Financial News

[Balta1701]

One interesting note re: Germany and the U.S. Germany's GDP actually took a larger percentage hit in the collapse than the U.S's did and has only recently recovered to the level the U.S. is at. However, unemployment in the U.S. took a much larger hit than Germany did, and has not even begun to come close to recovery.

 

 

[Y2HH]

One interesting note re: Germany and the U.S. Germany's GDP actually took a larger percentage hit in the collapse than the U.S's did and has only recently recovered to the level the U.S. is at. However, unemployment in the U.S. took a much larger hit than Germany did, and has not even begun to come close to recovery.

 

 

 

When people talk about the "house of cards", and why people are so worried about a possible US default, (which won't happen, btw), is because in the world economy the US is the foundation for the entire house.

 

If we fall...they're all coming down with us. And they know it.

[jasonxctf]

If you want them raised, why?

 

Personally, I'd have NO problem with raised taxes if I see VISIBLE added/increased benefit to doing so.

 

But as I've stated in the past, taxes are raised, just not at the federal level. They lowered income taxes all the while everyone else raised local/state and any other sort of tax you can stuff into a cell phone or cable bill, not to mention a bottled water tax, soda tax, etc. Our taxes never went down, they just shifted around a bit.

 

As for increasing tax just to be a patriot and help the government pay down debt (which they won't do), you can always just pay more on your own...you don't need them to force you to do that.

 

Keeping it simple, I feel that at the Federal Level, we need to go back to the balanced approach we had in the late 90's/early 00's.

 

Taxes were at X, Spending was at Y.

 

Since then, taxes have gone to X minus a certain % and spending has gone Y plus a certain %.

 

Think of all of the tax cuts/braks that currently exist or have gone into place since we had this balanced approach. Again, keeping it simple at the personal level.

 

Cuts/Breaks

- Mortgage Deduction

- Property Tax Deduction

- Student Loan Deduction

- Charitable Expenses Deduction

- Child Care Deduction

- Child/Dependent Deduction

- Clean Car Credit

- Capital Gains (from 35% to 15%)

- Helping out Katrina Victims deduction

- Unreimbursed business expenses deduction

- Medical expenses deduction

 

We could go on, and on.

 

You can cut your way to a balanced budget, without addressing revenue. It's nice talking points to say... "the problem isnt that we aren't taxed enough" but its simply not true.

 

Imagine if we'd cut our way to a balanced budget. It'd be a constant cutting game. We cut to balance and then we have a drop in tax revenue. (less tax revenue, with higher unemployment caused by these government cuts) Cut some more, and the same thing happens.

 

 

[BigSqwert]

The Chart That Should Accompany All Discussions of the Debt Ceiling

 

 

It's based on data from the Congressional Budget Office and the Center on Budget and Policy Priorities. Its significance is not partisan (who's "to blame" for the deficit) but intellectual. It demonstrates the utter incoherence of being very concerned about a structural federal deficit but ruling out of consideration the policy that was largest single contributor to that deficit, namely the Bush-era tax cuts.

 

An additional significance of the chart: it identifies policy changes, the things over which Congress and Administration have some control, as opposed to largely external shocks -- like the repercussions of the 9/11 attacks or the deep worldwide recession following the 2008 financial crisis. Those external events make a big difference in the deficit, and they are the major reason why deficits have increased faster in absolute terms during Obama's first two years that during the last two under Bush. (In a recession, tax revenues plunge, and government spending goes up - partly because of automatic programs like unemployment insurance, and partly in a deliberate attempt to keep the recession from getting worse.) If you want, you could even put the spending for wars in Iraq and Afghanistan in this category: those were policy choices, but right or wrong they came in response to an external shock.

 

The point is that governments can respond to but not control external shocks. That's why we call them "shocks." Governments can control their policies. And the policy that did the most to magnify future deficits is the Bush-era tax cuts. You could argue that the stimulative effect of those cuts is worth it ("deficits don't matter" etc). But you cannot logically argue that we absolutely must reduce deficits, but that we absolutely must also preserve every penny of those tax cuts. Which I believe precisely describes the House Republican position.

 

After the jump, from a previous "The Chart That Should..." positing, an illustration of the respective roles of external shock and deliberate policy change in creating the deficit.

via

[southsider2k5]

That isn't a biased source or anything... I love how the "Bush tax cuts" disappear under Obama... Either that or they become "stimulus tax cuts". The wars also somehow miraculously ended in the last two years, and the Fed didn't do any of the QE's. That chart is garbage.

