Tidbits Quotations
To Accompany the March 28, 2013 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

The U.S. will "do what is necessary" to prevent the Tehran from acquiring nuclear weapons.
President Barack Obama, March 2013
President Obama is apparently playing world war brinksmanship in the footsteps of President Kennedy. Except for the disastrous Bay of Pigs Invasion, the game of chicken worked well for JFK. I'm not optimistic it will work well with Iran. President Obama may end up with chicken egg on his face. But for the moment talking touch raises leadership approval ratings in the political arena where everything else in Washington DC is going badly.

What is Radiation --- http://everydayeinstein.quickanddirtytips.com/radiation.aspx

CBS Apologizes for Anti-American Show --- Click Here

The Economist: World in 2013 (Annual summary of world economics trends from The Economist magazine) ---

Economic and Financial Indicators
The Economist
March 16-22, 2013
pp. 92-93
I could not find a URL for this table
There are 17 columns of economic statistics for 47 nations plus the Eurozone
Included are estimates of the percentage changes in GDP for all of 2013
The estimated GDP gainers are China (+8.5%), India (+6.5%), and Indonesia (+6.4%)
The estimated GDP losers are led by Greece (-5.0%), Spain (-1.6%), Italy (-1.1%), The Netherlands ((-0.6%), and Hungary (-0.5%)
Germany only clocks in at an estimated 0.7% growth in GDP
The Eurozone as a whole is estimated to have a GDP decline of -.2% which explains in part the negativism about the Eruozone's economic prospects

The United States is estimated to have a 2.0% positive growth in GDP, but this falls way short of what is needed to significantly reduce unemployment

Current Unemployment Rates --- http://en.wikipedia.org/wiki/Unemployment
Unemployment is difficult to compare because of possible differences in definitions
The winners in terms of total unemployment are Thailand (0.5%) and Singapore (1.8%) current unemployment rates
Greece and Spain have much worse problems with almost non-existent opportunities for college graduates

The United States is currently clocked in at 7.7% but this is misleading because of having added so many temporary jobs relative to losses of full-time jobs with employment benefits like medical insurance. There is much concern about adding full-time jobs with medical benefits in advance of the costly Affordable Health Care Act.

The biggest losers are Greece (26.4%), Spain (26.2%)and South Africa (24.9%)
The Eurozone as a whole has unemployment currently at 11.9%

Current-Account Balances (Balance of Payment Trading) --- http://en.wikipedia.org/wiki/Current_account
Trading accounts as a percentage of GDP are strongest for South Korea (15.2%), Norway (13.6%), Saudi Arabia (13.3%), and Switzerland (11.5%)
The loses here include South Africa (-5.4%), Indonesia (-4.1%), and Chile (-3.5%)
The United States looks relatively bad at -2.6%
The Eurozone looks better at +1.2%

The Economist: World in 2013 (Annual summary of world economics trends from The Economist magazine) ---


The USA's National Debt is Now Over $16 trillion and spinning out of control --- http://www.usdebtclock.org/
Note that this greatly understates both long-term and short term obligations due to unbooked commitments like Federal crop insurance to farmers, weather disasters like Hurricanes Katrina and Sandy and hundreds of f tornadoes per year, and future Social Security, Obamacare, Medicare, and Medicaid entitlements.

"Who Owns the U.S. Treasury Market?"  by Barry Ritholtz, Ritholtz, February 1, 2013 ---
Note the pie charts.

The Great Pretender --- http://www.youtube.com/embed/6Zy297Xgr8Q

The 20 Best  (worst?) Quotes from CPAC 2013 --- Click Here

"Goading Gullible America Into War," by Pat Buchanan, Townhall, March 21, 2013 ---

Also see

"GOP’s ‘Post-Mortem’ Shows Political Party Without A Clue," by Douglas MacKinnon, Townhall, March 24, 2013 --- Click Here

At the start of an exam, a student openly wondered, "But Professor Einstein, this is the same exam question as last year!" To which the great man supposedly replied, "Correct, young man, but we need to find new answers."
Werner Reinartz --- http://blogs.hbr.org/cs/2013/03/measuring_creativity_we_have_t.html

The Evolving Curriculum:  More Marx Less Business, Finance, and Accounting (in terms of financial reporting in free markets)
The Harvard Business School, London Business School, IMEDE, and the Stanford Graduate School of Business Have Got to Be Eliminated
Let's let China have all the capitalists!

"The Sun Sets on the Modern Merchant Class," by David Priestland, Chronicle of Higher Education's Chronicle Review, March 18, 2013 ---

Jensen Comment
Let's face it. Corruption might be eliminated if we just let government take over commerce. But where's the historical evidence?

"The Federal Debt Ceiling," AICPA, March 2013 ---

The USA's National Debt is Now Over $16 trillion and spinning out of control --- http://www.usdebtclock.org/
Note that this greatly understates both long-term and short term obligations due to unbooked commitments like Federal crop insurance to farmers, weather disasters like Hurricanes Katrina and Sandy and hundreds of tornados per year, and future Social Security, Obamacare, Medicare, and Medicaid entitlements.

Add to this the unfunded and unbooked state entitlements for things like public pensions and you see why good people no longer enter into politics as Democrats or Republicans --- people that can say no to special interest groups demanding more and more handouts from government and lower taxes.


The buck stops everywhere else except here.
Author unknown

Four days after slamming the doors of the White House closed, Barack "It's-not-my-fault" Obama says he's going to ask the Secret Service if to reconsider. Contradicting previous statements, Obama told George Stephanopoulos of ABC News this morning that neither he nor his staff had anything to do with closing the public out of the White House. This time, he threw the Secret Service under the bus.

