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New IMF Head Says US Must Raise Debt Limit, or Face 'Nasty Consequences'
fysdt writes with this from an article on ABC News: "The International Monetary Fund's new chief foresees 'real nasty consequences' for the U.S. and global economies if the U.S. fails to raise its borrowing limit. Christine Lagarde, the first woman to head the lending institution, said in an interview broadcast Sunday that it would cause interest rates to rise and stock markets to fall. That would threaten an important IMF goal, which is preserving stability in the world economy, she said. The U.S. borrowing limit is $14.3 trillion. Obama administration officials say the U.S. would begin to default without an agreement by Aug. 2."
can people expect to wage 2 ground wars, and 1 air war, while giving tax cuts to the wealthy.
"Taxes Bad.", "Spending 10s of billions of dollars in 'wars' killing brown people Good."
We all know they are going to raise the debt limit. Every time this comes up, whichever party is in power votes to raise the limit. Whichever party is not in power delays the vote to the last minute, using the occasion for political grandstanding.
It would frankly be wonderful if enough Congresscritters had the chuzpa to not raise the limit. Force some fiscal responsibility, even if it is probably too late. But, no, this is the Congress that still hasn't passed a budget for 2011 - they just gave up, and there is every sign that there will be no official budget for 2012 either.
Enjoy life! This is not a dress rehearsal.
"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." Warren Buffet. His tax rate is lower then his secertary. They pay more then the none rich, because they make retardedly huge amounts of money, but for some reason their taxes as a percent of income is much lower then those of the middle class.
It's not the banks.
It's government debt, eg bonds. Greece's interest rate is like 28%, The US is 2%. Greece's economy has basically gone titsup without default, but they're still expected to default. All the countries that are in trouble their bond rate skyrockets as soon as it looks like the bonds are going to be worthless.
What does the government do with money? It pays government employees (Miltary, Entitlement programs, infrastructure and creditors.) Creditors are other countries/people/businesses, both domestic and foreign. If the US defaults, expect the equivalent of a bank-run on bonds and stocks (equities) to get their money out of the US and into safer places like... Japan or Canada (even if it's only for a short period of time.) Take a look at the price of most of the S&P 500 1 minute before and after the jobs report last friday. So many stocks dropped by 10% for several hours before picking back up, now multiply that in a downward trend, that is what will happen.
Publicly traded companies with stocks worth less than 5$ get delisted, and that means those companies are toast. Companies that are private and those that have physical assets like Apple might survive, but a lot of the service industry does not have physical assets and they are history if the US government defaults. The irony here is that the banks would survive, but they would be calling in their loans, which means 30% interest for you.
Yes it can be doom and gloom, but it's inconceivable that the debt limit doesn't get raised. If by some chance the politicians screw the pooch and don't get it lifted, every last one of them better not be re-elected.
You do realize that the US debt limit has nothing to do with "the banks", right? It has to do with the US being able to pay its obligations to its citizens. Yes, some of those obligations are to banks, but not just US banks, and they are also to other countries. The US has never defaulted on its financial obligations and I'm sure now would be a bad time to start.
It must have been something you assimilated. . . .
EVERYONE wants lower taxes and reduced spending and "fiscal responsibility".
The problem is that each person has a DIFFERENT idea of what the government should be spending money on (and what programs should be cut) and what should be taxed.
And that doesn't even factor in the ear-marks and riders and other pork that gets attached to garner votes.
The US won't "default" no matter what happens. Enough tax money comes in every day to sustain the interest payments on the debt. The tough decisions politicians need to make are the budget cuts. Obama and the Democrats don't want to cut anything (except for defense). The elephant in the room is all those people on the welfare dole. "Entitlements" account for the vast majority of the budget. Does a millionaire retiree really need that $2000 social security check and medicare? Those programs should be means-tested. Otherwise, they're just Ponzi schemes that are approaching the inevitable demise of more people taking out than putting in.
For those who want to raise taxes, I ask you: When has a tax increase ever created a job? On the contrary, Reagan knew what Kennedy (JFK) knew: tax cuts INCREASES private investment, which increases jobs, which adds more TAXPAYERS to the system. We don't need more taxes, we need more people paying taxes. Obama can sing his class warfare song (rich vs. poor) all he wants but the fact of the matter is, rich people INVEST their money. That creates jobs. Confiscate their money through taxation and that's less money available to invest. It's really quite simple. I'm glad my boss is a millionaire. If he wasn't, I might be unemployed right now.