[StrangeSox]

Looks like the same data that's been floating around for a few weeks now, just in a different form. The overwhelming policy drivers of the budget deficit are Iraq, Afghanistan and the Bush Tax Cuts* and it's compounded by falling revenues and increasing safety net spending.

 

*extended by Congress with little or no fight from Obama, in fairness to ss2k5's point. Still doesn't make it good policy.

Edited July 25, 2011 by StrangeSox

[BigSqwert]

That isn't a biased source or anything... I love how the "Bush tax cuts" disappear under Obama... Either that or they become "stimulus tax cuts". The wars also somehow miraculously ended in the last two years, and the Fed didn't do any of the QE's. That chart is garbage.

Perhaps you missed the "Total Cost of New Policies" part.

[StrangeSox]

Perhaps you missed the "Total Cost of New Policies" part.

 

The extension of the tax cuts can fairly be thrown into that category for Obama.

[southsider2k5]

The extension of the tax cuts can fairly be thrown into that category for Obama.

 

As can the QE's.

[StrangeSox]

As can the QE's.

Isn't that just the fed printing money and not part of the federal budget?

[southsider2k5]

Isn't that just the fed printing money and not part of the federal budget?

 

I'm not even getting into that clusterf*** again.

[StrangeSox]

I'm not even getting into that clusterf*** again.

 

I know you and Balta went back and forth on it, but in the context of "balancing the budget" or "federal budget deficits" it's an important distinction to make.

[Jenksismyhero]

So, NSS, tell me how Obama getting out of the way is a bad thing. As of today, Congress is in agreement for a short term increase (with matching cuts) with the promise to form a bipartisan committee to decide how to obtain 3-4 trillion in cuts within the next 5-6 months. Obama said no. Why? Because he doesn't want this to become an election issue. So, even the moronic Democrats in the Senate understand how important this issue is, but Obama is making it about politics and campaign issues.

 

 

[StrangeSox]

So, NSS, tell me how Obama getting out of the way is a bad thing. As of today, Congress is in agreement for a short term increase (with matching cuts) with the promise to form a bipartisan committee to decide how to obtain 3-4 trillion in cuts within the next 5-6 months. Obama said no. Why? Because he doesn't want this to become an election issue. So, even the moronic Democrats in the Senate understand how important this issue is, but Obama is making it about politics and campaign issues.

 

It's really easy to turn that around and say the Republicans are making this an election issue by refusing to reach any agreement whatsoever with Obama, no matter how heavily it leans in their favor, because it will be seen as a political win for him.

 

There's also no reason they couldn't accept the all-cuts Reid plan unless they want this to be a political issue for Obama and Democrats in general by insisting on bipartisan cuts to Medicare. Moronic House Republicans, don't you understand how important this is?!!!

 

Comments from the financial sector on the feasibility of Boehner's two-stage plan:

 

Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies & Co., said markets view a two-stage plan as a "non-starter because we now know it is amateur hour on Capitol Hill and we don't want to be painted in this corner again."

 

"There is significant risk of a downgrade with a deal that ties further cuts to another vote only a few months down the road given the significant resistance to do the right thing now," Cooper said.

 

Read more: http://www.sfgate.com/cgi-bin/article.cgi?...2#ixzz1T8nYpRhE

Edited July 25, 2011 by StrangeSox

[bmags]

http://www.npr.org/blogs/money/2011/07/25/...-patents-attack

 

I thoroughly recommend listening to this "this american life" on patent trolls.

[NorthSideSox72]

So, NSS, tell me how Obama getting out of the way is a bad thing. As of today, Congress is in agreement for a short term increase (with matching cuts) with the promise to form a bipartisan committee to decide how to obtain 3-4 trillion in cuts within the next 5-6 months. Obama said no. Why? Because he doesn't want this to become an election issue. So, even the moronic Democrats in the Senate understand how important this issue is, but Obama is making it about politics and campaign issues.

Because...

 

1. Congress is acting like a bunch of children, there IS NO "agreement in Congress" for anything more than a few months' extension, and as SS2K5 and I both like to point out, kicking the can down the road does no good. Obama agrees.

