Financial News

[NorthSideSox72]

Why are those funny? All seem logical to me.

 

Or are you simply saying it will never happen? Because that's probably true.

 

 

[Balta1701]

Or are you simply saying it will never happen? Because that's probably true.

There ya go.

 

Not a one of those could muster 50 votes, let alone a 60 vote supermajority, and that's before November.

 

The idea that we're suddenly going to stop doing really stupid wastes of taxpayer money that happen to go to preffered interest groups like oil companies or the top wage earners for a jobs program? LOL. We won't even be able to do that to accomplish the wonderful goal of reducing the deficit.

[StrangeSox]

The later. I forget which one, but a hedge fund manager likened Obama's plan to tax their earnings like everyone else to Hitler invading Poland in 1939.

 

The Bush tax cut one will probably happen, though, since "do nothing" will result in that and that is what Congress does best.

[StrangeSox]

If providing unemployment benefits, with the requirement of having to work for it, is a large government jobs program, then sure.

 

When did you become a Keynesian?

[Balta1701]

The Bush tax cut one will probably happen, though, since "do nothing" will result in that and that is what Congress does best.

Dude, you really think that "Do nothing" is what Congress does best...and that it's not "driving dumptrucks full of taxpayer dollars to make sure very rich idiots stay very rich"?

[StrangeSox]

Lately, yeah. My point is they don't need to pass legislation to get rid of the Bush cuts for the top brackets as opposed to actually having to pass a law that benefits someone other than the upper echelon.

[Jenksismyhero]

When did you become a Keynesian?

 

I don't think that's Keynesian. I'm saying for those people that don't work but get paid, make them work a little. I'm not advocating that the government hire 10 million new workers to build dams, bridges, etc.

[Balta1701]

Lately, yeah. My point is they don't need to pass legislation to get rid of the Bush cuts for the top brackets as opposed to actually having to pass a law that benefits someone other than the upper echelon.

They'll pass an extension.

 

Hell, if I was in the Senate I'd probably even vote for it...it's the only way I can do anything to apply an inflationary pressure through fiscal policy right now. It'd be 20% as effective as NSS's jobs program...but that's better than nothing.

[Jenksismyhero]

They'll pass an extension.

 

Hell, if I was in the Senate I'd probably even vote for it...it's the only way I can do anything to apply an inflationary pressure through fiscal policy right now. It'd be 20% as effective as NSS's jobs program...but that's better than nothing.

 

So, you'd agree the Bush tax cuts were a good thing?

[southsider2k5]

But I thought you wanted them to find all those plentiful real jobs?

 

There's an old saying...finding a full time job is a full time job. You're not finding a full time job if you're spending 30 hours a week doing service for the government.

 

Perhaps we could come to an agreement that there should be some sort of government jobs program, where the government was actively hiring people to complete tasks like rebuilding infrastructure, revamping the national parks, updating the electric grid, building some HSR, etc. I'd be totally game for that.

 

That is pretty much exactly what happened. The stimulus has exploded the governmental payrolls, and has done nothing to really get the private sector going, even though 2010 is the year that the biggest dollars of stimulus spending is happening. Yet here we are backsliding.

[Cknolls]

Exactly, it's time for more stimulus.

 

 

[Balta1701]

That is pretty much exactly what happened. The stimulus has exploded the governmental payrolls, and has done nothing to really get the private sector going, even though 2010 is the year that the biggest dollars of stimulus spending is happening. Yet here we are backsliding.

The private sector is adding jobs right now while the public sector is cutting jobs.

[NorthSideSox72]

The private sector is adding jobs right now while the public sector is cutting jobs.

Private sector job additions have been anemic. Its been enough to stave off a 2nd dip, so far, and probably still will be, but its not enough to get the economy going with some real steam.

 

[mr_genius]

Private sector job additions have been anemic. Its been enough to stave off a 2nd dip, so far, and probably still will be, but its not enough to get the economy going with some real steam.