"Obama's Budget Abdication Breaks 92 Year Tradition," by Mike Flynn, Brietbart, March 12, 2013 ---

Barack Obama certainly enjoys the trappings and perks of the Office of President. The actual job of being President, however, doesn't seem to interest him. His desire to avoid being tied to any specifics of any proposal have caused him to do what no modern President has done. He is the first President since 1921 to abdicate the task of drafting a federal budget to Congress.

Congress established the modern budget process in 1921. Under the terms of the law, the President is required to submit a budget for the federal government no later than the first Monday in February. Obama has only met this statutory deadline once during his Presidency, a record worse than any modern President. Obama has missed the deadline 4 times. Prior to him, all the Presidents back to 1921 together missed the deadline twice.

Pentagon officials recently advised the House Armed Services Committee that the President's budget wouldn't be delivered until April 8th, a 9 week delay that trumps any previous delay. Worse, though, the long delay means that Congress will initiate its own debate on the budget, without input from the Executive Branch.

On Tuesday, Rep. Paul Ryan unveiled the House GOP budget proposal. On Wednesday, Senate Democrats will unveil their first budget proposal in 4 years. By the time Obama gets around to submitted his mandated proposal, Congress will have had almost a month to deliberate on its proposals.

As we've seen throughout his tenure, Obama prefers lofty rhetoric over the day-to-day give-and-take required to enact legislation. He spoke in general, focus-tested, words about ObamaCare, the stimulus, financial services regulation and a host of other issues, while leaving the gritty, horse-trading work to Congress.

After Congress had finished, Obama appeared on the scene, Zelig-like, to put his signature to its work. He probably scheduled the bill-signings around tee times.

One of the central jobs of the Presidency is to manage the Executive Branch. The Office is responsible for making sure federal agencies can meet their mission with the resources available. Obama, however, can't be bothered to report to Congress what resources he believes the government needs to meet its mission.

We were told Obama would be an historic President. I don't think his unprecedented abdication on the budget is what they had in mind.

Note that President Obama is the first president in 92 years that refuses to submit a budget for Senate and Congressional approval in fear of political fallout in the 2014 elections. However, his influence is great in the Senate since he now argues that trillion dollar deficits, a 20 trillion National Debt, and $100 trillion unfunded entitlements are simultaneously sustainable and not to worry. He has other plans for his proposed tax increases.

In short, this document gives voters no reason to believe that Democrats have a viable plan for — or even a responsible public assessment of — the country’s long-term fiscal predicament.
"The Post’s View The Democrats’ complacent budget plan," Editorial Board of The Washington Post, March 14, 2013 ---

SENATE BUDGET Committee Chairwoman Patty Murray (D-Wash.) has now weighed in with a budget plan to counter the House Republican tax-and-spending blueprint. We’ll get to that Democratic document in a moment. First, here’s a quick fiscal reality check, based on an analysis published Feb. 28 by economists William G. Gale and Alan J. Auerbach of the Brookings Institution.

There has been halting but real deficit reduction progress in recent months. The United States faces no imminent budget “crisis.” Nevertheless, the economists write, “the 10-year budget outlook remains tenuous.” Even assuming steady economic growth, the national debt in 2023 will be twice as high as its historical average, as a percentage of the economy — and poised to resume rising. That long-term fiscal problem, driven by the growth of entitlement programs for an aging population, remains unaddressed. Dealing with it, Messrs. Gale and Auerbach write, will take tax and spending changes “several times the size of those adopted under the recent legislation.”

Except for the part about no imminent crisis, the Senate Democratic budget recognizes none of this. Partisan in tone and complacent in substance, it scores points against the Republicans and reassures the party’s liberal base — but deepens these senators’ commitment to an unsustainable policy agenda.

The Democratic budget rightly pushes back against the more mindless anti-government impulses of the GOP. It emphasizes infrastructure, education and research, which can enhance the economy’s growth potential. It protects programs for the poor. It includes revenue as part of the solution.

Of the plan’s modest $1.85 trillion in 10-year savings, half would come from eliminating tax loopholes and deductions. The document admirably backs this goal with a sophisticated explanation of distortion and unfairness wrought by federal tax expenditures. But it is woefully imprecise about which breaks — including popular items such as the mortgage-interest deduction — it would eliminate. It alludes to economist Martin Feldstein’s intriguing plan to cap deductions and credits but doesn’t dare endorse it.

It is on the issue of entitlements that the Democrats’ document really disappoints. There is literally nothing — not a word — suggestive of trimming Social Security, whether through greater means-testing, a more realistic inflation adjustment or reforming disability benefits. The document’s fuzzy call for $275 billion in “health savings” is $125 billion less than the number President Obama has floated.

As for the coming flow of baby boomers into Medicare, the Democrats declare that “new retirees deserve the same promise of quality, affordable health care from which their parents have benefitted — and it is the position of the Senate Budget that they ought to get it.” There’s plenty of excoriation for the GOP “premium support” plan. But there’s no explanation of how the Democrats would pay for their “promise” — nary a hint of the many cost-saving reforms that would extend Medicare’s life without embracing the GOP plan.

In short, this document gives voters no reason to believe that Democrats have a viable plan for — or even a responsible public assessment of — the country’s long-term fiscal predicament. Read alongside the GOP’s own partisan outline, it leaves only a faint hope that sensible members of both parties, together with Mr. Obama, might yet meet in the serious middle.

