Last Thursday Standard & Poor's cut Japan's credit rating to -AA from AA, warning that "Japan's government debt ratios--already among the highest for rated sovereigns—will continue to rise." A stagnant economy, unchanged in nominal terms since 1992, an aging population and escalating entitlement liabilities were all cited for the downgrade, along with the absence of a coherent strategy from current politicians. [more]
Social Security's finances are getting worse as the economy struggles to recover and millions of baby boomers stand at the brink of retirement.
The massive retirement program has been feeling the effects of a struggling economy for several years. The program first went into deficit last year, but the CBO said at the time that Social Security would post surpluses for a few more years before permanently slipping into deficits in 2016.
The outlook, however, has grown bleaker as the nation struggles to recover from the worst economic crisis since Social Security was enacted during the Great Depression. In the short term, Social Security is suffering from a weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits. [more]
Barack Obama’s State of the Union address sure sounded good, didn’t it? There were lots of solemn promises, lots of stuff about America’s “bright future” and a line about how we are now facing this generation’s “Sputnik moment” that will surely make headlines all over the globe. [more]
Mortgage finance giants Fannie and Freddie have asked taxpayers to pick up $160 million in legal fees owed during civil lawsuits, the New York Times reports.
The bulk of the money — $132 million — went to defend Fannie Mae in securities suits and government probes into accounting irregularities allegedly occurring before the subprime meltdown sparked the housing crisis.
The total bill could rise, the newspaper reports. [more]
Some experts say the economic bubble in China is going to make ours look like a mere hiccup. [more]
Gold is “overdue for a rest” and probably will fall after a decade of gains that sent prices to a record, said Jim Rogers, the chairman of Rogers Holdings who predicted the start of the global commodities rally in 1999.
“I’d rather own rice,” Rogers said. “I’d rather own something that’s more depressed than gold.” [more]
The vast majority of Americans, including many of those who believe that they are “educated” about the Federal Reserve, do not really understand how the Federal Reserve really makes money for the international banking elite. Many of those opposed to the Federal Reserve will point to the record $80.9 billion in profits that the Federal Reserve made last year as evidence that they are robbing the American people blind. [more]
The world is on the road to an all-out trade war unless the United States and China stop manipulating their currencies, says Brazilian Finance Minister Guido Mantega.
China and the United States have been tweaking their exchange rates to gain favorable trade advantages as well as to fuel economic growth, disrupting other nations' exchange rates in the process.
Mantega says Brazil is taking steps to keep the currency from strengthening further and adds his country will take up the issue before the World Trade Organization and other international bodies. [more]
This is one of those instances that I find something that has next to nothing to do with investing or finances, but was just too funny not to share: [more]
Rare earth metals, used in a variety of scientific and industrial processes, are due for a sharp upswing in price due to supply concerns, says legendary commodities investor Jim Rogers. China controls more than 97 percent of the world's rare earth metals and has said it will crack down on illegal mining as well as curb exports.
The time to buy rare earth metals — used in green energy and high-tech components such as wind turbines, fiber-optic cables, cell phones and flat-screen monitors — is now, as prices will come down when new mines eventually open. [more]
Former presidential candidate Rep. Ron Paul warned Wednesday that even if Republicans fulfill their pledge to slash $100 billion in federal spending, the United States still only has a one in 10 chance to avert an economic catastrophe.
Appearing jointly on Fox News with his son, newly minted Kentucky Sen. Rand Paul, the Texas Republican said that a $100 billion cut in federal spending — a goal that leading Republicans now are cautioning may not be realistic — would amount to “peanuts.”
“It hardly does anything,” Paul said of the $100 billion cut, which would roll back federal spending to 2008 levels.
Full article [more]