$14,289,000,000,000.00 not enough credit . . .

[Texsox]

Which would you prefer to leave people of future generations, no debt and no jobs, or debt but a solid job market?

 

 

 

Are those the only two options you know of?

[Balta1701]

Ugh.

 

-2008 wasn't caused by a an over-supply. It was caused by a drop in demand. Those are two very different things.

 

-Final sale price affects amount produced. It's called profit motive. If you costs go up, whether it is due to supplies costing more, or the government cutting off your subsidies, production goes down. The source of the cost increase doesn't matter. I taught that very lesson in the first six weeks of high school economics.

1. A drop in demand = too much supply. Same exact problem. More oil was being supplied than there was demand for, and prices plummeted.

 

2. Ok, I understand completely where your flaw is right now. You're somehow under the impression that production prices for oil are similar to the per barrel cost. This is fundamentally untrue. There is little to no oil anywhere that is produced and shipped for $100/barrel. This is not a commodity where the high price is reflecting increased cost of production, it is reflecting only the scarcity of the item.

 

Furthermore, virtually all of the production subsidies we offer are on oil that is produced at well less than $100/barrel cost, meaning that it is all oil that would be produced anyway without the subsidies. We're not subsidizing companies to produce extremely hard to get oil here, we're subsidizing them to produce oil that would be very profitable for them to produce anyway.

[Balta1701]

Are those the only two options you know of?

In this case, yes. That is the reality of the 9% unemployment we're dealing with after the 2008 crash. You cut back on spending, you lose jobs.

 

If you cut back on government spending in boom times, you lose jobs. The difference now is that the economy after 2008 is not in a position to replace those job losses.

 

Furthermore, a significant chunk of the deficit problem anyway is due to the fact that people lost jobs and suddenly stopped being taxpayers. If you take actions that cut more jobs, you get much less bang for your buck because you simply move those people onto the unemployment rolls and Medicaid, and they stop paying taxes.

[southsider2k5]

1. A drop in demand = too much supply. Same exact problem. More oil was being supplied than there was demand for, and prices plummeted.

 

2. Ok, I understand completely where your flaw is right now. You're somehow under the impression that production prices for oil are similar to the per barrel cost. This is fundamentally untrue. There is little to no oil anywhere that is produced and shipped for $100/barrel. This is not a commodity where the high price is reflecting increased cost of production, it is reflecting only the scarcity of the item.

 

Furthermore, virtually all of the production subsidies we offer are on oil that is produced at well less than $100/barrel cost, meaning that it is all oil that would be produced anyway without the subsidies. We're not subsidizing companies to produce extremely hard to get oil here, we're subsidizing them to produce oil that would be very profitable for them to produce anyway.

 

-It isn't the exact same problem. It is two fundamentally different things. You fail econ 101 if you don't understand the difference between those two things in the state of Indiana. That is a state standard that you have to know to pass the class.

 

-Price point doesn't matter. Again, cost structure doesn't care where the costs come from, or at what price point they come in at. If you change costs, you change final price, and you change production. None of the political party lines matter here. This introduction to high school economics we are talking about here. These aren't rules which are negotiable based on your party.

[Balta1701]

-Price point doesn't matter. Again, cost structure doesn't care where the costs come from, or at what price point they come in at. If you change costs, you change final price, and you change production. None of the political party lines matter here. This introduction to high school economics we are talking about here. These aren't rules which are negotiable based on your party.

Hypothetical situation.

 

It costs $30 to bring a barrel of oil out of the ground and take it to a refinery in New Orleans.

 

Oil prices are $98/barrel.

 

If I offer the person who owns the production site an additional $10 per barrel, will the producer add extra production?

 

If that producer does, then he's a fool, because that means he has been neglecting to produce every drop he can at the $68/barrel profit. Or, he's been acting as a monopoly and keeping supply off of the market in the hopes of fixing prices.

 

Alternative scenario. It costs $105 to bring a barrel out of the ground. The price on the market is $98. In this case, if you offered an increase of $10 a barrel in subsidies, yes, you should get extra production, because then you'd bring on to line additional oil sold at a profit.

 

However, in this case, there is very little oil anywhere in the world that actually costs $100 to bring out of the ground. Even the Canadian tar sands are typically profitable at a level of $40 (Canadian).