Continued in article

"Extending Social Security and Medicare Eligibility Ages," by Nobel Laureate Gary Becker, Becker-Posner Blog, March 10, 2013 ---

"Extending Social Security and Medicare Eligibility Ages," by Richard Posner, Becker-Posner Blog, March 10, 2013 ---

Bob Jensen's threads on looming entitlements disasters ---

The following article  is a very well-written (as far as it goes) as a put down of austerity in government spending.
Is there anything terribly misleading in the following article?

"Spending Isn't the Problem, Austerity Is," by Robert Schlesinger, US News, March 15, 2013 ---

Here is how I think Schlesinger's article is a highly misleading article in favor of a spendthrift government.


Firstly it encourages massive government spending for spending sake irrespective of how dysfunctional some types of government spending can be can be dysfunctional to recovery and prosperity. For example, currently 11 states have more people on welfare than people who are working in the legitimate economy. In other states like Vermont there's a growing problem acknowledged by the progressive Vermont Governor --- too many potential workers are opting for welfare instead of working because, for them, welfare pays much better ---

Hence I would conclude that spending much more, ala Schlesinger, to make welfare living a more attractive alternative to working is probably dysfunctional to the economics and sociology of the USA and elsewhere such as in Europe. Greatly increasing welfare and the minimum wage simultaneously exacerbates the problem because of the underground economy. In San Antonio, for example, it is very common for mothers on welfare to work in the underground economy for five times the minimum wage. Even here in New Hampshire we just interviewed a woman who wants $70 cash-only per hour to clean houses and is getting some jobs at that rate ---


Secondly, the article makes no mention of how the Fed's current policy of printing trillions upon more trillions of dollars (Quantitative Easing) to pay government bills is a Zimbabwe-like time bomb that keeps interest rates low on the current national debt but is putting the USA on a disaster course from which may never recover in spite of the rants of Paul Krugman. Printing money to pay bills becomes addictive in a death spiral of economics!


Thirdly, the above article completely overlooks the pending disaster of entitlements that needs some corrective actions immediately rather than waiting for massive government spending for the next ten years to solve the entitlements problem. For example, one of the most sensible ways of sustaining entitlements like Social Security and Medicare is to admit up front that life expectancy has exploded from 65 years of age in 1940 to nearly 80 years of age in 2000 ---

If we intend to correct the Social Security and Medicare entitlements for this drastic increase in life expectancy of claimants, it is important to act now, because there will be a huge lag before adjustments take effect.

"Extending Social Security and Medicare Eligibility Ages," by Nobel Laureate Gary Becker, Becker-Posner Blog, March 10, 2013 ---

"Extending Social Security and Medicare Eligibility Ages," by Richard Posner, Becker-Posner Blog, March 10, 2013 ---

Bob Jensen's threads on looming entitlements disasters ---

More on the Use of Statistics and Graphs to Mislead Readers

For this module I will begin with one of the comments that follow the article. In particular, this comment reveals how dangerous it is to compare trends in ratios. In this case the numerator's ratio is wages of workers divided by number of workers. The denominator ratio is the GDP divided by number of people. Perceptively, the commenter notes that as a significant number of women entered the work force, the numerator was greatly impacted without affecting the denominator since women are defined as people.

Great charts, but there is a confounding factor — the civilian employment / population ratio has been changing over time. In particular, after being stable for many decades, the ratio began to rise in the mid 1970s as more women began to enter the workforce. While GDP continued to rise at a more or less constant rate, the number of workers increased in the 1980s and 1990s — therefore the wages (or GDP) per worker had to decrease relative to the GDP per person.

Mind you, the employment – population ratio has fallen back to late 1970s early 1980s levels but wages haven’t rebounded, so clearly something else is going on as well.

Here’s a link to the Civilian Employment – Population Ratio from the St. Louis Fed

"Looking at Wages Relative to GDP," by Barry Ritholtz, March 22, 2013 ---

Additional Jensen Comments
I don't think Barry Ritholtz or most other readers of these graphs (including me) caught this point until Gasgus straightened us out. This is just another example of how to use statistics and graphs to mislead readers.

Other confounding factors are the exploding use of robots in manufacturing plants and reduced participation in the labor force. How do we define number of workers as more and more people remove themselves from the labor force? Increasingly an unmarried parent withdraws from the labor force, collects welfare and food stamps, and receives financial benefits from a a working unmarried partner. There are now 11 states with more people on welfare than are working in the legitimate (non-underground) labor market. Several other states like Vermont are on the brink of raising this number above eleven ---

Labor Hoarding --- http://en.wikipedia.org/wiki/Underemployment

"Housing has been booming! Construction jobs haven’t. Here’s why," by Neil Irwin, The Washington Post, March 19, 2013 ---

. . .

Key to understanding the sluggish growth in construction jobs is a concept called “labor hoarding.” That’s what happens during a recession when companies don’t fire as many workers as the decline in business would seem to have justified. Firms don’t want to lose all their quality workers and then be unable to keep up with demand when business finally turns around, so they keep people on staff even when there is not enough work to keep them fully busy.

This seems to have happened on a large scale in construction in the last few years. Kris Dawsey and Hui Shan at Goldman’s economics research group calculated that the economic value added per construction worker fell from $80,000 in 2006 to under $60,000 at the end of 2012. That is labor hoarding in a nutshell.

But because construction companies never fired as many workers as the collapse in their business would have justified, that means that over the last year, they haven’t needed to hire additional workers to keep up with the uptick in business.

Continued in article

Jensen Comment
I think an even bigger reason that a housing boom is disappointing for reducing unemployment is the way housing contractors outsource much of the construction work to skilled tradesmen who are self-employed and not included in the employment-unemployment data generated by the government ---

For example, such things as basement construction, plumbing, electrical wiring, bricklaying, siding, roofing, landscaping, swimming pool installation, etc. are outsourced mainly for reasons of not having to pay benefits to employees and unemployment insurance. The self-employed subcontractors often hire unskilled and unreported helpers in the underground market where no benefits like health care, Social Security, Unemployment Compensation, and Medicare payments must be paid.

