Archives For August 2011

UPDATE: I updated the charts to give them the same scale as per BG’s request.

I mentioned the other day that I’m looking at the Federal Budget. I have entered the budget numbers for every agency from 1970 through 2011 (2010 and 2011 numbers are still considered estimates). I plan to go back and enter the information for the 1962 through 1969. The charts below show the four biggest pieces of the federal budget based on percentage of the budget. As you can see, some of them have grown substantially over the years. Health and Human Services has grown from 10% of the budget to consume nearly 25% of the budget.

People gripe about the military spending but it’s percentage of the budget has dropped from nearly 41% to just under 19% over the years.

More stuff to come…

I have been spending some time lately analyzing the budget for the United States. The Budget for Fiscal year 2011, Historical Tables (PDF) publishes some pretty interesting information. One of those tables is Table 4.1—Outlays by Agency: 1962-2015. I spent a good part of the weekend entering the information for 1970 – 2011 so that I could see where the increased spending was coming from (NOTE: I just now figured out that I was missing the page that contained the numbers for 1962-1969. I’ll go back and add them later.)

I want to show you the budget for 2008 and 2009. The increase is pretty drastic (and NOT all Obama’s fault):

Like I said above, it’s not fair to pin all of the increases from 2008 to 2009 on Obama. But, the increase overall is pretty amazing to think about. Eighteen of the 31 Agencies increased by more than 10%.

I’m working on a larger analysis that includes 1962-2011.

Pretty good op-ed piece in this morning’s WSJ by John Steele Gordon.

He opens the piece with some definitions (bold mine)…

So, a few definitions. The total national debt of the United States is the sum of all federal bills, notes and bonds that have been issued by the Treasury and not yet redeemed. The publicly held debt is the sum of the Treasury securities held by individuals, financial institutions and foreign governments. (That’s not just the Chinese, by the way. Both Great Britain and Japan are also major holders of U.S. debt, as are many other countries in lesser amounts.)

The intra-governmental debt is the sum of Treasury bonds held by agencies of the federal government, principally the so-called Social Security Trust Fund. The liabilities equal the future pensions, health care, Social Security payments, etc., that are promised under current legislation.

Then he makes the point that failure to pay Treasury securities would be a default but changing some laws (like adusting social security cost-of-living adjustments and retirement age) would shrink future liabilities significantly.

Gordon believes the debt focus should be on the debt-to-GDP ratio instead of on the exact amount of the debt. His recipe for handling our debt is to keep spending from increasing and grow the GDP.

ANOTHER Mortgage Plan…

August 26, 2011

All these different bailouts are getting old. Here’s the latest. The details are vague:

One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today’s lower interest rates, about 4 percent, according to two people briefed on the administration’s discussions who asked not to be identified because they were not allowed to talk about the information.

…Despite record low interest rates, many homeowners have been unable to refinance their loans either because they owe more than their houses are now worth or because their credit is tarnished.

I almost think we would have been better off had we just allowed foreclosures to happen and let the housing market capitulate. I think all this government involvement has only made things worse by stretching out the inevitable.

I hate to see him go: Jobs’ Resignation Marks Storied Career.

I put the following graphic together to show you the impact that August 2011 is having on the history of the S&P 500 Index. It’s pretty interesting.

The second column shows the average, median, standard deviation, and geometric average for ALL August months through 2010. The third column shows the same stats for ALL August months through August 19, 2011. The fourth column shows the difference between the other two columns. Pretty significant difference.

Of course, there is still a week left in August and these numbers could change dramatically. We shall see.

Not good news: Home-Loan Delingquencies Rise Again.

The Mortgage Bankers Association said 12.87% of mortgage loans on one-to-four-unit homes were 30 days or longer past due or in the foreclosure process at the end of the second quarter, representing more than 6.3 million households. The second-quarter figure was down from 14.4% one year earlier but up from 12.84% at the end of March.

The figures offer the latest sign of how the slumping job market threatens to create new problems for the fragile housing market. The nation’s unemployment rate ended the quarter at 9.2% after beginning the period at 8.8%.

The uptick stems from an increase in newly delinquent borrowers. Nearly 4.8% of mortgage borrowers had missed two or fewer payments at the end of June on a seasonally adjusted basis, up from 4.7% at the end of March and 4.6% at the end of last year. Those are still down from year-ago levels of 5%. Indiana, Mississippi and West Virginia saw the biggest increases in new delinquencies.

The article doesn’t mention it but I wonder how many of these delinquencies are by people who previously received help.

I wish we could just get this mess behind us. We have to allow housing to hit bottom before the housing market (and the economy) can recover.