I used to agree with this line of thinking. The problem is the rich aren't investing in US companies. The current tax breaks are creating jobs they just happen to be in China.
said in an interview broadcast Sunday that it would cause .... stock markets to fall.
Oh, no! Please don't let the stock market fall! Anything but that! It'll be a tragedy for all the people who've bought non-dividend paying stock at prices far higher than they're worth!
It's been pointed out before, and is worth pointing out again, but US government default is prohibited by the 14th amendment of the constitution. Whether they follow it or not is left to be seen.
"First they came for the slanderers and i said nothing."
The US Constitution says the government isn't allowed to default on the debt. But the Debt Limit Law isn't in the Constitution - it's just a law that says that Congress doesn't authorize borrowing more than $X, and requires some actions if we hit that limit, including not spending more money than we're taking in. It's questionable whether it really even applies, because Congress has passed a budget law since the last Debt Limit Law update, and that budget says they're going to be spending more than they're taking in so they're going to be in more debt.
So what can the Executive Branch do when they hit the debt limit?
I'm guessing that they'll probably do a combination of politically unpopular spending cuts and Federal pay cuts and try to blame the Republicans, plus the Washington Monument's going to be doomed until there's a solution. I don't think they'll default on the debt, not just because it's unconstitutional, but because it seriously degrades their chances of borrowing any more money in the near future, which they want to be able to do - Obama's threatening that, but I think it's more of a political game of chicken.
Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Rich people pay above 30%.
False. Rich people don't make money from wages. They make money from investments, dividends, and bond interest. That's why the super rich pay almost no tax (and why C-levels get paid in stock as opposed to salary). In the US we tax income from work, but we do not tax income from wealth.
Er... this has almost nothing to do with what happened with the banks in 2008. In fact, it's about as unrelated as it is possible for one looming economic crisis to be to some recently past economic crisis. The fallout from the prior crisis is a major contributing factor, of course, but if there is any issue of "looting", it's going to be we the people, through our elected representatives in Congress, who do it.
This crisis is entirely voluntarily precipitated by our political leadership, albeit with the excuse that they believe *some* crisis is coming sooner or later. We are facing default not because we've spent more than was budgeted, or more than was appropriated, but because we spent money that as budgeted and appropriated but now Congress won't let the Treasury raise the money to pay the people we owe money to as a result.
Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
A relevant cartoon.
No kidding? The IMF is the banker's bank: Of the banks, by the banks, for the banks.
It seems more like
"One Bank to rule them all, One Bank to find them,
One Bank to bring them all and in the darkness bind them"
Faster! Faster! Faster would be better!
At first I was going to mock your silly idea, but then I thought about it.
Essentially your idea is to have the government extract taxes from people equally by creating inflation, and thus taking money from everyone according to how much they have. It seems like a good idea on the surface, because we get rid of the expense of paying for the IRS, and it's fair: it taxes people according to their wealth.
In practice, it seems there might be obstacles. Countries like Zimbabwe and Brazil have tried similar schemes, and it seems to have had a real negative effect on their economies. Although it would seem fair, ultimately it would not be, because rich are much more capable of putting their money in inflation-protecting schemes, whereas the poor are hurt by constantly rising prices. Given these two considerations, I would be very cautious about moving the entire system over to that method quickly.
"First they came for the slanderers and i said nothing."
Oh, the infamous Lafffer curve (too lazy to post a link to wikipedia, check it yourself). Too bad it has not been proved, nobody knows where the optimal point is (why they always assume the optimal point is with LESS taxes, and no with more?), and everything else. But it gives some people a good mantra to repeat and repeat.
As other post has already put, everyone is willing to make sacrifices and cut costs... unless it is in something that benefits them.
At least some people is honest and choses consequently "I want good public services and I'll pay the taxes needed to/I do not want good public services but I want less taxes instead". Others just say"If I pay less taxes then everything will magically solve". With the first people one can try to get to a common point, arguing with the later ones is just a waste of time.
Why can't
In other news, heroin addict must get another fix or face "nasty consequences".