In San Antonio, for example, hundreds and hundreds of workers, many undocumented, crowd selected street corners in south San Antonio waiting for subcontractors to pick them up for day work. Their self-employed bosses have the trade skills, but they need helpers who do not have to be so skilled. The one fringe benefit is that unskilled workers often learn tricks of the trade, like bricklaying, and eventually become their own self-employed subcontractors.

I replaced my roof twice in San Antonio with the same roofing company over a period of 24 years. My roofing contractor did not have a single employee on the books and did not go up on the roof himself after the day he estimated the price of each job. I never met any of his workers who could speak much, if any, English. However, some of them who worked for my contractor were regulars over the years who became quite skilled at roofing.  I was happy with their work even if I always hated having a flat roof next to enormous live oak trees, I grew very tired of having to rake and blow leaves from my roof in San Antonio. In what remains of my life I will never again own a house with a flat roof or swimming pool.



The Mouse That Roared:  The Cyprus Deal

From the CFO.com on March 25, 2013

Cyprus secured a €10 billion bailout from its international creditors, ending its week of financial panic. But lasting damage has likely been inflicted on the Cypriot economy, the WSJ reports on A1 today. Officials said they believe the country will now need strict controls on money transfers in and out of the economy in the coming weeks or possibly months, cutting off its citizens and companies from much of the rest of the euro zone’s financial system.

The program also aims to slash the size of Cypriot banks, perhaps forever ending the country’s status as an offshore tax haven and financial-services center. The deal lines up financing for the government and shuts Cyprus’s second-largest bank, Cyprus Popular Bank, imposing steep losses on deposits with more than €100,000, European officials said. The country’s largest bank, Bank of Cyprus, will also be downsized aggressively, with large depositors there taking a hit.

Also vitally at stake in the banking crisis is Cyprus’s credibility as a place for international companies to continue doing business, the New York Times writes. Much of what has made Cyprus so alluring to businesses has blown up in the past week. Cyprus’s 10% corporate tax rate would rise to 12% under the tentative terms of the bailout. That would still be the lowest in the euro zone, but Cyprus has lost the stability needed to be a tax haven.


"Why Cyprus Keeps Running to Russia," by Barry Ritholtz, Ritholtz Blog, March 21st, 2013 ---

Jensen Comment
The bigger question addressed here is whether it's a good thing for any Eurozone country to be so totally dependent upon Russia. If Cyprus had its own currency things would be a whole lot different.

Of course we could also say the same for Greece, Spain, Italy, and maybe even France --- nations not so dependent upon mother Russia but facing very high unemployment rates and serious current debt and long-term entitlement issues. In theory France is moving closer to socialism while Russian is moving closer to capitalism, but I'm not certain about Russia's sincerity here. Nor is it clear how far France is willing or able to move to move further to the left.

Greece, Italy, and the USA should be running faster from their crappy governments apart from political doctrine --- governments that increasingly cater to special interests that pony up cash for political favors. Italy is unable to even form a government, and the 2014 and 2016 elections could exacerbate the gridlock in Washington DC.

Maybe World War III starting in Iran and North Korea will save us all. Yeah right!
If it wasn't such a sick joke I would laugh at overwhelming media attention being devoted to the history of the Iraq war and the Bush tax cuts --- rather than in-depth media coverage of the evolving history of World War III and global economic collapse.

Let's hang G.W. Bush and Dick Cheney (Chris, Ed, and Rachel get front row seats at the hangiing) for past war crimes and get on with the really, really serious problems in the world, problems much more serious than the size of gun magazines and minimum wage and (gasp) when to ban abortions.

And let's forget about medical privacy rights and hang a scarlet letter on every kid that's having some mental issues.  Forget the minor issues like $125 trillion in entitlements and adding another $x trillion to current National Debt. And by all means carpet bomb Iran and get it over with.

Michigan's Taxpayers Pay Dearly to Acquire Both the Real Detroit and Fanciful Land of Oz ---

The Yellow Brick Road to Detroit

"Law Professors See the Damage Done by ‘No Child Left Behind’," by Michele Goodwin, Chronicle of Higher Education, March 12, 2013 ---

. . .

Bernstein explained, “I want to warn you of what to expect from the students who will be arriving in your classroom, even if you teach in a highly selective institution.”

He was right to warn us, except for one error: Those students have already arrived. Very bright students now come to college and even law school ill-prepared for critical thinking, rigorous reading, high-level writing, and working independently.

Bernstein described what many college professors and even graduate-school professors have come to know firsthand. For more than a decade, a culture of test taking and teaching to the test has dominated elementary and secondary education in the United States, even at elite public and private schools. And now its effects are being felt by professors.

Continued in article

Jensen Comment
Seems like law schools are seeing more of the damage done by four years of undergraduate education in college.

These 11 States now have More People on Welfare than they do Employed!

Last month, the Senate Budget Committee reports that in fiscal year 2011, between food stamps, housing support, child care, Medicaid and other benefits, the average U.S. household below the poverty line received $168.00 a day in government support. What's the problem with that much support? Well, the median household income in America is just over $50,000, which averages out to $137.13 a day. To put it another way, being on welfare now pays the equivalent of $30.00 an hour for a 40-hour week, while the average job pays $25.00 an hour.

A Retirement Crisis is Brewing

How would you like to retire with a small nest egg that cannot earn as much as one percent per year in a safe investment?

