When will our creditors come knocking

[Paslode]

http://www.thelocal.de/politics/20100304-25667.html

German MPs suggest cash-strapped Greece should sell islands

Published: 4 Mar 10 13:47 CET
Online: http://www.thelocal.de/politics/20100304-25667.html

Greece should sell some of its uninhabited islands to raise cash to avoid bankruptcy, two German parliamentarians from Chancellor Angela Merkel's centre-right coalition suggested on Thursday.



"The Greek state must sell stakes in companies and also assets such as, for example, unpopulated islands," Frank Schäffler, a member of parliament for the pro-business Free Democrats, told the Bild daily.

Marco Wanderwitz, an MP for Merkel's own conservative Christian Democrats, said Athens should provide collateral for any money it receives from the European Union to help it out of its debt crisis.

"In this case, certain Greek islands also come into question," added Wanderwitz.

"We give you cash, you give us Corfu," the Bild commented.

Greece has around 6,000 islands off its coast, of which only 227 are inhabited, according to the country's National Tourism Office website.

The cash-strapped country Wednesday launched a fresh round of draconian austerity measures in a bid to rein in a ballooning budget deficit that is more than four times above EU limits.

The Socialist government increased sales, tobacco and alcohol taxes and cut public sector holiday allowances to save €4.8 billion ($6.5 billion), equal to about two percent of gross domestic product (GDP). Pensions in the public and private sector were also frozen.

Merkel is set to hold talks with Greek Prime Minister George Papandreou on Friday to discuss the situation in Greece.

AFP (news@thelocal.de)

Makes you wonder what California or the US Government might need to sell off to keep the money flowing and creditors at bay.

[Pete]

Maybe your great grand kids future but not any land held by the Feds.

The Earth First Movement will not allow them to.

[Green Light]

Earth First!
(We'll log the other planets later)

Greece is going to go under. Then France (they're holding a portion of their debt). Then Germany will go, since they have a large position in France and Greece. Next, when the EU starts to flag, then the UK will call in its chips on the debt that they've financed for the US. Of course, we can't pay it.

It's like a house of cards - everyone's debt is based on someone else, who has borrowed to the hilt from someone else.

California will IMO fail. Of course all it needs to do is start drilling off the coast and they'll immediately erase their debt - even before they drill, they'll erase their debt with licensing the oil companies' drilling rights. Drilling would also obviate the state income tax and keep California from losing its sovereignty (and maybe statehood) - when the feds take over the state.

[nmap]

When will our creditors come knocking? How about by 2016 or before?

LINK

PARKERSBURG, W.Va. – The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

It's time to start cashing them in.

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.

Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.

Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program's finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there's concern that the looming crisis will lead to reduced benefits.

"This is not just a wake-up call, this is it. We're here," said Mary Johnson, a policy analyst with The Senior Citizens League, an advocacy group. "We are not going to be able to put it off any more."

For more than two decades, regardless of which political party was in power, Congress has been accused of raiding the Social Security trust funds to pay for other programs, masking the size of the budget deficit.

Remember Al Gore's "lockbox," the one he was going to use to protect Social Security? The former vice president talked about it so much during the 2000 presidential campaign that he was parodied on "Saturday Night Live."

Gore lost the election and never got his lockbox. But to illustrate the government's commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bonds exist only in electronic form.

They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War.

One bond is worth a little more than $15.1 billion and another is valued at just under $10.7 billion. In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government. But don't bother trying to steal them; they're nonnegotiable, which means they are worthless on the open market.

More than 52 million people receive old age or disability benefits from Social Security. The average benefit for retirees is a little under $1,200 a month. Disabled workers get an average of $1,100 a month.

Social Security is financed by payroll taxes — employers and employees must each pay a 6.2 percent tax on workers' earnings up to $106,800. Retirees can start getting early, reduced benefits at age 62. They get full benefits if they wait until they turn 66. Those born after 1960 will have to wait until they turn 67.

Social Security's financial problems have been looming for years as the nation's 78 million baby boomers approached retirement age. The oldest are already there. As that huge group of people starts collecting benefits — and stops paying payroll taxes — Social Security's trust funds will shrink, running out of money by 2037, according to the latest projection from the trustees who oversee the program.

The recession is making things worse, at least in the short term. Tax receipts are down from the loss of more than 8 million jobs, and applications for early retirement benefits have spiked from older workers who were laid off and forced to retire.

Stephen C. Goss, chief actuary for the Social Security Administration, says the crisis has been years in the making. "If this helps get people to look more seriously at that in the nearer term, that's probably a good thing. But it's only really a punctuation mark on the fact that we have longer-term financial issues that need to be addressed."

