New CBO Numbers: Ugly Stuff

Every year about this time the Congressional Budget Office releases its budget and economic outlook for the next ten years. This year's CBO report for the years 2012 through 2022 was issued recently. So how do things look for the next ten years, according to the CBO? Really bad. It's not pretty. There's nothing in this 147-page report to celebrate. Anyone who spends just 30 minutes with the document will quickly conclude that we're in a world of hurt and things are only going to get worse if we do not radically alter course.
First, a little background. Our public debt (the sum total of our annual deficits from the beginning) totaled $5.8 trillion at the end of fiscal 2008. Annual deficits for the ten year period ending in 2008 averaged $262 billion, with an unprecedented annual deficit of $458 billion in 2008. Then things nosedived fast with an unimaginable $1.4 trillion deficit in 2009 - a 300 % increase over anything we'd ever seen in the past. Fiscal years 2010 and 2011 brought more of the same, with each year racking up a shortfall of $1.3 trillion and making it a three-peat of trillion dollar plus annual deficits. These monster deficits ballooned the federal public debt to $10.1 trillion by the end of fiscal 2011 (up 74% from the 2008 level), and the total federal debt (inclusive of the amounts owed to Social Security and other trust funds) had surpassed $14.4 trillion.
To appreciate the significance of an additional trillion dollars of debt every ten to twelve months, remember that a single trillion dollars would fund the cost of a full-ride, four-year college scholarship for all 20 million Americans between the ages of 15 and 19 or would fund a 20 % down payment on a $200,000 home for all 25 million Americans between the ages of 28 and 35.
With this background, here's my take on the top ten highlights of what the CBO now says about the next ten years.
1. Under the "alternative fiscal scenario" (the most (only?) plausible scenario), the deficit in 2012 will exceed $1.1 trillion, keeping the annual trillion-dollar plus deficit string alive. And, worst yet, the string will continue. The projected cumulative annual deficits during the period 2013 through 2022 total $10.981 trillion (an average of roughly $1.1 trillion a year), with the lowest year being 2017 ($960 billion) and the highest year being 2022 ($1.5 trillion).
2. According to the CBO, these deficits will push the total public debt to an unthinkable $23.3 trillion by 2022 (a whopping 400 % increase over the 2008 level).
3. On top of this, by 2022 the debt owed by the federal government to the trust funds, including Social Security, will top $5.6 trillion. So the total federal debt, inclusive of the trust fund debt, could total more than $28.8 trillion by 2022. This debt number would exceed 117 % of our annual gross domestic product (GDP) in 2022.
4. With this debt load, the CBO projects that the net annual interest cost on the federal debt would skyrocket to 3.8% of GDP by 2022 (up from 1.4% in 2012) or roughly $935 billion. And that assumes that rates on a three-month Treasury Bill will be in the 4% range in 2022. In assessing the impact of such an annual interest tab, consider that total individual income taxes collected in 2022 are projected to equal $2.8 trillion. Thus, under this scenario, one out of every three dollars in income taxes paid by individuals in 2022 would be used to fund the annual interest hit on the federal debt. And, of course, with an ever-burgeoning debt load, the interest burden will continue to escalate in all future years.
5. The real GDP annual growth rate in 2011 was a pitiful 1.7%. The CBO now projects it will be only 2.0 % in 2012 and 1.1% in 2013. What's most discouraging is that the average projected annual growth in GDP from 2012 to 2022 is estimated to be only 2.3%, a far cry from the historic annual average of 3.3% since 1950. The CBO credits the ongoing sluggishness in the annual growth rate to a "continuing decline" in the potential labor force and slower growth in capital services and productivity. It's a sad contrast to the higher projected average annual growth rates of our trading partner countries and the continuing robust 6.7% to 7.2% annual growth rate in Asia.