If you lock up a minimum of $100,000 for five years in a Certificate of Deposit the best you can do is 1.75 % which most likely won't cover food and fuel price increases over the next five years. A one-year CD gets you a whopping 0.94% annual rate. ---
http://cdrates.bankaholic.com/ ---
Thanks ever so much Ben Bernanke.

The CREF bond yield to date in 2013 is at a (negative)  -0.13%.
The TIAA-CREF Inflation linked bond fund is at a (negative) -0.80% thus far in 2013
The CREF Equity Index at a (positive) +0.73% thus far in 2013 but has much more high-risk volatility for what you've struggled to save and might lose
According to MSNBC, President Obama's approval rating fell 15% since January 2013 and is now less than 50%
Congressional approval ratings barely registers
It's time for term limits

From CFO.com Morning Ledger on March 19, 2013

A retirement crisis is brewing as workers save too little and companies face bigger pension liabilities. A report out today from the Employee Benefit Research Institute (PDF) shows that 57% of U.S. workers have less than $25,000 in total household savings and investments excluding their homes. Only 49% reported having so little money saved in 2008. And 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study’s 23-year history, the WSJ’s Kelly Greene and CFOJ’s Vipal Monga report.

Corporate balance sheets (including TIAA-CREF) are also under pressure. Based on another recent report, the Society of Actuaries said rising life expectancies could add as much as $97 billion to corporate pension liabilities in coming years, an increase of up to 5%. Goodyear said life expectancy growth for its plan’s beneficiaries is one reason its global pension-funding gap widened to $3.5 billion last year from $3.1 billion in 2011.

The effect of longer life spans on pension obligations has been dwarfed by the impact of declining interest rates over recent years. Because of the way pension liabilities are calculated, lower rates mean that future obligations are higher today. But interest rates are likely to rise at some point, which will lessen pension obligations. “Rates can go up,” said Rama Variankaval, an executive director in the corporate finance advisory group of J.P. Morgan’s investment bank. “Mortality is more of a one-way street.


World Life Expectancy Map --- http://www.worldlifeexpectancy.com/index.php

Life Expectancy Trend for the United States --- http://www.aging.senate.gov/crs/aging1.pdf


As a result of falling age-specific mortality, life expectancy rose dramatically in the United States over the past century . Final data for 2003 (the most recent available) show that life expectancy at birth for the total population has reached an all-time American high level, 77.5 years, up from 49.2 years at the turn of the 20th century. Record-high life expectancies we re found for white females (80.5 years) and black females (76.1 years), as well as for white males (75.3 year s) and black males (69.0 years). Life expectancy gaps between males and females and between whites and blacks persisted.

In combination with decreasing fertility, the life expectancy gains have led to a rapid aging of the American population, as reflected by an increasing proportion of persons aged 65 and older. This report documents the improvements in longevity that have occurred, analyzing both the underlying factors that contributed to mortality reductions and the continuing longevity differentials by sex and race. In addition, it considers whether life expectancy will continue to increase in future years. Detailed statistics on life expectancy are provided. A brief comparison with other countries is also provided.

While this report focuses on a description of the demographic context of life expectancy change in the United States, these trends have implications for a wide range of social and economic programs and issues that are likely to be considered by Congress.

How is the Federal Reserve under Ben Bernanke destroying pension funds, especially defined benefit pensions like those of teachers, firefighters, police, municipal workers, and state workers, and postal workers.?

There's no worry about Social Security Trust Funds since Congress, in it's great wisdom, emptied those trust funds long ago on things other than Social Security pensions.

"Bernanke Unbounded:  The Fed enters a brave new world of unlimited monetary easing," The Wall Street Journal, September 13, 2012 ---
Read that printing trillions of greenbacks without taxing or borrowing to pay Federal government bills. The net effect is to drive interest rates on savings accounts, Certificates of Deposits, and pension funds to virtually zero.

From the CFO.com Morning Ledger on March 20, 2013

Pension math overwhelmed by discount rate.
Longer lifespans are putting some pressure on corporate defined benefit plans, but changes in the interest rates used to calculate liabilities are by far the biggest issue facing pensions, writes Vipal Monga. As we noted yesterday, increased longevity could add as much as 5% to pension liabilities. But, as CFO Journal reported last month, that increase is dwarfed by the impact of falling discount rates. “Mortality is somewhat of a second-order element [in the rise of obligations],” said Rama Variankaval, an executive director in the corporate finance advisory group of J.P. Morgan’s, investment bank. DuPont CFO Nick Fanandakis said in an interview that his company tries to adjust its mortality assumptions every year, and any increase in the lifespan of retirees will be insignificant compared to changes in the discount rate. “[Longevity increases] won’t move the needle,” he said. The company’s U.S. plans had a pension deficit of $6.6 billion at the end of 2012.

Jensen Comment
University employees in TIAA are given a choice to transfer funds into the riskier CREF equity funds, although there are restrictions on how much can be shifted in any give year. TIAA is not doing so well since 2008 thanks to Ben Bernanke.

Every Breath You Take
Here's an
anti-Bernanke musical performance by the Dean of Columbia Business School ---
Ben Bernanke (Chairman of the Federal Reserve and a great friend of big banks) --- http://en.wikipedia.org/wiki/Ben_Bernanke
R. Glenn Hubbard (Dean of the Columbia Business School) ---

Bob Jensen's threads on entitlements ---

From the CFO.com Morning Ledger on March 13, 2013

CFOs want immigration overhaul.
CFOs overwhelmingly want dramatic immigration reform that will allow highly skilled workers to enter and remain in the country. That’s one of the key findings in the just-released Duke University/CFO Magazine Global Business Outlook Survey. More than 88% of CFOs say the U.S. should drop the current lottery system and instead adopt a merit-based immigration system. Among other findings, the U.S. Business Optimism Index rebounded this quarter to 55 – up from last quarter’s reading of 51 but still below the long-run average optimism of 59. U.S. companies plan to increase business spending by 5.3% percent this year, double the projection from last quarter. And full-time domestic employment is expected to rise 2.2% in the next 12 months. However, CFOs consider there to be a 33% chance the U.S. will slip back into recession in the next 12 months.