[Y2HH]

The CEO of Exxon said this isn't a supply/demand issue...he outright said that a barrel of oil *should* be between 60-70$ based on stock/supply/demand and availability. He said this in response to a question about whether speculators are the cause. While he never outright said it was speculators, you can do the math yourself:

 

Q: Are speculators influencing the cost of oil?

 

A: If you said: 'If I had access to the next marketable barrel, what would it cost? When we look at it, it's going to be somewhere in the $60 to $70 range.

 

http://www.reuters.com/article/2011/05/12/...E74B4NQ20110512

[Balta1701]

The CEO of Exxon said this isn't a supply/demand issue...he outright said that a barrel of oil *should* be between 60-70$ based on stock/supply/demand and availability. He said this in response to a question about whether speculators are the cause. While he never outright said it was speculators, you can do the math yourself:

 

Q: Are speculators influencing the cost of oil?

 

A: If you said: 'If I had access to the next marketable barrel, what would it cost? When we look at it, it's going to be somewhere in the $60 to $70 range.

 

http://www.reuters.com/article/2011/05/12/...E74B4NQ20110512

If oil speculators are buying oil at $100 a barrel that should be sold for $70 a barrel, then the response is going to be a glut of oil being put into storage as consumers cut back, and eventually things will have to swing the other way, to prices well below $70, to remove that excess.

 

Speculators can drive bubbles but since production prices are so low compared to the price per barrel, they can't drive changes in the amount produced.

[Y2HH]

If oil speculators are buying oil at $100 a barrel that should be sold for $70 a barrel, then the response is going to be a glut of oil being put into storage as consumers cut back, and eventually things will have to swing the other way, to prices well below $70, to remove that excess.

 

That will happen, but in the mean time, it's not helping people.

[Balta1701]

That will happen, but in the mean time, it's not helping people.

The only real solution to that problem is a highly regulated oil market or even a mandated oil price, and that has the exact same problems.

 

The real issue isn't the oil markets, its the casino-based financial system itself.

[StrangeSox]

-Price point doesn't matter. Again, cost structure doesn't care where the costs come from, or at what price point they come in at. If you change costs, you change final price, and you change production. None of the political party lines matter here. This introduction to high school economics we are talking about here. These aren't rules which are negotiable based on your party.

 

To me, your line of reasoning boils down to subsidies (or lack thereof) not actually affecting their profitability at all. If the subsidies are there, prices will drop and their profits will stay at x%. If subsidies disappear, they'll simply raise prices to a level to maintain profits of x%.

[Balta1701]

To me, your line of reasoning boils down to subsidies (or lack thereof) not actually affecting their profitability at all. If the subsidies are there, prices will drop and their profits will stay at x%. If subsidies disappear, they'll simply raise prices to a level to maintain profits of x%.

Which, as I am trying to say, only happens in the case of a monopoly, where there is no risk of anyone coming in and undercutting your chosen profit percentage.

[bmags]

Here's a good article on speculators:

Yglesias

MarcK asked in the requests thread about commodity speculators: “I would like to hear more about the commodities market and how banks like Goldman have been manipulating the prices. No one seems to focus on these speculators when the price of oil and even copper goes up for no good reason.”

 

I think speculators get a bad rap and speculation is a stabilizing impact on commodity prices. The easiest illustration of this comes from the price of onions. Onion futures trading was banned in 1958 at the behest of then-congressman (later president) Gerald Ford who felt speculators were engaged in price manipulation. The result is that onions are one of the most unstable commodities out there:

In general, commodities speculation is a good thing. For any given commodity at any given time, there’s always someone who wishes the price were either higher or lower and that person tends to complain about speculators. But if you constantly had to pay the spot price for everything, prices would be more unstable and ordinary households and firms would need to spend more time stockpiling goods to hedge against price fluctuations. The world of derivatives is a convenient playground for Wall Street firms interested in designing products whose purpose is regulatory arbitrage and this is a bad thing. But the problem there is with the regulatory arbitrage, not the speculation.

[bmags]

it appears i killed this thread.

[Balta1701]

it appears i killed this thread.

Well, since it is a deficit thread and no one has posted it yet, here's the graph.

 

[Y2HH]

Well, since it is a deficit thread and no one has posted it yet, here's the graph.

 

 

We can call them Obama era tax cuts now, right?

 

And those are now Obama's wars, as he clearly campaigned we'd not be there still if he was elected.

 

Oh, plus Libya.

 

Time to move on.

