Financial News

[Balta1701]

On a similar topic, talks aimed at raising the debt ceiling and a long-term budget framework appeared to end this morning when Eric Cantor walked out over the principle that there should be no increases from the current tax level in any form as part of the deal.

“I believe that we have identified trillions in spending cuts, and to date, we have established a blueprint that could institute the fiscal reforms needed to start getting our fiscal house in order,” Mr. Cantor said in a statement.

 

“That said, each side came into these talks with certain orders, and as it stands the Democrats continue to insist that any deal must include tax increases. There is not support in the House for a tax increase, and I don’t believe now is the time to raise taxes in light of our current economic situation. Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.”

 

The debt ceiling negotiation group, which includes Mr. Biden and Congressional leaders from both parties, has been working since May to reach some type of agreement before the Aug. 2 deadline for the debt limit to be raised.

 

In recent weeks, the talks, which had been billed by both sides as productive, began to unravel as Republicans were pressed to make a decision on whether they would go along with Democrats to increase revenue as part of a deal, either through the elimination of corporate tax breaks or other measures.

 

Mr. Cantor clearly did not relish that role, and has suggested that President Obama, rather than Mr. Biden, as well as Speaker John A. Boehner must take up the mantle. “Given this impasse, I will not be participating in today’s meeting, and I believe it is time for the president to speak clearly and resolve the tax issue,” Mr. Cantor said in his statement.

 

Here's probably the best commentary I've read

Cantor has the credibility with the Tea Party that Boehner lacks. But that’s why Cantor won’t cut the deal. The Tea Party-types support him because he’s the guy who won’t cut the deal. He can’t sign off on tax increases without losing his power base. But if he’s able to throw it back to Boehner, and Boehner cuts the deal, that’s all good for Cantor: Boehner becomes weaker and he becomes stronger. Which is why Boehner will also have trouble making this deal. It’ll mean he made the concessions that Cantor, the true conservative, didn’t. That’s not how he holds onto the gavel in this Republican Party.

 

....

 

But the pessimistic analysis is that if you had to write a plausible scenario for how America defaults on its debt, or at least seriously spooks the market, this is how it would start. After insisting on using the debt limit as leverage for a budget deal, the Republican leadership finds they can’t actually strike a deficit-reduction deal, but nor can they go back on their promise to vote against any increase in the debt limit that isn’t accompanied by a deficit-reduction deal. What follows is a lot of jockeying and fingerpointing, a short-term increase or two, and eventually, a market panic.

[southsider2k5]

There are a couple possible benefits of that though...in particular, if you had some mechanism where a rapid oil price increase or decrease triggered an SPR response, you might well kill off any speculation-only driven price spikes.

 

That was never meant to be the idea. The idea was to be an emergency safety net against supply shocks.

[Balta1701]

That was never meant to be the idea. The idea was to be an emergency safety net against supply shocks.

Doesnt mean that it wouldn't be a possible benefit.

[Cknolls]

Ah, this is why oil plummeted.

Personally, I have no idea why you'd do this now and not 3-4 months ago when we first started bombing Libya.

 

 

LOL. DESPERATION!!!!!!!!!

[StrangeSox]

who's desperate, and for what?

[Cknolls]

Bernanke, that dastardly liberal, is again warning against short-term spending cuts.

 

 

 

OTOH Republicans have managed to convince 55% of Americans that spending cuts and tax cuts will magik up some growth despite all sorts of economists, left & right, saying that implementing Republican economic mythology would have disastrous results.

 

 

BEN "the housing mkt is contained" Bernanke? GMAFB......

[Cknolls]

who's desperate, and for what?

 

 

OBAMA. REelection. This does nothing long term.

[Balta1701]

OBAMA. REelection. This does nothing long term.

Those will do a great job of turning out the vote in the August 2011 presidential race.

[StrangeSox]

OBAMA. REelection. This does nothing long term.

 

It's June 2011.

[StrangeSox]

BEN "the housing mkt is contained" Bernanke? GMAFB......

 

What economists are saying big austerity measures will save this economy?

[Balta1701]

What economists are saying big austerity measures will save this economy?

Eric Cantor.

[southsider2k5]

If it was going up though, we'd see the increase reflected immediately, so I'll be content with the dropping.

 

Crazy thing is, futures recovered a decent amount from the lows and finished down about 14 cent/gal. Overnight prices at the station I usually go to dropped 9 cents since yesterday morning at the same time.

[Balta1701]

Crazy thing is, futures recovered a decent amount from the lows and finished down about 14 cent/gal. Overnight prices at the station I usually go to dropped 9 cents since yesterday morning at the same time.

No price changes here that I saw. Of course, we lost power during another tornado warning last night and half the roads were blocked/flooded, that might have had something to do with it too.