Set your phasers on "funky"!
The Laffer curve is a miserable failure, as anyone with even the slightest knowledge of economic history can deduce.
The only private investments tax cuts will spur will be in paying accountants to find new and unique ways to hide the taxable income in esoteric financial constructs designed specifically for the wealthy.
Balancing the budget requires cutting spending AND raising taxes.
~X~
- Not one penny of US debt has been repaid for 51 years: the last time US government funded debt actually decresed on a year-over-year basis was 1960
97% of today's funded debt has been accumulated since August 1971 - the end of the Bretton Woods era by Nixon, and the terminal delinking of all fiat currencies from any and all hard assets, ushered in the era of modern-day hyper-debt insolvency
- Obama projects 2.5% Fed Funds rate in budget calculations through 2020. Average Fed Funds rate since 1980: 5.7%; Since 2008: 0.00%, If average 5.7% rate was used, projected US deficit would increase by another $4.9 trillion by 2020
- Obama projects 4.2% growth rate over next 3 years. If a normal growth rate of 2.5% is used, deficits would increase by another $4 trillion by 2020
- The US government borrows 40-50 cents for every dollar it spends. A balanced budget would mean cutting government spending in half.
- Implementing a balanced budget would not reduce current debt outstanding. It would merely stop it from growing.
- Over the past three fiscal years US debt grew by over $1.5 trillion per year: this is more than three times the record annual debt increase in any previous year in US history
- Last night deficit reduction targets were cut from $4 trillion to $2 trillion over the next decade, in exchange for a $2.4 trillion debt ceiling hike, which will last the Treasury until the next presidential election. Said otherwise, the Treasury needs to fund a $2.4 trillion hold over the next 15 months. Over a decade this come to $20 trillion: ten times more than the proposed deficit reduction.
In other words, cut the US budget in half to stop the situation from getting worse. Then start working on your debt mountains.
Tea Party which is holding President Obama hostage on the budget. They simply do not want Obama to pass a budget
Well, when the Democrats controlled the House, the Senate, and the Presidency in 2010, they failed to pass a budget. The Tea Party didn't have any power to stop them back then.
The Tea Party wants a budget - they just want it to be balanced, rather than simply pile on more and more unsustainable debt.
So that's why the US wanted her as head of IMF
I don't think you have your finger on the pulse of America (what little pulse there is). Unless you're going to acknowledge the same civil rights to gay people that everyone else has on a federal level, or you're going to shut down the NFL, or you're going to ban latte's, there is nothing that will ever cause the US to erupt. If that video of our troops unloading on unarmed people with really pathetic commentary on the open mics didn't cause a riot, nothing will. If Goldman Sachs executives running the treasury giving massive bailouts to Goldman Sachs didn't cause riots, nothing will. If going to war for almost a decade against a country that didn't attack us for reasons that were later acknowledged to be manufactured and false (and that we're still participating in) didn't cause riots, nothing will.
Don't you know that taxes work like homeopathy?
Justice is the sheep getting arrested while an impartial judge declares the vote void.
Obama offered a plan for $4 trillion in deficit cuts, with 75% coming from spending cuts (including cuts to entitlement programs). The Republicans turned it down, because in their minds even $100B a year in tax hole closures and rate increases is too much. They are now pursuing only a $2T deficit reduction package, all because they care more about their rich benefactors than the economy.
So don't go saying both sides are unreasonable. The Democrats have been perfectly reasonable. It's the tea-baggers that are the problem.
You forget that the Tea Party had the power of FILIBUSTER! (by agreement, they didn't even have to do anything, just say they were filibustering and magically things more than just a simple majority to pass)
Why do you hate your grandparents?
Because they spent decades partying as they built up huge debts that they now expect their grandchildren to pay?
The solution to debt is not more debt. At some point someone is going to have to be grown up about this. It would be nice if they were grown up sooner, so that it hurts less. I'm not holding my breath.
Also, the US makes enough tax income to pay interest on it's current debt. In other words, "default" is not a consequence of refusing to raise the debt limit. Something will have to go unpaid, but it doesn't have to be the USA's debt interest. People are running fast and loose with the meaning of the word "default". Don't let them take you in.