Jensen Comment
It's not clear what a merit-based immigration system would entail. In Canada, merit includes the ability to buy citizenship. But most of the controversies in U.S. immigration do not entail candidates who can pay $50,000 for the right to become a citizen.

Merit in the USA could include academic credentials, but only a small part of our immigration troubles concern turning back promising teachers and researchers.

Merit could be based on having exceptional work skills such as IT or auto mechanic skills. But these could easily become unbalanced with unlimited immigration based upon skill sets.

Merit could be fluency in English, but that might destroy the Spanish language south of the Rio Grande.

Merit could include length of time on a waiting list, but most of our future undocumented aliens would not wait it out on such a list.

Merit could include being the parent of a U.S. citizen child.
Many of our troubles stem from immigrants who entered illegally to have a child on U.S. soil so the child is automatically a U.S. citizen under the 14th Amendment. Emergency rooms in south Texas are filled with very pregnant non-citizens. Troubles begin when families have to be separated due to forceful return of one or both parents back to their home countries.

Troubles begin when the parent of a U.S. citizen-child is not legally entitled to get a job in the USA.

Troubles begin when a non-citizen received most of his or her K-12 education in the USA. Should this constitute "merit?"

The whole thing is one big mess when it comes to defining "merit" for citizenship.

One thing we do know. At times we feel overcrowded in the USA at about 300 million people, but our economy and our genetic diversity can benefit from  somewhat larger population due to immigration. Is there a limit somewhere between a USA population of 300 million and 3 billion people?

Have Paul Krugman, Ed Shultz, Sen. Barbara Boxer, Sen. John McCain, Sen. Harry Reid, Barbara Striesand, or Sean Penn written anything about what is sensible in terms of  immigration reform? I'm sure they're all for such reform, but how would they keep it from getting totally out of control in the USA assuming that stopping clandestine passage across all USA borders is literally impossible? I suspect they all agree with John McCain when he says border fencing is a useless waste of tax money.

It would seem that ID cards are useless if we can't even stop counterfeiting of money. I assume an electronic database will be a sick joke if the IRS cannot presently stop millions of thieves from getting tax refunds with stolen Social Security numbers.

I might be all for merit-based reform if I knew what it was and liked the sound of things.
Sadly, I don't have a better idea when it comes to how to efficiently, effectively, and humanely hold back the tide. The ultimate solution probably lies with making it more economically desirable to not sneak into the U.S. This has worked somewhat well in terms of the success of the recent automobile factories built in Mexico. But this solution is very, very limited to date.

Eventually the Bric nations  may have more immigration problems than the USA. But this is years and years and years into the future before citizens of the USA are sneaking across the borders into Bric nations to find jobs and prosperity and better health care ---

"A Smaller Slice of the Pie: Why Technology Is No Longer Creating Jobs," Knowledge@Wharton, March 13, 2013 ---

Can technology set off a new boom in job creation? The question is a fundamental one for the American economy given that policy makers in Washington often look to the technology sector to pick up the slack in the employment market. Meanwhile, the fortunes of Silicon Valley start-ups continue to be closely followed, in part because of the spectacular wealth they can generate for their founders, but also because of the assumption that these new companies are a significant source of new employment.

So it will likely disappoint many people that four prominent economists assembled for a recent panel discussion to explore the link between technology and job creation were, in large part, bearish in their outlook. Some went so far as to suggest that technology actually increases unemployment and adds to other problems in the U.S. economy, notably the growing wage disparities between an extremely elite group of earners and everyone else.

The discussion, titled "Can Tech Power the Next Jobs Boom?" took place at Wharton's San Francisco campus and was co-sponsored by the Churchill Club, a Silicon Valley business and technology forum.

Several troubling data points emerged during the evening, including one offered by Erik Brynjolfsson, a professor at MIT's Sloan School of Management and director of the MIT Center for Digital Business.

Working with fellow MIT professor Andrew McAfee, Brynjolfsson compared the market capitalization and payrolls of four of the biggest tech companies. His conclusion: While the companies had astronomical values on Wall Street, their job production was minimal.

The four -- Apple, Amazon, Facebook and Google -- at the time had a market cap in the neighborhood of $1 trillion, which is roughly 6.25% of the combined market cap of all U.S. companies. But the four employ about 190,000 people, fewer than the number of jobs the U.S. economy needs to add approximately every six weeks to just keep pace with population growth. The implication, said Brynjolfsson, is that even hugely successful tech companies cannot be counted on to create the kinds of jobs the economy needs.

Brynjolfsson also described what he called a "superstar" effect in technology-related wealth distribution, a trend that has become pronounced in the last decade. In recent years, he said, the majority of GDP growth has benefited a very small part of the population, less than 1%. In many cases, even college-educated workers are not sharing in the growing pie. "It's becoming a winner-take-all situation," he said.

"Technology doesn't automatically lift the fortunes of all people," Brynjolfsson noted. "It's something of a paradox. Profits have never been higher, innovation is roaring along, GDP is high, but job creation is lagging terribly, and the share of profits going to labor is at a 60-year low. This is one of the most important issues facing our society."