6. The CBO states that the "slow growth in output will hold down the growth of employment." The unemployment rate is expected to remain above 8% for the next two years, with the 2012 average rate pegged at 8.8% and the 2013 rate at 9.1%. The unemployment rate is projected to still be at a high 7.0% by 2015 and to have dropped to 5.25% by 2022. And, of course, these rates exclude from the calculations all those (now tens of thousands a month) who give up looking for a job and check out of the workforce.
7. The percent of the total population over the age of 65 will grow by a full third between 2012 and 2022. As a result, the CBO projects that Social Security and healthcare program costs for this aging group will grow at an annual rate of over 7%, which will, in the words of the CBO, "outstrip growth in nominal GDP." The combined costs of these programs, expressed as a percent of total non-interest federal outlays, will escalate from 45% in 2012 to over 60% in 2022.
8. Compared to normal averages, there are now an additional 2.1 million vacant homes. The CBO projects that this huge backlog of vacancies will keep housing prices below pre-recession levels until 2018.
9. The CBO projects that the value of the dollar will continue its constant decline over the next 10 years, noting that the dollar's "value fell for most of the past decade as investors became less willing to add to their increasingly large holdings of U.S. dollar assets." As for the recent bump in value triggered by Europe's banking and fiscal crisis, the CBO forecasts that the dollar will "return to its downward trend when the European problems fade in the next few years."
10. How about after 2022? In this report, the CBO states, "Beyond the coming decade, the fiscal outlook is even more worrisome." Referencing its June 2011 Long-Term Budget Outlook, the CBO explains that, under present policies, the debt held by the public would "balloon" to nearly 190% of GDP by 2035 and "the amounts the federal government would be required to borrow would be unsustainable." Noting that such "burgeoning" debt would reduce national savings, suppress output and income, discourage work, and "boost the likelihood of a sudden fiscal crisis," the CBO emphasizes that the "explosive path" of escalating federal debt "underscores the need for policy changes that would put the nation on a more sustainable course."
So does all this mean that our future is cooked? Not necessarily. It means that existing policies (the core basis of the CBO's forecasts) don't work. No family, business or country can prosper with an unsustainable, out-of-control debt that forever spirals upward and digs an ever-expanding hole that makes real progress impossible. Consider that just 24 months ago, in this same annual report for 2010, the CBO projected that, for the period 2012 through 2014, the real GDP growth rate would be a healthy 4.4% and the average unemployment rate would be down to 6.5%, and that the unemployment rate would continue its descent to 5% by 2016. So the CBO, like nearly everyone else in the country, has grown increasingly pessimistic about the future as we've all witnessed the powerful impacts of the present drags on our economy.
We've known for some time what it will take to smartly alter course. We just haven't done it. Higher tax rates (on the rich or anyone else) are not the answer, nor are knee-jerk, draconian freezes in future government borrowing. In a nutshell, we need a smart long-term plan that:
• Reforms our massive senior entitlement programs to restore long-term solvency, to protect the status quo for those who are at or near retirement, and to provide a fair deal for all American workers, both the young and not-so-young.
• Revises the tax code to wipe out fat-cat tax breaks, to promote certainty and fuel growth with permanent pro-growth tax incentives and lower rates, and to grow government revenues by creating more taxpayers and higher incomes.
• Aggressively promotes the development of our natural resources to fast-track real energy independence that becomes a driving force for immediate job creation and improved global competitiveness.
• Eliminates or seriously mitigates the fear and uncertainty of the pain that healthcare reform now promises in the years ahead.
• Promotes a pro-business regulatory environment that provides smart oversight, opens up new global markets for American businesses, and scraps the ever-growing regulatory obstacles to growth and job creation.
• Establishes, monitors, and maintains smart spending caps that work for the long term, preserve essential safety nets, and mandate real fiscal discipline.
By Dwight Drake

Top Online Marketing Platforms in India

In the view of rising numbers of internet users (around 300 million users by 2015) in the country, small and medium enterprises (SMEs) will vouch for online presence as digital advertising in the country is already growing by a massive 50% year on year.