In the short term, the nonpartisan Congressional Budget Office projects that Social Security will continue to pay out more in benefits than it collects in taxes for the next three years. It is projected to post small surpluses of $6 billion each in 2014 and 2015, before returning to indefinite deficits in 2016.

For the budget year that ends in September, Social Security is projected to collect $677 million in taxes and spend $706 million on benefits and expenses.

Social Security will also collect about $120 billion in interest on the trust funds, according to the CBO projections, meaning its overall balance sheet will continue to grow. The interest, however, is paid by the government, adding even more to the budget deficit.

While Congress must shore up the program, action is unlikely this year, said Rep. Earl Pomeroy, D-N.D., who just took over last week as chairman of the House subcommittee that oversees Social Security.

"The issues required to address the long-term solvency needs of Social Security can be done in a careful, thoughtful and orderly way and they don't need to be done in the next few months," Pomeroy said.

The national debt — the amount of money the government owes its creditors — is about $12.5 trillion, or nearly $42,000 for every man, woman and child in the country. About $8 trillion has been borrowed in public debt markets, much of it from foreign creditors. The rest came from various government trust funds, including retirement funds for civil servants and the military. About $2.5 trillion is owed to Social Security.

Good luck to the politician who reneges on that debt, said Barbara Kennelly, a former Democratic congresswoman from Connecticut who is now president of the National Committee to Preserve Social Security and Medicare.

"Those bonds are protected by the full faith and credit of the United States of America," Kennelly said. "They're as solid as what we owe China and Japan."

[dr. mabuse]

*

[Paslode]

But to illustrate the government's commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bonds exist only in electronic form.

They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War.

One bond is worth a little more than $15.1 billion and another is valued at just under $10.7 billion. In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government. But don't bother trying to steal them; they're nonnegotiable, which means they are worthless on the open market.

Man what a joke! That is some High Tech protection they have for all those IOU's....a 3 ring binder in a bottom drawer.....almost makes you wonder if someone isn't hoping for a fire, Silver Fish or some other paper eating insect to have its way with the evidence.

[rdret1]

There is more than one way to take over a country. For well developed countries, actual war is no longer an option. Now, you quietly buy the place.

[Stras]

Originally Posted by rdret1

There is more than one way to take over a country. For well developed countries, actual war is no longer an option. Now, you quietly buy the place.

Greece is available. Look at what the European Union is doing to them in regards to their current situation.

Nice to see that the EU is just as power-hungry as the dude with the funny mustache and the short dude who kept his one hand in his chest cuz it was cold. Funny how power leads to corruption.

[Stras]

Originally Posted by Paslode

http://www.thelocal.de/politics/20100304-25667.html

Makes you wonder what California or the US Government might need to sell off to keep the money flowing and creditors at bay.

But who wants to buy Hollywood with a bunch of worthless actors and actresses?

[Ret10Echo]

It appears that the use of the budgetary or legislative grenade has become commonplace.

What I mean by that term is there are (repeatedly) unpopular and downright wrong decisions made by elected officials who then package the legislation in such a way that it does not take affect for a period of time (5 -10 years +). Then, when the "thing" happens all of those in office can point fingers down to their predecessor, or count on the ignorance of their constituents in not tracking down the origin of the tax, fine, levy, pork, earmark or wasteful spending and program cancellation.

The Maryland legislature is expert in this and apparently have been spending time with their cronies at the other end or Route 50. All too often when the taxpayers of this State have their pockets picked, there is some guy in a $1000 suit doing a press conference lamenting how they were powerless to stop the onset of whatever it was.

Bad decisions are bad decisions regardless of how long you cut the time fuse and in the end the American people are the ones who take the hit.

R10

[nmap]

Originally Posted by rdret1

There is more than one way to take over a country. For well developed countries, actual war is no longer an option. Now, you quietly buy the place.

And along that line... LINK

Cnooc Acquires Argentina Oil Assets

HONG KONG—Chinese state-owned oil company Cnooc Ltd. said it will pay $3.1 billion for a 50% stake in a unit of Argentina's Bridas Energy Holdings Ltd. in a move to boost its production and reserves.

The deal highlights China's growing thirst for energy resources globally. The Chinese government is encouraging state-owned energy companies to buy assets abroad to power the country's booming economy.

The deal is structured as an oil and gas production joint venture. The Beijing-based oil company's unit, Cnooc International Ltd., and Bridas Energy Holdings will each hold a 50% stake in Bridas Corp., which has exploration and production activities in Argentina, Bolivia and Chile, mostly through its 40% interest in Pan American Energy LLC.