Social security is an unfunded liability, currently funded through a Ponzi scheme, which is just now entering the "not enough new suckers" phase. (No, really, it is. There is no SS "trust fund". I can write checks to myself all day; it doesn't mean I have more money.)
Medicare is a disaster in terms of cost.
The US spends each day double what it takes in in taxes.
The US decided to take what was entirely a private problem (big banks would go bankrupt because they made bad bets on housing) and turn it into a government problem by bailing private entities out that should have gone bankrupt, and then guaranteeing lots of other debt. This actually prolongs the problem and makes it worse.
The Federal housing entities are some of the worst culprits, helping blow the housing bubble, and now pretending they are not bankrupt. They will have to implode and be shut down at some point. Bye bye Fannie and Freddie.
The inmates are running the asylum. It seems the solution to being seriously in debt is to spend more. There is also apparently a magical money multiplier that makes government spending somehow blessed and better than private spending. We have economists making arguments based on very dubious differential equations in which they carefully never specify their boundary conditions. The well known "economists" are more about justifying their political leanings than any actual scholarship.
Public union pensions for federal and state workers are unfunded to the tune of tens of trillions of dollars. These will never be paid out.
All of these chickens will have to come home to roost. Arguing about Democrats or Republicans or Left or Right completely ignores the fact that reality will eventually force a solution.
The current administration will do all of the worst possible things they could do. Not because they are evil, or Democrats, or whatever, but because bureaucracy is about protecting the way things are now. Their universe does not include actions which could fix this problem, because they would change the power balance and the money flows upon which they depend. The Republicans are being forced to pay lip service to the concept of being fiscally responsible by entities such as the Tea Party, but I can't see them doing anything real. They too are bureaucrats, and they too have rice bowls to fill.
If any entity did force some kind of resolution, it will be vilified by all and sundry, because resolution involves the death of a million sacred cows at all levels of this society. There's no upside for a politician in being vilified for doing something that will hurt this much, even if it's the right thing to do.
It would be nice to say that we get to pick whether we try to deal with it now, and maybe have a little control, or later, when it will be completely out of our control. In reality, I can't see that choice having any chance of being presented.
The Financial Crisis never ended. It was just temporarily papered over by insane government spending. Now we just have a bigger can to kick down the road.
A massive failure is coming, whether it be a cascade failure, or death by a thousand cuts. I have no idea when or how. I wish it would happen sooner so I can start concentrating on rebuilding, instead of trying to dodge falling pianos while the world at large tries to pretend we're in a light summer rainstorm.
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Lagarde is also the politician who has been involved in a huge scandal over offering french troops to Tunisia's ousted dictator Ben Ali to suppress demonstrations.
In other words, she's perfect for the job. She supports dictatorship, systemic oppression of the masses to benefit rich elite and increase of power of private financial institutions at the cost of public ones.
Which is exactly what IMF has always stood for under all the glossy slogans.
What reason would the IMF have to do that? Their entire purpose is to direct resources away from people indirectly by using the state as the enforcer for their policies. They don't care to preserve stability any more than a farmer cares about the stability of his crop. It is only a means to an end and not even a necessary one for the end in question. There are plenty of other metaphorical fields, and while it is convenient that this one is tilled and planted, it is also near overuse.
This isn't speculation either. The IMF, world bank, USAID and other institutions have shown again and again that their policies take from the citizens of a country, and prop up rulers and the wealthy. The 3rd world countries in particular have their rulers bribed with promise of financial aid in exchange for policy implementation that in turn cripples their peoples ability to thrive. Here is a concrete example of what I mean by the abstract general arguments above. The most specific example I studied is Haiti, where agricultural subsidies and bribery encouraged baby doc and other rulers to enact policies that artificially incentivized Haitians to change their economy into a cheap manufacturing export industry. This along with more direct coercion meant that workers had to pack into cities to find work to survive. This however was not done in a natural way, nor was there any centrally mandated creation of decent infrastructure so people were herded into cities(like Port au Prince) in flimsy housing and buildings. The resulting economic damage was ignored by all but economists who do not worship at the alter of the state but when the earthquake hit, direct proof of the harm of this policy manipulation was laid bare for all to see. In the entire time the people of Haiti lived there, earthquakes were endured without even a fraction of the death toll. Why? Because before that coercive centrally planned pressure to live in dense underdeveloped cities, people found it made more sense to stay away from such dangers. They have a history of earthquakes, and knew better. But because employment is more important than possible earthquake, they of course chose to risk it when the option of working outside of the cities was forcibly taken from them.