 

2. Among Congress and the PResidency, as far as I can tell, Obama is the only one trying to do anything sane here.

 

I think it is fascinating that centrists and moderates seem to agree that Obama is the sane one, while the people deeply on one side or the other are saying it's all Obama's fault (but for different reasons - Dems because Obama is giving away lots of cuts, GOP because he wants to raise revenues). That tells me Obama is the one to follow here.

 

[Jenksismyhero]

It's really easy to turn that around and say the Republicans are making this an election issue by refusing to reach any agreement whatsoever with Obama, no matter how heavily it leans in their favor, because it will be seen as a political win for him.

 

There's also no reason they couldn't accept the all-cuts Reid plan unless they want this to be a political issue for Obama and Democrats in general by insisting on bipartisan cuts to Medicare. Moronic House Republicans, don't you understand how important this is?!!!

 

Comments from the financial sector on the feasibility of Boehner's two-stage plan:

 

I agree if we were at this point 3 weeks ago. But it's obvious that NO agreement will be made until the last minute, at which point the markets will probably already drop in fear of the possibility of default, even if slight. All indications are that both parties in Congress agreed to the two step plan to avoid that, but Obama said no and Reid quickly followed. He's afraid of this becoming a campaign issue. He's putting his campaign before the country. Let's put it this way, if the two step plan added 6 months to the timeline, don't you think Obama would jump all over it? (yes, he would)

 

And the feasibility of the two stage plan is a crap argument. An extension of less than 5 months has been done like 38 times over the last few decades. It's been done before without a problem.

 

And i'm not disagreeing that the GOP is holding too strong to the no taxes mantra. But it's too late in the game to keep f***ing around here. Just as a practical matter I don't think they can push through legislation in less than a week.

[Balta1701]

2. Among Congress and the PResidency, as far as I can tell, Obama is the only one trying to do anything sane here.

 

I think it is fascinating that centrists and moderates seem to agree that Obama is the sane one, while the people deeply on one side or the other are saying it's all Obama's fault (but for different reasons - Dems because Obama is giving away lots of cuts, GOP because he wants to raise revenues). That tells me Obama is the one to follow here.

Do people really accept this logic? Honestly? It seems like such a complete and total copout to me.

 

I read it as saying "I can't be troubled to learn the logic of either side or both sides, so I'm just going to point at the one that sounds like they're in the middle of the 2 sides"

 

Not only does it leave you open to having your own politics totally shifted because of either side shifting towards their extremes, but IMO, it also leaves you unprepared to evaluate proposals critically.

[StrangeSox]

I agree if we were at this point 3 weeks ago. But it's obvious that NO agreement will be made until the last minute, at which point the markets will probably already drop in fear of the possibility of default, even if slight. All indications are that both parties in Congress agreed to the two step plan to avoid that, but Obama said no and Reid quickly followed. He's afraid of this becoming a campaign issue. He's putting his campaign before the country. Let's put it this way, if the two step plan added 6 months to the timeline, don't you think Obama would jump all over it? (yes, he would)

 

And the feasibility of the two stage plan is a crap argument. An extension of less than 5 months has been done like 38 times over the last few decades. It's been done before without a problem.

 

You can accept all of this as true. It still doesn't mean that the Republicans aren't intentionally trying to make this a campaign issue and trying to hurt Obama over this as much as possible. Yeah, duh, Obama's going to try to avoid having this same dumb manufactured problem clog up American politics for the next year. Why are Republicans putting the GOP presidential campaign ahead of the country?!!?!?!!?!?!11

 

The feasibility isn't a crap argument because these extensions are generally routine, not opportunities for one party to force a complete reworking of domestic fiscal policy, but this is exactly what it's become. This includes several GOP Presidential candidates, 90 House members and right-wing pundits all saying we shouldn't raise the debt ceiling period. It's like you've completely ignored that we're slightly more than a week away from starting to fail to meet debt obligations. Why on earth would you assume this will be any easier once it becomes a "campaign issue?"

 

And i'm not disagreeing that the GOP is holding too strong to the no taxes mantra. But it's too late in the game to keep f***ing around here. Just as a practical matter I don't think they can push through legislation in less than a week.

 

"I'm not disagreeing that the GOP hasn't acted like a bunch of giant idiots and said "NO!" to every incredibly favorable plan they've been presented with, but they've held out for so long we've just got to give them exactly what they want!"