 

Oh, and I'm not blaming Obama either, he's doing what he needs to do. But let's get past the blame Bush garbage already...if we're going to do that, we can still point to Carter, Nixon, etc, too...it's old now.

Edited May 18, 2011 by Y2HH

[Balta1701]

We can call them Obama era tax cuts now

well we already know how it'll go next year, the republicans will want to extend them all again, Obama will talk about why that's a bad idea and then they'll extend them all again

[Y2HH]

well we already know how it'll go next year, the republicans will want to extend them all again, Obama will talk about why that's a bad idea and then they'll extend them all again

 

Then he needs to put more pressure on them...he can get it done if he tries hard enough to do so. Bush got a ton of stuff done HIS way with a democratic controlled congress/senate...so it CAN be done if Obama makes the right moves.

 

If reelected, and with a full term under his belt, I think Obama will know how to maneuver the landscape a LOT better, just like Clinton learned to do in his second term.

[Balta1701]

Then he needs to put more pressure on them...he can get it done if he tries hard enough to do so. Bush got a ton of stuff done HIS way with a democratic controlled congress/senate...so it CAN be done if Obama makes the right moves.

 

If reelected, and with a full term under his belt, I think Obama will know how to maneuver the landscape a LOT better, just like Clinton learned to do in his second term.

Maneuvering by Clinton in his 2nd term? the only maneuvering he did was...well...

[StrangeSox]

well we already know how it'll go next year, the republicans will want to extend them all again, Obama will talk about why that's a bad idea and then they'll extend them all again

 

 

[Balta1701]

An alternate way of looking at that chart...in terms of accumulated debt.

 

[mr_genius]

An alternate way of looking at that chart...in terms of accumulated debt.

 

 

I assume you are in favor of returning to Clinton era tax rates? Would that be for all tax brackets?

Edited May 22, 2011 by mr_genius

[Balta1701]

I assume you are in favor or returning to Clinton era tax rates? Would that be for all tax brackets?

I could tolerate that, sure...in a couple years, once we get down to 7% unemployment or so, if we avoid another collapse.

 

Of course, I'm also of the belief that the best solution involves dramatically cutting back tax credit expenditures. Every time we hear about them, it's GE paying no taxes, or the Walton family or Buffet paying no taxes, etc. Right now, the total amount the government doesn't collect in the form of tax expenditures is on the order of $1.2 trillion per year. Now some of that would be really hard to get rid of (i.e. the home mortgage interest tax deduction and the health insurance credits), but it's worth noting when you have a trillion dollar deficit that you're using tax credits to subsidize behaviors to the tune of the same amount.

[mr_genius]

I could tolerate that, sure...in a couple years, once we get down to 7% unemployment or so, if we avoid another collapse.

 

Of course, I'm also of the belief that the best solution involves dramatically cutting back tax credit expenditures. Every time we hear about them, it's GE paying no taxes, or the Walton family or Buffet paying no taxes, etc. Right now, the total amount the government doesn't collect in the form of tax expenditures is on the order of $1.2 trillion per year. Now some of that would be really hard to get rid of (i.e. the home mortgage interest tax deduction and the health insurance credits), but it's worth noting when you have a trillion dollar deficit that you're using tax credits to subsidize behaviors to the tune of the same amount.

 

But GE paid a lot of bribes for those tax breaks. Is it fair to take the rug out from under them? I'm sure they'll be on TV whining about how if they don't get these big special privileges there will be another great depression. No one wants another great depression!

 

As far as raising all taxes back to Clinton era, it's a non-starter. The Democrats can't do it. They will end up with an attempt raise on upper bracket tax increases.

[Balta1701]

But GE paid a lot of bribes for those tax breaks. Is it fair to take the rug out from under them? I'm sure they'll be on TV whining about how if they don't get these big special privileges there will be another great depression. No one wants another great depression!

 

As far as raising all taxes back to Clinton era, it's a non-starter. The Democrats can't do it. They will end up with an attempt raise on upper bracket tax increases.

Again...if all we do is "Nothing", tax rates will return to Clinton Era rates. Cutting them takes additional legislation.

 

If we do "nothing" and we bring the army home, the deficit shrinks away.

[mr_genius]

Again...if all we do is "Nothing", tax rates will return to Clinton Era rates. Cutting them takes additional legislation.

 

If we do "nothing" and we bring the army home, the deficit shrinks away.

 

the do nothing option works on raising the debt ceiling too.