That is just one specific example, but it is a common story in many developing areas of the world. Africa in particular has a whole set of rulers who have no reason to keep their citizens out of poverty because having poor people is a source of revenue for them. Journalists, economists and writers(like Andrew Mwenda) have been jailed by these African rulers just in pointing out this fact.
Lagarde is also the politician who has been involved in a huge scandal over offering french troops to Tunisia's ousted dictator Ben Ali to suppress demonstrations.
Actually, it was not her, it was Michèle Alliot-Marie who offered French "expertise" to the Tunisian government. Both are french, women, and politicians, but that's all they have in common.
"military contractors, lay off TSA, DEA, ATF, etc. " You mean they could remain on furlough until some heinous crime or terrorist act happens. Then Obama would get screwed. And those aren't the agencies driving the debt. 2/3 of the budget is ENTITLEMENTS. Fail to attack those means you do squat against the debt.
There is another aspect to the debt. The Bush tax cuts were enacted when they "could see surpluses as far as the eye can see". Well, that lasted...well...it didn't last. Why didn't it last? Two elements: (1) Bush never funded the wars, and (2) the Clinton years were the dot.com bubble. Regarding (2), there was deadlock between Congress and the White House, neither would agree to the other's spending plans. So they simply stopped increasing spending lest their enemies get the leg up in the next election.
In addition, the economy changed during the aughts. Companies shifted more of their operations overseas due to shortsighted Business School Product, and an antiquated tax structure that made it prohibitive for Big Business to invent in the U.S. The latter is open to speculation. Anyhow, the anti-regulation atmosphere of the Bush Years (although started under Clinton attempting to "triangulate") allowed investment banks to invade the loan market. They were aided by the credit rating agencies, and Congress who thought any business is good business. Their bright idea was to securitize (sp?) loans and sell them widely...with collateral "guaranteed by the rating agencies".
That alone wouldn't have caused the current mess.The missing element was the American people. Being greedy and too dumb to understand (or read) the fine print, they bought houses they couldn't afford, bought second houses, flipped houses, took equity out of their houses to piss off on large SUVs (thereby distorting the car market), etc.
This encouraged the Contractors. It used to be you found a contractor to build a house the bank decided, based on your financials, to loan you the money to have build. But in the rarefied atmosphere of no-one minding the store, mega-contractors took over. They will buy a 100 acres or more and build speculation houses (spec-houses). And the American people sucked them right up. Being dumb, you could buy one and think it was worth the purchase price. Being greedy, you could buy one with the intention of flipping it.
And now, the chickens have come home to roost. And everyone wants to point fingers. There is plenty of blame to spread around, and I've neglected several miscreants.
And the Tea Party is not intent on wrecking the economy. The economy is already wrecked, now we are only fighting on how to fix it.
Indeed in a normal year the GOP would have jumped at that deal, which is because it's a rather extreme deal. I'm not familiar enough to comment on it too much, but the tax increases are pretty minimal and are mostly the result of closing loopholes.
-Obama added the wars to the budget so all that military spending that was 'off the books' is now on the books making the budget look much larger when it was there before but was outside the budget!
-When we have a surplus, state or federal there is a big push from our fools to give tax rebates and tax cuts INSTEAD of paying off the debt. This is what we do each time so the debt grows.
-The deficit and debt are two different things people confuse too often. Fixing the deficit does not fix the debt and the interest on the debt only compounds creating more deficit problems.
-Cutting the budget in half will not stop the situation from getting worse. Breaking even will not stop it-- the only way for things to not get worse is if we pay back the interest on the debt and actually break even.
-Trickle down economics do not work; it has a bad reputation... Well, the terms are considered bad-- we've simply shifted the terms while still supporting supply side economics with Democrats slowly warming up to it as well. What is clever is the use of cover terminology that can be swapped out after it takes too much damage. Today its all veiled in terms of jobs-- the rich provide jobs etc. Its just another way of selling the same old failed economics which made huge gains around the Nixon era when the powerful started think tanks to legitimize their positions (the beginning of the modern corporate info war.)