According to IAMAI March 2013 report, the online advertising market in FY 2012-2013 has grown to reach INR 2260 crores, which represents a y-o-y growth of 29%. It is projected that by FY 2013-2014, the size of the online advertising market in India will be INR 2,938 Crores.
Even though traditional media like television and newspapers still remain the preferred media for seeking information and entertainment, spends on digital media have steadily increased from just over 1 percent of total Indian advertising spend in the year 2005 to nearly 7 % in 2012.
From 2011 to 2013 regarding online marketing, we have noticed a decline in search and display advertising (major contributors), and a rise in mobile, social media and video advertising. The Internet has been reinvented on mobile devices becoming smaller, more personal, customizable, and accessible anywhere on the go. Traditional forms of interactive advertising are therefore now in the process of evolving as they migrate from computers to mobile devices. According to a study, post click behavior tells that people who looked for specific information on a product have in the end bought it: 55% email Ad, 64% Ad on SM websites, Mobiles ads 64%.
In an environment where Digital Advertising is still growing, online marketing appears to be more effective (large targeted audience, accuracy in the measurement of ROI, interactiveness and engagement of the audience, creativity and celerity) and inexpensive compared to traditional media. With a great number of companies sharing the market, choosing the best Digital advertisement firm in India can turn to be a really difficult task.
Here is a list of Digital marketing companies which can be considered as the top 7 in India in terms of the quality of services offered and popularity.
1- - HQ: Bangalore, India
Mydeals247 is a real-time online e-commerce platform which also gives the possibility to other businesses to advertise through their platform. They offer a unique advertisement model which tends to be really effective and inexpensive for businesses compared to other digital advertisement firms.
MyDeals247 displays the Ads based on the user's interest. When the user clicks on any Ad, MyDeals247 showcases a questionnaire asking a couple of questions related the Advertiser's product or service - if the user answers all the questions correctly at the first time, MyDeals247 charges the cost per potential lead from the Advertiser. If there is any wrong answer(s), Advertiser will not be charged at all. All the user information (whoever answered all the questions correctly) will be shared with the Advertiser.
With their personalized ad politic (only ad matching with user's interests are displayed to him), users are not get annoyed with irrelevant ads and they only see what they are interested in. Users can use the money earned to recharge their cell-phones, to purchase any item at right away or transfer the money into their bank account once in a month.
2- Google - HQ: Mountain View, USA
Google Inc. is an American multinational corporation specializing in Internet-related services and products. These include search, cloud computing, software and online advertising technologies. Regarding online advertising, Google offers tools to advertisers such as: Google Analytics (allows website owners to track where and how people use their website), Google AdWords (allows advertisers to display their advertisements in the Google content network), search and display Ads through their search engine. Most of its profits are derived from AdWords.
3- Facebook- HQ: Menlo Park, USA
Facebook is an online social networking service with 1.15 billion active users (March 2013).
Facebook generally has a lower click-through rate (CTR) for advertisements than most major Web sites. On pages for brands and products, however, some companies have reported CTR as high as 6.49% for Wall posts. A study found that, for video advertisements on Facebook, over 40% of users who viewed the videos viewed the entire video, while the industry average was 25% for in-banner video ads.
In 2010, Facebook opened its fourth office, in Hyderabad and the first in Asia. Facebook announced that its Hyderabad centre would house online advertising and developer support teams and provide round-the-clock, multi-lingual support to the social networking site's users and advertisers globally.
4- Yahoo - HQ: Sunnyvale, USA
Yahoo! Inc. is an American multinational Internet corporation. It is globally known for its Web portal, search engine Yahoo Search, and related services, including Yahoo Directory, Yahoo Mail, Yahoo News, Yahoo Finance, Yahoo Groups, Yahoo Answers, advertising, online mapping, video sharing, fantasy sports and its social media website.
More than 50% of Yahoo's revenues come from marketing services. The largest segment of it is from search advertising, where advertisers bid for search terms to display their ads on the search results. On average Yahoo makes 2.5 cents to 3 cents from each search. Other forms of advertising that bring in revenue for Yahoo include display and contextual advertising.