Citing the work of economist Joseph Schumpeter, Brynjolfsson noted that technology has historically provided "creative destruction" for an economy, causing some jobs to disappear while bringing others into existence. "But the last 10 years have been different. Technology simply hasn't been creating jobs as it did before."

It's a double-barreled effect, Brynjolfsson added. Not only are today's technology companies creating fewer jobs, but the products they make, notably computerized automation equipment, often lead to further job losses in other parts of the economy. These second-effect job losses are further encouraged by off-shoring and by the declining power of labor unions.

"Improvements in technology can improve productivity," he said. "For most of the 20th century, those productivity increases were associated with job growth and growing wages. But there is no economic law saying that always has to be the case. It's quite possible to make the pie bigger, but with most people having a smaller slice. That is what has been happening recently."

Flint, Michigan, vs. Austin, Texas

Somewhat similar themes were echoed in the remarks of Enrico Moretti, an economics professor at the University of California, Berkeley, whose recent book, The New Geography of Jobs, was widely praised for its insights into the changing nature of the American workforce.

According to Moretti, there was not one single labor market in the United States, but hundreds, corresponding to metropolitan areas. Overall, he said, these markets fell into three different groups: those doing well in the new technology economy, those doing poorly and those hanging in the balance.

The differences between the emerging job market "winners" and "losers" are striking. In 1980, Moretti noted, both high school and college graduates in Austin, Tex., made half as much as their counterparts in Flint, Mich. Now, however, those ratios are reversed, and the gap between wages in Flint's rust belt and the booming tech sector in Austin continues to grow. "So when people ask, 'Can technology create the next job boom?' my answer is, 'It depends,'" said Moretti.

While technology may not be making as many jobs as it once did, the jobs it does create are among the most economically valuable. Moretti noted that the average tech position creates five additional jobs in various support industries, from doctors to hairdressers to dog walkers. However, the "multiplier effect" for manufacturing jobs is much lower: 1.6 instead of 5. Much of that, he added, was simply the result of the higher wages generally paid by tech jobs.

Because of that high multiplier, the majority of people will never be employed directly by technology, even in thriving tech hubs like Silicon Valley. "Technology jobs will be the minority, [about] 30%," Moretti said. "What's important is to build that foundation of 30%...."

Moretti and several other panelists suggested that the jobs being lost in the traditional manufacturing sector are never coming back. Or, if they do, there will be far fewer of them, as is the case with the heavily automated manufacturing facilities that Apple has discussed opening in the United States.

Michael Chui, who studies job creation for the McKinsey Global Institute, said that "employment transparency" has become a crucial issue for college students attempting to pick a field of study. They need to know where the jobs of tomorrow are likely to be, but the data is not available to them during the period of their lives when they are making decisions that will weigh most heavily on their career options.

He also said the United States needs to increase the number of college graduates studying science, technology, engineering and mathematics, the so-called "STEM" curriculum. More than 40% of China's college population are in a STEM field, and the figure in Germany is 28%. But in the United States, said Chui, it is only 15%.

Even within STEM, he noted, priorities may need to be readjusted. For example, a traditional elite technical education typically includes a healthy dose of calculus. But perhaps statistics should receive more attention, Chui said, because of the need for future managers to be able to more intelligently use the huge mountains of data now being routinely collected by businesses.

Education Is Key

The fourth member of the panel, Hal Varian, chief economist at Google and an emeritus professor at the University of California, Berkeley, told the audience that the "secret" of guaranteeing oneself employment in an increasingly technology-oriented society is "to make yourself an expensive complement to something that is becoming cheaper and more ubiquitous." As an example, he echoed Chui's reference to the growing demand for "data scientists" who can work with businesses' ever-larger databases.

Varian also urged greater appreciation for the "supporting" jobs created by technology, saying many of them, like doctors and lawyers, require sophisticated educations and usually provide excellent salaries.

Continued in article

"Registered Nurse Pleads Guilty in Connection with Detroit ($24 Million) Medicare Fraud Scheme," FBI, March 22, 2013 ---

A registered nurse who fabricated nursing visit forms in connection with a $24 million home health care fraud conspiracy in Detroit pleaded guilty today for her role in the scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley, III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh, III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Regional Office.

Beverly Cooper, 59, of Detroit, pleaded guilty before U.S. District Judge Victoria A. Roberts in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.

Cooper admitted that she and others conspired to defraud Medicare through home health care companies operating in the Detroit area, including Reliance Home Care LLC, First Choice Home Health Care Services Inc., and Accessible Home Care Inc. According to court documents, Cooper fabricated nursing visit notes and other documents to give Medicare the impression that she had provided home health care services, when, in fact, home health care was not needed and/or was not being provided. Cooper also admitted that while at these companies, she signed nursing visit notes for home visits made by other unlicensed individuals to give Medicare the false impression that she had provided home health care. Court documents reveal that Cooper understood that the documents she created would be used by these companies to submit claims to Medicare for home health services that were not medically necessary and/or not provided.

Court documents show that when home health companies were inspected by state regulatory agencies, Cooper and her co-conspirators participated in staged home health visits, posing as employees of these companies and treating fake patients, all to give inspectors the false impression that these companies’ operations were legitimate and that home health services were in fact being provided.

Court documents allege that between 2006 and May 2012, Cooper’s conduct caused Reliance, First Choice, and Accessible to submit claims to Medicare for services that were not medically necessary and/or not provided, causing Medicare to pay these companies approximately $5,403,703.

At sentencing, scheduled for July 23, 2013, Cooper faces a maximum penalty of 10 years in prison and a $250,000 fine.