 

jobless claims have been steadily rising. Just to get back the 8 million jobs lost and to cover new entrants into the labor market would require a spectacular turn around. A turnaround that would make the gains in the 90's look meager. I just don't see that happening.

[Cknolls]

jobless claims have been steadily rising. Just to get back the 8 million jobs lost and to cover new entrants into the labor market would require a spectacular turn around. A turnaround that would make the gains in the 90's look meager. I just don't see that happening.

 

 

Just smoke some more Hopium.

[Cknolls]

 

 

Another "unexpected" record month to month drop in existing home sales. 3.83mln vs. 4.72 mln. Just missed. More stimulus more stimulus.

[Balta1701]

Another "unexpected" record month to month drop in existing home sales. 3.83mln vs. 4.72 mln. Just missed. More stimulus more stimulus.

So...a serious question...although I think it's fair to blame this number in part on the stimulus (this is the hangover from the housing tax credit which I never really liked)...you appear to be ridiculing the idea that more stimulus is necessary.

 

Fine. What do you think can be done to pull the economy out of its doldrums? If the answer is nothing, that's fine, but I want to hear you say it. What can be done by anyone to generate economic growth?

[Jenksismyhero]

So...a serious question...although I think it's fair to blame this number in part on the stimulus (this is the hangover from the housing tax credit which I never really liked)...you appear to be ridiculing the idea that more stimulus is necessary.

 

Fine. What do you think can be done to pull the economy out of its doldrums? If the answer is nothing, that's fine, but I want to hear you say it. What can be done by anyone to generate economic growth?

 

I'd be fine with SPENDING nothing. Give out some tax breaks/credits/incentives to companies that hire workers, to companies in emerging industries ("green" energy, for example), etc. Let the market adjust to itself.

 

The country needs to go through a cleansing process, just like the housing market needs to go through one. Clear out the bad, allow it to recover, and in the long run we'll all be better off. The way Obama wants to fix things is to continue to artificially prop everything up , which isn't working in the short term, and definitely isn't helping in the long term.

[Balta1701]

I'd be fine with SPENDING nothing. Give out some tax breaks/credits/incentives to companies that hire workers, to companies in emerging industries ("green" energy, for example), etc. Let the market adjust to itself.

 

The country needs to go through a cleansing process, just like the housing market needs to go through one. Clear out the bad, allow it to recover, and in the long run we'll all be better off. The way Obama wants to fix things is to continue to artificially prop everything up , which isn't working in the short term, and definitely isn't helping in the long term.

So, basically your opinion is that the recession was not deep enough and more people need to lose their jobs.

 

I think you're wrong, and I think your path is at best a Japan style lost decade path. There's nothing right now that can push any sort of job creation. Companies aren't going to hire for tax credits right now; they're sitting on enormous piles of cash already. They're only going to hire when they have customers to buy their products, and right now there is no customer base left capable of expansion.

 

Oh, and I vehemently, 100% disagree with the concept that tax cuts and tax credits aren't spending.

 

Thank you for giving an opinion though. It's something we can legitimately discuss.

[Jenksismyhero]

So, basically your opinion is that the recession was not deep enough and more people need to lose their jobs.

 

I think you're wrong, and I think your path is at best a Japan style lost decade path. There's nothing right now that can push any sort of job creation. Companies aren't going to hire for tax credits right now; they're sitting on enormous piles of cash already. They're only going to hire when they have customers to buy their products, and right now there is no customer base left capable of expansion.

 

Oh, and I vehemently, 100% disagree with the concept that tax cuts and tax credits aren't spending.

 

Thank you for giving an opinion though. It's something we can legitimately discuss.

 

So, nothing can create jobs, but we should spend, spend, spend our limitless cash tree?

 

At the end of the day businesses are going to bring the economy back, not the government paying people to be unemployed or paying people to do odd jobs. That's not long term sustainable growth. The government needs to create meaningful incentives so that businesses get back to risking a little bit of money (investing) into growth, either of existing businesses or new businesses.