5- LinkedIn - HQ: Mountain View, USA
LinkedIn is a social networking website for people in professional occupations, and it is mainly used for professional networking. As of June 2013, LinkedIn reports more than 259 million acquired users in more than 200 countries and territories.
On July 23, 2013 LinkedIn announced their Sponsored Updates ad service. Individuals and companies can now pay a fee to have LinkedIn sponsor their content and spread it to their user base. LinkedIn derives its revenues from three business divisions:
- Talent Solutions - Recruiters and corporations pay for: Branded corporate page on LinkedIn complete with careers section, pay per click-through Job ads that are targeted to LinkedIn users who match the job profile, access to the database of LinkedIn users and resumes.
- Marketing Solutions: LinkedIn advertisers pay for pay per click-through targeted ads.
- Premium Subscriptions - LinkedIn users pay for: LinkedIn Business for business users, LinkedIn Talent for recruiters, LinkedIn Job-seeker for unemployed LinkedIn users looking for a job, and LinkedIn Sales for Sales Professionals.
6- Orkut - HQ: Belo Horizonte, Brazil
Orkut is a social networking website that is owned and operated by Google. The service is designed to help users meet new and old friends and maintain existing relationships. With 33 million active users Worldwide, India is the 2nd largest Orkut users' country after Brazil. A part of Orkut's revenues comes from pay per click-through ads displayed. Advertisers also have the possibility to imbed YouTube videos to promote.
7- Twitter - HQ: San Francisco, USA
Twitter is an online social networking and microblogging service that enables users to send and read "tweets", which are text messages limited to 140 characters. Twitter claimed to have 200 million active users on February 2013. Twitter derives it revenues from paid advertising for companies that are able to purchase "promoted tweets" to appear in selective search results on the Twitter website. In April 2013, Twitter announced that its Twitter Ads self-service ads platform for small businesses was available to all US users.
By Kriss Sandeep

China, Taiwan, Japan, A Little Island No One In the West Has Ever Heard Of and the USA

Recently, in November of 2012 after President Obama was reelected, he had planned an Asian trip to Myanmar, China, and Japan. This is good considering there has been quite a bit of tension in Asia over the expansion of China's claim to territorial waters. China has forced her will in the oceans off her coasts with Vietnam, South Korea, Philippines, Taiwan, and Japan. Today, there is still a huge conflict going on over a little island off the coast of Taiwan that Japan claims is theirs, but China also lays claim too.
This is somewhat serious due to how international waters work when it comes to territory. If China is allowed to claim that island as their territory it gives them rights to the surrounding ocean, and limits the rights of Japan which also owns a string of islands considered to be in the same chain. The name of the island hardly matters, and this same scenario has played out previously with China's other neighbors. Perhaps it really is time for an American president to work to negotiate and solve this problem, if that's even possible.
There is an interesting book I own which talks about the US and its relationship with Taiwan and how that could possibly lead to a war with Mainland China. You see, China believes that Taiwan is its territory and that it has a right to it, and it wants it back. China and the PRC will not budge on this; no way, no how. So, it will remain a problem area for US-China relations. This book I have, I'd also like to recommend to you;
"America's Coming War With China - A Collision Course Over Taiwan" by Ted Galen Carpenter, Palgrave MacMillan Publishers (a Division of St. Marten's Press), UK, 2005, 216 pages, ISBN: 1-4039-6841-1.
Now then, the author is a member of the CATO Institute so this isn't some BS agenda book. Although this book was written in 2005, it is still somewhat relevant. It is quite possible that China and Taiwan will both agree on reunification as the two countries become more economically close through trade, and politically close through infiltration into Taiwan's government leadership. In that case it will be a moot point.
Currently, a large number of citizens in Taiwan would be okay with reunification, whereas there are still a good many who don't wish to see that. There is money involved with trade, and the merchant class will have something to say about it. China is also going through its own leadership changes, but I imagine the changing of the old guard for the new guard will increase the political need for reunification on China's side of the fence.
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