Edited July 25, 2011 by StrangeSox

[StrangeSox]

Do people really accept this logic? Honestly? It seems like such a complete and total copout to me.

 

I read it as saying "I can't be troubled to learn the logic of either side or both sides, so I'm just going to point at the one that sounds like they're in the middle of the 2 sides"

 

Not only does it leave you open to having your own politics totally shifted because of either side shifting towards their extremes, but IMO, it also leaves you unprepared to evaluate proposals critically.

 

Yeah, it's the whole idea behind the Overton Window and a formal fallacy."

[NorthSideSox72]

Do people really accept this logic? Honestly? It seems like such a complete and total copout to me.

 

I read it as saying "I can't be troubled to learn the logic of either side or both sides, so I'm just going to point at the one that sounds like they're in the middle of the 2 sides"

 

Not only does it leave you open to having your own politics totally shifted because of either side shifting towards their extremes, but IMO, it also leaves you unprepared to evaluate proposals critically.

LOL, OK. You go right on believing that EITHER extreme is worth listening to in this case. You can believe that we shouldn't cut any spending at all if you want to, because of the delicate economy - and then see what happens to US paper. Or if you were on the other side, you can go right on fantasizing about miraculously creating growth by cutting government discretionary spending to the bone.

 

Does anyone really accep that logic?

 

[Jenksismyhero]

You can accept all of this as true. It still doesn't mean that the Republicans aren't intentionally trying to make this a campaign issue and trying to hurt Obama over this as much as possible. Yeah, duh, Obama's going to try to avoid having this same dumb manufactured problem clog up American politics for the next year. Why are Republicans putting the GOP presidential campaign ahead of the country?!!?!?!!?!?!11

 

The feasibility isn't a crap argument because these extensions are generally routine, not opportunities for one party to force a complete reworking of domestic fiscal policy, but this is exactly what it's become. This includes several GOP Presidential candidates, 90 House members and right-wing pundits all saying we shouldn't raise the debt ceiling period. It's like you've completely ignored that we're slightly more than a week away from starting to fail to meet debt obligations. Why on earth would you assume this will be any easier once it becomes a "campaign issue?"

 

 

 

"I'm not disagreeing that the GOP hasn't acted like a bunch of giant idiots and said "NO!" to every incredibly favorable plan they've been presented with, but they've held out for so long we've just got to give them exactly what they want!"

 

Oh please. If the tables were reversed we'd be in the exact same f***ing position with the Dems. Bush wants to finance his two wars of choice but the deficits out of control. Of course the Dems would have used this as political leverage to reign in "wasteful" spending. Well, surprise, the GOP is smart and is doing the exact same f***ing thing.

 

[StrangeSox]

Even ss2k5's said now's not the time for large austerity measures. What happens when the extremes both agree?!

 

FWIW I don't see any economists embracing this middle-of-the-road plan. You've either got guys like Krugman calling for a huge stimulus plan instead or conservative economists calling for even larger tax cuts.

[Balta1701]

LOL, OK. You go right on believing that EITHER extreme is worth listening to in this case. You can believe that we shouldn't cut any spending at all if you want to, because of the delicate economy - and then see what happens to US paper. Or if you were on the other side, you can go right on fantasizing about miraculously creating growth by cutting government discretionary spending to the bone.

 

Does anyone really accep that logic?

Yes. I fully accept this logic. Virtually that exact statement has been written dozens of times since 2008, and still, "U.S. paper" has run well under the inflation target. Banks like JPM have lost billions betting you were right.

 

Inflation is no threat until there is upward pressure on wages (unless we default). That won't happen with 9% unemployment. Every cut we make right now is a job that is cut, is a taxpayer that goes from paying taxes to collecting unemployment and Medicaid, and might well have virtually no impact on the deficit.

 

 

[NorthSideSox72]

Even ss2k5's said now's not the time for large austerity measures. What happens when the extremes both agree?!

 

FWIW I don't see any economists embracing this middle-of-the-road plan. You've either got guys like Krugman calling for a huge stimulus plan instead or conservative economists calling for even larger tax cuts.

And I think those are both stupid ideas. Burying us in more debt is a horrible idea of the long term, we need to start making dents in the deficit, then the debt, ASAP for many reasons. And even larger tax cuts is equally idiotic.