 

Edit: as to the tax cut as spending, I agree it technically is, but I view it as the reduction in tax revenue is less than the unemployment the government would be spending on that otherwise unemployed worker.

Edited August 24, 2010 by Jenksismybitch

[Balta1701]

So, nothing can create jobs, but we should spend, spend, spend our limitless cash tree?

 

At the end of the day businesses are going to bring the economy back, not the government paying people to be unemployed or paying people to do odd jobs. That's not long term sustainable growth. The government needs to create meaningful incentives so that businesses get back to risking a little bit of money (investing) into growth, either of existing businesses or new businesses.

 

Edit: as to the tax cut as spending, I agree it technically is, but I view it as the reduction in tax revenue is less than the unemployment the government would be spending on that otherwise unemployed worker.

The problem with pretending that tax credits aren't spending is that it allows for huge market distortions that otherwise would get much more attention. I can give a stellar example...the mortgage interest tax credit. It's a subsidy on the scale of $100 billion per year...that's on the scale of the first Bush Tax cut or the Iraq war. It is a subsidy that isn't indexed to cost or anything like that. It literally means that up to a certain level, the federal government pays a slightly larger share of your mortgage as you buy a bigger house. It hurts renters and anyone who doesn't purchase a $700k house, while it rewards people who go deeper in to debt to buy a larger house. It's a massive market distortion that doesn't get any attention because it's a credit and that doesn't count as actual spending.

 

If you, right now, proposed a policy that would take $100 billion a year in taxpayer money and use it to finance the mortgages of people who have bought houses, and then made it so that the bigger your house was, the more you got...I think a lot more anger at paying one's neighbors' mortgage would be inspired, but no one cares because it's a credit.

 

On the other matter...yes, it's going to be business that eventually resumes investment, but businesses aren't going to risk money right now, it's simply bad business. The average business right now has seen its customer base erode significantly over the last 2 years while its cash positions have improved massively through cutbacks. If that business had any reason to think that by investing the cash it was sitting on it would increase profits, it would. Instead, that business is seeing an environment where inflation is at 0.5% and plummeting, and the returns on holding cash or treasury bills are slightly greater than that amount. There is more money to be made right now by not investing cash holdings than there is by creating jobs. The only thing way to change that is to either find a way to generate more customers (aka hire people) or to push inflation the other way, to disadvantage sitting on piles of cash. Both of those happen when the federal government pushes stimulus. Neither of them will happen if the government pulls back.

[Jenksismyhero]

The problem with pretending that tax credits aren't spending is that it allows for huge market distortions that otherwise would get much more attention. I can give a stellar example...the mortgage interest tax credit. It's a subsidy on the scale of $100 billion per year...that's on the scale of the first Bush Tax cut or the Iraq war. It is a subsidy that isn't indexed to cost or anything like that. It literally means that up to a certain level, the federal government pays a slightly larger share of your mortgage as you buy a bigger house. It hurts renters and anyone who doesn't purchase a $700k house, while it rewards people who go deeper in to debt to buy a larger house. It's a massive market distortion that doesn't get any attention because it's a credit and that doesn't count as actual spending.

 

If you, right now, proposed a policy that would take $100 billion a year in taxpayer money and use it to finance the mortgages of people who have bought houses, and then made it so that the bigger your house was, the more you got...I think a lot more anger at paying one's neighbors' mortgage would be inspired, but no one cares because it's a credit.

 

Who cares what the distortion is? Starting today, if the government gives up some tax revenue to assist businesses grow (thereby decreasing the governments costs for unemployment benefits, among other things, and also potentially adding tax revenue through income taxes), then it's not "spending" in the sense that the government has to come up with the cash to pay for it.