There are other issues leading to a collapse around 2020 besides OUR money mismanagement. Its all interconnected to a point where repair is impossibly difficult.
Democracy Now! - uncensored, anti-establishment news
Yeah, no one seems to understand this.
Guys, we already had the budget debt. Remember the whole 'tax cuts for the rich' Obama wasn't able to get removed? Remember that? Several months ago?
That was the fucking budget.
This is now the Federal government is attempting to operate with our democratically decided and constitutionally passed budget, and needing to borrow more money to do it. (As everyone knew they would.)
And now the right has decided to pretend it's time to make budget decisions again. The joke is, it actually almost is time again, for the 2012 budget. But not for how much we spend in 2011.
It's probably worth mentioning that we're basically the only country in the world where we actually have #5 as a separate process...most countries include, in #4, the authorization to borrow as much as needed to actually implement the budget.
Incidentally, people predicted this back during the budget fight, and that fucking idiot Obama just shrugged it off, because he can't get it through his head that the Republicans are goddamn assholes with no interest in actually running the country, and are, in fact, utterly willing to break it to tiny pieces to get reelected.
If corporations are people, aren't stockholders guilty of slavery?
Raising taxes will only further DECREASE revenue.
That is just an opinion that the vast majority of economists (and educated people) disagree with. Sometimes I wish we could send all the people like you to a separate country, so that you can screw up your own lives without affecting mine. Perhaps the feeling is mutual =). There is no tax, and no government in Somalia. Go for it.
Like all pain, suffering is a signal that something isn't right
Am I the only one that is starting to think this default thing might not be so bad? We've tried bailouts, the banks said "thanks" and promptly foreclosed, we bailed out the ultracorps like GE who said "thanks!" and promptly sent the jobs to India, meanwhile the government is building new aircraft carriers and pissing money into the F35 black hole like the cold war was scheduled to restart next Tuesday and Americans are living in tents because they can't find work. Did I miss anything?
Maybe if we default we won't be able to keep borrowing money, imports will fall off the face of the planet, and we might actually have to start manufacturing things again? Just a thought. But so far we have done everything the bankers wanted and while they got a couple more yachts it certainly hasn't helped this country out, if anything their trickling on the American people has made things MUCH worse.
I really am starting to wonder if it is time for the fall, if it is time for our own Arab spring. it is obvious the elected officials will no longer listen to or obey the will of the people, not on the three wars killing our kids, not on the border leaking like a sieve, not on H1-Bs when there are 100 Americans or more applying for every job, not on anything anymore. maybe it is time for this system to go away and a new one to replace it, one that listens to the people. Because frankly I don't see how we can continue down this path without almost certain full scale class war.
ACs don't waste your time replying, your posts are never seen by me.
It is very possible the US is too far on the left of the curve and optimal revenue might require a tax increase.
Rod Taylor
Uh, not raising the debt limit isn't 'not getting more debt'.
Not raising the debt limit is not paying the minimum balance due on your credit card.
Gee, I wonder why that would hurt your credit rating?
If corporations are people, aren't stockholders guilty of slavery?
Crooks and Criminals = IMF
How many banks have told people that Oh, you are in debt. No problem, take on more debt! That will fix your problem!
The only reason why they are suggesting this is because they want every country they can to go bankrupt, and privatize the infrastructure of the country afterwards.
See what they are doing to Greece? Those idiots in Greece voted to increase the debt limit and now the IMF is asking for some of the islands, their bridges and historic works of Art to be used as collateral to private foreign interests.
By the time the IMF gets done with Greece, the citizens of that country won't even own their own water works, Hospitals or government buildings.
The IMF will own everything.
Now, the IMF has its sites set on the USA. By the time they get done, we won't even have a national park anymore, it will be owned by IMF private investors.
-Hack
Got Geometrodynamics? Awe, too hard to figure out? Too bad.
"Because frankly I don't see how we can continue down this path without almost certain full scale class war."
We've been in class war for a while now, it just isn't obvious.
Try fighting your way up from a net worth of $0.00 and living in a homeless shelter up to the middle class. Most places won't hire you if you don't have a permanent address and reliable transportation. You'll end up getting kicked out of the shelter long before you have enough for a rent deposit, and most renters won't rent to you if you don't have a previous address or at least a good credit history. Then you come in to work smelling funny one day because you can't shower daily (no place to shower) and get fired because a customer complained. Now you've got to live on the street for a while before you can get into the homeless shelter.