This case is being prosecuted by Trial Attorney William G. Kanellis and Assistant Chief Gejaa Gobena of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and it was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.

Bob Jensen's Fraud Updates ---

"How Monsanto outfoxed the Obama administration The inside story of how the government let one company squash biotech innovation, and dominate an entire industry," by Lina Khan, Salon, March 15, 2013 ---

"The Cyprus Bailout Europe rescues Russian depositors at the expense of small savers," The Wall Street Journal, March 17, 2013 ---

Cyprus is finally getting a bailout, and what an instant classic of euro-crisis dysfunction it is. Nine months after Nicosia first requested a rescue, the deal that emerged Saturday is slapdash, short-sighted and manhandled by politics.

The novelty of Saturday's deal is that, for the first time in the euro crisis, depositors will contribute to the cost of recapitalizing banks. As we went to press, the plan was for Nicosia to extract €5.8 billion via a one-off 9.9% "stability levy" on deposits larger than €100,000 and a 6.75% levy on deposits smaller than that. The International Monetary Fund will pitch in €1 billion, and the European Stability Mechanism lends the rest, for a total of €10 billion.

At 0.2% of euro-zone GDP, Cyprus hardly poses a systemic economic risk. But if there is a bailout, these columns have pushed for uninsured depositors to take losses. Cypriot banks are overwhelmingly deposit-funded, which means that writing down senior bondholders wouldn't substantially reduce the total bill for recapitalization. The choice is between hitting big depositors and hitting euro-zone taxpayers. Germany and the IMF have also angled for the former.

However, Saturday's decision to bite both large and small depositors was guided more by Cypriot politics than by German pressure or economic logic. Nicosia presumably wished to minimize the burden on large depositors, many of them Russian, so as not to derail progress on renegotiating a €2.5 billion loan from Moscow. Nicosia also fears scaring away offshore cash that has flowed in to take advantage of its weak money-laundering enforcement. Cypriot President Nicos Anastasiades said as much on Friday, declaring that he couldn't have accepted a double-digit levy on large depositors.

The 9.9% ceiling on the large-deposit tax means that small savers also had to take a hit. Cypriot banks hold about €30 billion in insured deposits and €35 billion in uninsured deposits. If the goal is to get a total of €5.8 billion from depositors, then you need a levy of around 7% on insured deposits.

It's not clear if taxing small deposits violates Cyprus's guarantee on deposits up to €100,000, though there are practical risks in any case. Fearing bank runs, the Cypriot cabinet has petitioned to extend Monday's bank holiday through Tuesday, even though the European Central Bank has said it will offer unlimited liquidity to banks that experience deposit flight. According to Greek radio on Sunday, the Greek central bank has shipped nearly €5 billion to Cyprus to help banks meet their customers' cash requirements.

Europe is also setting a dangerous precedent, even if the Cypriot deal is supposedly unique. The principle toward which Europe has agreed to move with its new banking union is that taxpayers won't pay a dime to save banks until all bank creditors have been wiped out. So it's progress that depositors are being put on the block.

But by apparently sparing senior bank bondholders, the euro zone has again shown that no principle is above political meddling. The cleaner solution would have been a 20% haircut on deposits over €100,000, with writedowns on all bank debt. This would have respected creditor hierarchy and, by not trampling on deposit insurance, honored the rule of law.

Uncertainties still cloud the deal, and the Cypriot Parliament could veto it Monday. But one thing is clear: In the way it was cooked up and the way it apportions the pain, the Cyprus bailout is a step backward for legal predictability in the never-ending euro-zone crisis.


Paul Krugman fears this will start a run on EU banks ---

When bailing out some companies is a bad idea for an industry
"Why We Need More Solar Companies to Fail: Solar manufacturers like Suntech are struggling. Hundreds need to die for the industry to recover," by Kevin Bullis,   MIT's Technology Review, March 18, 2013 --- Click Here

"Labor Union Asks Milwaukee Technical College to Stop Training Program," by Sydni Dunn, Chronicle of Higher Education, March 18, 2013 ---

Jensen Comment
And if there are too many graduating K-12 teachers, should universities place upper bounds on the number of education school graduates entering the teaching market?


A tax in sheep's clothing
"Employers Blast Fees (that won't cover their workers) From New Health Law," by Janet Adamy, The Wall Street Journal, March 14, 2013 ---

. . .

The fees will hit most large U.S. employers, and several have been lobbying to change the program, contending the levy is unfair because it subsidizes individually purchased plans that won't cover their workers. Boeing Co. BA -0.15% and a union health plan covering retirees of General Motors, GM +0.32% Ford Motor Co. F +0.22% and Chrysler, among other groups, have asked federal regulators to exclude or shield their insurance recipients from the fee.

Insurance companies, which helped put the fee in the law, say the fee is essential to prevent rates from skyrocketing when insurers get an influx of unhealthy customers next year. The fee is part of a new insurance landscape created by the health law that will forbid insurers from denying coverage to people with pre-existing conditions.

The $63 fee will apply to plans covering millions of Americans in 2014. It applies to employers that assume the risk for workers' medical bills, and many private plans sold by insurers. The fee will be smaller for 2015 and 2016, though regulators haven't set those amounts.

Few noticed the fee when the 2010 Affordable Care Act passed. Employers have spent recent months trying to peel it back, but final regulations published Monday in the Federal Register left it largely intact.

"It's caught most employers, if not all employers, by surprise," said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington, which represents large employers. "They're very upset about it."

The fee comes on top of other costs employers expect to face. Proponents of the law say it eventually will lower employers' health costs by expanding insurance coverage to 30 million Americans, meaning employers won't subsidize their unpaid medical bills.

Continued in article

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---

Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/