a boom in exports, durable goods manufacturing has shown little growth this year.
Unemployment claims fell 8,000 to 331,000 last week.
For six months we have said that losses in mortgage-related securities at big banks would top $400 billion. This week the NY Times has agreed with our opinion. That alone is greater than the S&L looses of the mid-1980s. The total losses by homeowners and CDO and ABS holders will easily exceed $2 trillion plus $4 trillion in real estate losses. The losses could be greater than the $7 trillion or 40% wipeout in the market in 2000 and 2001. Wait until state and local entities have to deal with billions in lost real estate tax revenue. House prices decline slowly because many potential sellers simply stay in their current homes when they think prices are too low. Most cannot move because of their jobs or their children.
We see a drop on spending next year and one half of $350 billion and perhaps more due to layoffs, offshoring and outsourcing. 70% of the economy is consumer consumption. We see that dropping to the long term mean of 64.5% and perhaps lower, as home inventory continues to build. Since 2003 housing-related businesses like mortgage companies, home builders, suppliers and contractors added 1.3 million jobs up to 3/06, or about 23% of new jobs. They have since laid off close to 400,000 on payroll jobs and an additional 300,000 illegal aliens. Thus, we only have about 1.2 million more who will lose their jobs over the next two years. We are anxious to see how the BLS will lie about that. This is why Bank of America is laying off 3,000.
We are sure it is comforting to know that your government now has 775,000 suspected terrorists on their terror list. It is only a matter of time in our brave new world that we will all be on the list. They have so many people on it now that it is already unless. 53,000 have been questioned since 2004, but government won’t tell us how many have been denied entry to the US, or how many have been dragged off to a foreign country for torture, abuse, rape and to be murdered. The FBI says 269 have been denied entry but no details. This is America’s new Gestapo.
The geniuses at the State Department cannot tell what it got for the $1.2 billion spent for Iraqi police training. Records are so corrupted at the State Department that they cannot collect from DynCorp.