2011 November 14 | timiacono.com

Occupy Wall Street vs. the Tea Party

Spotted over at Barry’s Big Picture blog is this comparison of the Occupy Wall Street movement and the Tea Party. I can’t say that there was anything really surprising in it, however, they may have taken the “hipster” stereotype a bit too far when they said “unemployed and looking to live off government aid”. At least I hope they did…

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Seniors and their Social Security COLAs

Based on news reports last month, one of the few item that Republicans and Democrats on the deficit supercommittee could agree upon involved rejiggering the government’s inflation calculation to produce a lower inflation rate and, as a result, less inflation-linked spending in the future, not the least of which would be social security cost of living adjustments. But, what once looked like a slam dunk seems to be getting more complicated rather quickly as seniors are now organizing to oppose this move as reported by the Fiscal Times.

The senior lobby AARP’s latest television barrage is just part of the larger grass roots campaign that was launched recently by an array of senior citizen and public interest groups aimed at beating back any attempt by members of the Super Committee to change the cost-of-living adjustment factor for Social Security. Shifting to a less generous measure of inflation would cut  $112 billion or about 7 percent from projected beneficiary payouts over the next decade.

The proposal — popular with many policy analysts as a more accurate portrayal of consumer prices — remains one of the most attractive revenue raising measures in some politicians’ and deficit-cutters’ playbooks. Beyond cutting Social Security costs, it would reduce future claims in a wide range of government programs that benefit mostly the poor, including Head Start, school lunch programs, and home heating assistance. It would also raise $72 billion in new tax revenue by slowing upward adjustments in income tax brackets, thus throwing more taxpayers into higher brackets.

While Democrats on the committee are staying mum on the issue, the grassroots campaign by key elements of their political base has made it extremely difficult for them to embrace the proposal. Last week, thousands of demonstrators marched on the Boston office of Sen. John Kerry, D-Mass., demanding he reject cuts in Social Security and other social programs. “Though we don’t have armies of corporate lobbyists, we have passionate people who belong to all political parties, including independents, who don’t want to see their benefits cut,” said Joshua Rosenblum, a spokesman for Social Security Works, which helped organize the demonstrations.

This should be a pretty interesting ten days between now and the time the supercommittee’s plan is due on Capitol Hill on the day before Thanksgiving. By all accounts, their chances of producing any kind of agreement are less than 50-50 and financial markets now seem to be sniffing this out, reacting in advance of any August-style U.S. budget deficit debate.

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Obama and China, Good Cops and Bad Cops

You’d think that there’s at least a little bit of a “Good Cop, Bad Cop” dynamic going on right now when President Obama talks to the Chinese about letting their currency strengthen at a faster pace. Of course, Obama is the good cop here with just about every GOP presidential hopeful playing the alternate role and one can easily imagine Chinese President Hu Jintao being told over the weekend, “Hey, I’m about the best friend you’re ever going to have in Washington. How about a little appreciation, currency-wise?

As Hu made clear yesterday, from the perspective of the Chinese, they had no part in making any of the rules in the current global monetary system and feel little compulsion to play by them. Mindful of the Japan experience in the late-1980s when strong currency appreciation led to massive asset bubbles and two lost decades, they’re not likely to simply comply with the wishes of the West when it comes to their currency.

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Back From the Dead Morning Links

Europe could be in worst hour since WWII: Merkel – Reuters
France Keeps a Watchful Eye on Turmoil in Italy – NY Times
Obama to China: Behave like “grown up” economy – Reuters
‘Enough’s Enough’ on Undervalued Yuan: Obama – Bloomberg
Occupy Portland Protesters Face Showdown With Police – HuffPost
Europe’s mess gives U.S. a reprieve on debt comeuppance – LA Times
Growing doubts about supercommittee debt deal – Washington Post
Super committee: 10 days to deadline and no deal imminent – CNN/Money
Deficit Panel Seeks to Defer Details on Raising Taxes – NY Times
Senior Backlash Builds on Social Security Cuts – Fiscal Times
Greece, Italy, and financial stability – EconBrowser
Debt By Degrees – Surowieki, New Yorker
Hokey Pokey – Hussman Funds

Oil slips below $98 amid Europe debt concerns – AP
Gold dented by dollar gains; Europe in focus – Reuters
After Europe Change, Time for Market to Focus on US Economy – CNBC
OPEC — Imaginary Numbers And The Problem Of Spare Capacity – DOTE
Gold price movement – buying the rumour, selling the fact – Mineweb
Silver outlook bullish for 2011 and into 2012-Thomson Reuters-GFMS – Mineweb
Gold demand doubles amid economic gloom and frozen interest rates – Telegraph
ETF inflows support gold: Saxo Bank – Commodity Online
Get Paid to Play Gold – U.S. Global Investors
Is gold headed to $2,200? – MarketWatch

Downside Risks – Calculated Risk
We Are In Year 4 Of A 7-10 Year Depression – BI
All major economies headed for slowdowns: OECD – Reuters
An Economist Accepts a Mandate to Rescue Italy – NY Times
The end of Berlusconi: Hallelujah – Economist
Japan ready to help EU bailout – Channel News Asia
Inflation inches up further to 9.73% in October – Indian Times
In foreclosure-plagued Vegas, empty homes go to pot – LA Times
Short sales, mortgage mods used to rob lenders, homeowners – MarketWatch
Realtors: Homebuyers getting older and richer – O.C. Register
Banks Quietly Ramping Up Costs to Consumers – NY Times

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