 

And I think it's a bit disengenious to say that you get some kind of benefit for buying a larger house. Yeah, the interest paid on a million dollar loan is certainly more than the interest of a 250k loan. But on a year to year basis, it's not THAT much difference. It's not like the rich guy is getting 250k while the lowly guy is getting 500 bucks. Plus, chances are that rich person is spending more money in the economy for his house - more goods are bought, more services are used, etc.

 

On the other matter...yes, it's going to be business that eventually resumes investment, but businesses aren't going to risk money right now, it's simply bad business. The average business right now has seen its customer base erode significantly over the last 2 years while its cash positions have improved massively through cutbacks. If that business had any reason to think that by investing the cash it was sitting on it would increase profits, it would. Instead, that business is seeing an environment where inflation is at 0.5% and plummeting, and the returns on holding cash or treasury bills are slightly greater than that amount. There is more money to be made right now by not investing cash holdings than there is by creating jobs. The only thing way to change that is to either find a way to generate more customers (aka hire people) or to push inflation the other way, to disadvantage sitting on piles of cash. Both of those happen when the federal government pushes stimulus. Neither of them will happen if the government pulls back.

 

That's why I said meaningful benefits to do so. We've got to figure out a way to get businesses to move money again. I just don't see how having the government continue to fund unemployment, or build a bridge or whatever, is going to do that. It's just the government propping up people in the short term, but it's not changing anything else. It's not creating an environment for business to grow so that once the short term project is over, there are some other jobs waiting.

 

What stimulus are you suggesting that would do this? What can the government spend money on? And why do we need MORE stimulus, when the first stimulus bill hasn't run out yet?

Edited August 24, 2010 by Jenksismybitch

[Balta1701]

What stimulus are you suggesting that would do this? What can the government spend money on? And why do we need MORE stimulus, when the first stimulus bill hasn't run out yet?

First of all, the first stimulus wasn't big enough.

 

Second of all, the first stimulus was too loaded with tax cuts, which exacerbates the problem of people not spending. The people who got the tax cuts spent some of it, but also saved a ton of it.

 

Third...there's a ton of legitimate stuff out there that hasn't had the kind of investment on it that should be there, either short term construction or long-term building-a-sound-future stuff (Smart grid, Supertrains). Great example...the Obama admin set a goal of renovating 1000 schools a year when they took office...a goal that they're missing.

 

Fourth...the 2 big issues right now preventing investment are, as I said; the near-deflationary environment where holding cash is a very wise investment, and lack of customers.

 

The reason businesses have no customers right now is...we're nearly at 10% unemployment, and the ones who are employed have still lost $10 trillion or so in housing wealth (the well-established economic effect where people spend more when their assets are worth more regardless of whether they're just worth more on paper now).

 

That jobs program you and I talked about a few pages ago does both items here, and it's a shame there aren't people sitting around working up lists of construction jobs that could be done. This nation still needs a couple trillion in legitimate renovation and infrastructure investment to cover the hole that's appeared in the last 20 years (a personal example; my building right now at a state school is probably 25 years overdue for renovation, but there's no money in the pipe for this building).

 

You hire a ton of people and you do several things; you push the unemployment rate in the right direction, you give more people money to spend since they're actually earning it, you keep people out of work from becoming trapped as long-term unemployed, and you push the inflation pressure in the way we need it to go, such that businesses that hold cash will be in a losing-position rather than a winning position. One part of the beauty of hiring people who are unemployed to do things (hell, you can put them at the border for all I care) is that they're almost guaranteed to spend that money since it's a question of some income versus zero income (you give me a tax cut, for example, and it just goes in the bank right now since there's no risk and my assets are appreciating relative to the value of the dollar).

[Jenksismyhero]

First of all, the first stimulus wasn't big enough.

 

Second of all, the first stimulus was too loaded with tax cuts, which exacerbates the problem of people not spending. The people who got the tax cuts spent some of it, but also saved a ton of it.