The other 60% of Pan American Energy, most of whose assets are in Argentina, is held by BP PLC, Cnooc said.

J.P. Morgan Chase & Co. advised Cnooc on the deal.

The plan is the latest in a string of international expansion moves by Cnooc, including elsewhere in Latin America. In December, Cnooc initialed a pact in Caracas to develop the Boyaca 3 oil block in the Orinoco belt, a large heavy-crude basin in Eastern Venezuela.

Last week, Cnooc said it and French oil major Total SA are seeking to acquire a third of Tullow Oil PLC's oil assets in Uganda. And earlier this month, the Baghdad government said Cnooc had signed an initial deal to develop the 2.5 billion-barrel Missan oil field complex in southern Iraq, along with Chinese partner, Sinochem International Corp.

Bridas Corp. is 100% owned by Bridas Energy, a holding company owned by the family of Argentine magnate Carlos Bulgheroni. Bridas Energy confirmed the deal Sunday.

"Cnooc takes a first large step into southern South America, and Bridas consolidates its international presence and its interests in Central Asia, Africa and the Far East," said Mr. Bulgheroni, Bridas Energy president.

The assets of Bridas Corp., which could have its name changed once the transaction is completed, include proven reserves of 636 million barrels of oil equivalent and an average daily output of 92,000 barrels of oil equivalent.

Cnooc said it will fund the investment through internal resources and expects the deal to be completed in the first half of this year.

It said Sunday that one attraction of the agreement was the prospect of boosting the recovery rates of some of the fields using proven technologies.

"This joint venture is aligned with our philosophy of seeking partnerships to expand our global footprint," Chairman Fu Chengyu said.

Cnooc is a unit of China National Offshore Oil Corp., China's third-largest oil company by assets. It said previously it is targeting production of 275 million to 290 million barrels of oil equivalent this year, up from 226 million to 228 million barrels in 2009.

Cnooc has said it wants to increase its oil and gas output by 6%-10% between 2011 and 2015.

[craigepo]

IMHO, we need a Federal balanced-budget amendment, as well as a Federal single-subject rule.

http://en.wikipedia.org/wiki/Single-subject_rule

http://en.wikipedia.org/wiki/Balanced_budget

Sorry to cite to wikipedia, but these are links to pretty simple discussions. Interestingly, Vermont is the only state that doesn't have a balanced budget amendment.

[TrapLine]

Originally Posted by craigepo

IMHO, we need a Federal balanced-budget amendment, as well as a Federal single-subject rule.

Unfortunately I think that the simple brilliance of the two aforementioned ideas preclude them from becoming a part of federal legislation.

[nmap]

Apropos of the balanced budget...

Let's suppose we have a friend - a close friend we care about. He comes to us for advice.

Our friend has a good income, lots of assets worth considerable money - and a tremendous load of debt. Still worse, he has contractual commitments for the future that dwarf those debts. His creditors are beginning to wonder about his capacity to repay - and if they increase his interest rates, his income won't cover the interest on the debts.

So...what shall we tell him?

Our friend has a name - Sam. And his situation is described rather well at this LINK

Sam's income is about $14 trillion. His debt is around $12.5 trillion. But his future social security commitments bring it up to about $72 trillion.

And those creditors? Let's see what the bond rating firm Moody's has to say:

LONDON—The four large triple-A-rated countries—the U.K., the U.S., France and Germany—face "an increasingly delicate balancing act" as they consider spending cuts to reduce government debt, Moody's Investors Service said in a review of these country's ability to retain their top credit-rating status.

The credit-rating company repeated that there was no immediate risk of a downgrade of the big triple-A-rated countries, although the slight risk they could fail to get their finances under control, and thus be downgraded, has increased. Moody's concluded that "on balance, we believe that the ratings of all large triple-A governments remain well positioned—although their 'distance-to-downgrade' has in all cases substantially diminished."

All large triple-A governments "have the capacity to rise to the challenges they face," the rating agency said in its quarterly report on triple-A-rated sovereign issuers.

A downgrade to any of these countries, as well as being viewed as a national humiliation, could significantly increase the government's interest bill.

LINK

Balancing Sam's budget requires very large tax increases, very large spending cuts, and - quite possibly - some sort of partial default.

I suspect Sam and his family will prefer some scheme to put off the day of reckoning. MOO, YMMV.

[craigepo]

Nmap:

RE: Comparing a potential recovery from our present situation, versus recoveries as seen during/after i.e. the Reagan years.

Is there a significant distinction regarding present social security projections and those same projections during recent recoveries? Is the distinction large enough to make previous "fixes" unusable in the present case?