[Balta1701]

A new study by researchers at the Northeast Regional Center for Rural Development at Penn State shows that “lower taxes are statistically insignificant in explaining state economic performance, and that targeted tax incentives and financial assistance — as currently practiced — are more likely to harm growth and income inequality.” “Although our results are primarily suggestive, they indicate that lower taxes across the broad economy and the use of tax incentives and financial assistance programs do not stimulate state economies,”

Found this interesting

Abstract. In attempting to promote economic development, states often pursue either a race to

the bottom approach focused on lowering business costs or a more investment-based, race to the

top approach that aims to increase productivity, innovation, and entrepreneurship. Whether either

approach promotes growth and produces broad-based economic gains across the population is

the subject of this paper. The novelty of our approach is that an extensive array of variables

representing examples of the two economic development approaches are examined for their

effects on various indicators of state economic performance, including income distribution, over

the 2000-2007 period. We find that lower taxes are statistically insignificant in explaining state

economic performance, and that targeted tax incentives and financial assistance – as currently

practiced – are more likely to harm growth and income inequality. Some support exists for state

and local governments to encourage entrepreneurship and to enhance internet connectivity.

[Cknolls]

So the incompetent corruptocrats in the Illinois Dept. of Revenue send me a letter saying they revised my tax return to reflect changes they made. The changes they made were cheating me out of $500 of my return. They said they did not receive my estimated payment for the 4th quarter of 2010, which is paid in Jan of 2011. But guess what, they cashed my check less than a week after I sent it to them. And I had to get a copy of the front and back of the check, and lo and behold the f***ers did cash the check. The cynic in me says these thieves do not want to pay the entire refund so they f*** with the citizens to delay paying the money they owe because were basically insolvent. KEEP UP THE GOOD WORK!!!!!!!!!!

[mr_genius]

Those will do a great job of turning out the vote in the August 2011 presidential race.

 

good luck winning with 10% unemployment in 2012. Obama will need it.

[southsider2k5]

In all seriousness, I can't wait to test out my $4 gallon gas theory. Right now that seems to be the economy's tipping point. If he can push it back down to the $3.00 range, I bet we see a surprise in the 3Q growth.

[Balta1701]

In all seriousness, I can't wait to test out my $4 gallon gas theory. Right now that seems to be the economy's tipping point. If he can push it back down to the $3.00 range, I bet we see a surprise in the 3Q growth.

For once, I have to say, I think he's just about right.

[kapkomet]

In all seriousness, I can't wait to test out my $4 gallon gas theory. Right now that seems to be the economy's tipping point. If he can push it back down to the $3.00 range, I bet we see a surprise in the 3Q growth.

 

Yup.

 

For once, I have to say, I think he's just about right.

 

And yup.

 

This is a piss in the bucket, and it's all political.

[Balta1701]

Yup.

 

 

 

And yup.

 

This is a piss in the bucket, and it's all political.

If it's a political move, the timing is foolish.

[kapkomet]

If it's a political move, the timing is foolish.

 

 

Not really. 3q 2011, 4q 2011, is all anyone is going to care about before the "extra" stimulus (read: the bs that got set aside for 2012) kicks in.

 

This will bump up things just enough to make it look like what he's doing is working, and coast him in. Of course, this is all predicated on the GOP continuing to be, well, the GOP.

[southsider2k5]

If it's a political move, the timing is foolish.

 

Eh, not really. He knows he can't come out and announce that energy prices are what gave the economy "head winds" which is why the fed chief sounded like a droolling idiot the other day on why growth stopped. If he did say it, one of his administrations policies would have been trumpeted as the cause of those high prices, whether that be QE's, Libya, energy policy, or some combination of those three. Instead he has to do this, and pretty much not explain why to save his polling numbers. The timing has to correspond to have growth into next year, so here we are. Barack is catching the save of already falling prices, and doesn't have to try to fight a headwind right now. People don't care how it happened, but they weren't going to re-elect Obama with $4.00 gas and 10% unemployment. The gas changes happen quickly, but the employment stuff takes six months to a year to really hit, which puts us when exactly on the calendar? Right before the election.

[Balta1701]

Not really. 3q 2011, 4q 2011, is all anyone is going to care about before the "extra" stimulus (read: the bs that got set aside for 2012) kicks in.

 

This will bump up things just enough to make it look like what he's doing is working, and coast him in. Of course, this is all predicated on the GOP continuing to be, well, the GOP.

 

Extra 2012 stimulus? From what bill?

[southsider2k5]

Greece looks like they lost the Stanley Cup this morning...

[Jenksismyhero]

Greece looks like they lost the Stanley Cup this morning...

 

Is anyone on the board Greek or know anything about how their government works? An attorney in my firm (who is Greek) was telling me over lunch the other day that the main reason the people of Greece are so upset is that they're now going to have to pay taxes they never paid before, like property taxes. I guess they only pay sales tax and a really low income tax?

 

Also heard a demonstrator on the radio basically say this whole move is smoke/mirrors. It's a country 100+ billion in debt with ~10 million residents with no manufacturing, little to no exporting. The economy is entirely dependent on tourism and olives. In essence, he claims they'll be back in the same spot 5 years from now.