 

Third...there's a ton of legitimate stuff out there that hasn't had the kind of investment on it that should be there, either short term construction or long-term building-a-sound-future stuff (Smart grid, Supertrains). Great example...the Obama admin set a goal of renovating 1000 schools a year when they took office...a goal that they're missing.

 

Fourth...the 2 big issues right now preventing investment are, as I said; the near-deflationary environment where holding cash is a very wise investment, and lack of customers.

 

The reason businesses have no customers right now is...we're nearly at 10% unemployment, and the ones who are employed have still lost $10 trillion or so in housing wealth (the well-established economic effect where people spend more when their assets are worth more regardless of whether they're just worth more on paper now).

 

That jobs program you and I talked about a few pages ago does both items here, and it's a shame there aren't people sitting around working up lists of construction jobs that could be done. This nation still needs a couple trillion in legitimate renovation and infrastructure investment to cover the hole that's appeared in the last 20 years (a personal example; my building right now at a state school is probably 25 years overdue for renovation, but there's no money in the pipe for this building).

 

You hire a ton of people and you do several things; you push the unemployment rate in the right direction, you give more people money to spend since they're actually earning it, you keep people out of work from becoming trapped as long-term unemployed, and you push the inflation pressure in the way we need it to go, such that businesses that hold cash will be in a losing-position rather than a winning position. One part of the beauty of hiring people who are unemployed to do things (hell, you can put them at the border for all I care) is that they're almost guaranteed to spend that money since it's a question of some income versus zero income (you give me a tax cut, for example, and it just goes in the bank right now since there's no risk and my assets are appreciating relative to the value of the dollar).

 

(1) I thought only like 25% of the stimulus has been used thus far.

 

(2) Yes, businesses right now prefer to hold onto their cash because they'll make more money that way. But its like getting people to buy houses - you lower the rates far enough and give people an incentive to buy and they will. I did, and as we've seen today with a 27% drop in housing sales, so did a lot of other people. If you do that with a business you'll not only hopefully start/revitilize new industries, you get people hired, and you also invest ifor the future. I think we're in agreement that jumpstarting things like a smart grid and supertrains is a good idea. I just don't see the negativies with doing it through tax cuts/credits.

 

(3) the jobs program we talked does nothing for long term investment. You put a small fraction of the population to work at minimum wage type jobs, and that's putting a bandaid on a torn off leg. The New Deal and its infrastructure jobs did little to decrease unemployment. Hiring tons of people is just a form of paying for unemployment benefits. I liked the idea of requiring them to work because at least that way the country gets something out of it. But you're not involving enough of the economy in that scenario to make it grow into something.

 

And where do you get the guarantee that they'll spend the money? If you're unemployed now you're probably recieving unemployment already. You're struggling to make the bills. You're not going to go out and buy meaningful (to the economy) goods like appliances or cars or the like. You're going to pay off bills and save it up.

Edited August 24, 2010 by Jenksismybitch

[Balta1701]

(3) the jobs program we talked does nothing for long term investment. You put a small fraction of the population to work at minimum wage type jobs, and that's putting a bandaid on a torn off leg. The New Deal and its infrastructure jobs did little to decrease unemployment. Hiring tons of people is just a form of paying for unemployment benefits. I liked the idea of requiring them to work because at least that way the country gets something out of it. But you're not involving enough of the economy in that scenario to make it grow into something.

 

And where do you get the guarantee that they'll spend the money? If you're unemployed now you're probably recieving unemployment already. You're struggling to make the bills. You're not going to go out and buy meaningful (to the economy) goods like appliances or cars or the like. You're going to pay off bills and save it up.

First of all, unemployment benefits are limited and ending, so you can't count that very much. Secondly...an actual paying job does a heck of a lot more in terms of earning power than unemployment benefits.

 

Third...whaddya mean the New Deal infrastructure programs did little to decrease unemployment? It dropped from 25% to 15% in the 4 years between when it was implemented and the 1937 budget-balancing cutbacks. It dropped massively again when the federal government began a much larger jobs program in 1940.