Then you see every day in the paper that homeless shelters are running out of money while we're sending billions of dollars of aid to various countries, bailing out companies that knowingly risked and lost billions, billions of dollars just vanishing overnight, etc. That is class warfare.
We don't hesitate to hand out billions for free, but we aren't going to hand out billions to the people that really desperately need it right here at home.
It really saddened me that a lot of those free-healthcare-missionaries recently started setting up places here in the United States rather than in remote jungles of Cambodia because neither could afford basic health care.
Job? I don't have time to get a job! Who will sit around and bitch about being broke and unemployed then?
Been there, learned a trick.
If you saw anything coming before hand, you might still have a car left. You can sleep in your car. Your first X bucks go to a gym membership. That's your shower. Then your next $20 goes to one of those fancier "street boxes" where they can't tell what 188 Main St #24 is.
Rent + cars are the killers of today's economy - a lot of places have really skewed rents vs the jobs available.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
there are massive hordes of credit default swaps against US debt out there right now.
credit default swaps are almost completely secret. nobody knows how many are out there. there could be a hundred billion, there could be 10 trillion.
if you allow the US debt to default, it will make the Russian and Asian defaults of 1997/1998 look like a kids birthday party.
When Lehman went under, the money market funds started to crash, and then the credit system started to crash. Yes, McDonalds was going to have problems meeting payroll.
the US government is like tens of thousands of Lehman Brothers, not in its operation but in the tentacles it has to every other financial product and financial system on the planet. credit default swaps against US debt are just the tip of the iceberg - and they are completely secret. we have no idea how many other products and institutions of the 'shadow banking system' are linked to US debt, or what the repercussions would be.
we would see currency devaluation on a massive scale. we could see entire companies disappear overnight. we could see entire countries central reserves emptied, overnight.
it could make the AIG bailout look like a child asking for 5 cents for a gumball.
it would be like taking a cigarette lighter and throwing it into a fireworks factory.
----
some people want to see the factory blow up. yes, it would be awesome, and serve the factory owners right for running such a sweatshop. but it is completely irresponsible to allow it to happen.
the only safe way to take apart the fireworks factory is brick by brick, slowly, over time. not in a massive explosion that will destroy an entire quadrant of the city.
just because she didnt want to let lehman fail doesnt mean she necessarily wanted to bail it out.
there are other ways to do it. when ordinary banks fail the FDIC takes them over, puts a few people in prison, pays off some creditors, winds it down, and keeps things going in an orderly fashion.
of course, since Lehman was an "investment bank" (not an ordinary bank) in the US, the FDIC, the Comptroller of the Currency, and the Fed did not technically have legal jurisdiction over it.
letting lehman just go bankrupt caused a lot of problems. institutions who had money saved there in europe couldnt get their savings out. also investors in lehman, like the "good as money" money market funds started losing value, which caused a mass panic and helped the credit markets seize up, which meant that ordinary business activity, like mcdonalds payroll, was threatened. it was like one of the last dominos to start the global run on the global financial system in sept 2008.
if i understand it correctly, she probably would have wanted us to 'go cowboy' on Lehman, and do something like have the FDIC take it over, even though it wasn't technically under FDIC jursidiction. in Paulsons book he talks about how he is continually hamstrung by what is allowable legally for him to do as treasury secretary. he is always worried about doing whats legal.
however, technically, we had no right to invade Iraq, to writetap american citizens, to set up secret prisons and torture POWs. why couldnt we bend the rules in this case? i think thats where she might have been coming from.
1. enforce transparency with laws
2. put people in prison for breaking the laws
i know they sound too simple, but that is basically what happened in the US from the 1930s to circa the 1980s, when it had the 'best financial system in the world'. the SEC & financial laws were somewhat well enforced (especially compared to every other country) and these companies had to show what they were doing in public.
that broke down with the rise of the 'shadow banking system' and the end of the rule of law, which many people will say began in circa the 1980s when the big investment banks stopped being partnerships and started being 'shareholder driven'. the rise of special purpose entities, collateralized debt obligations, off-balance sheet special investment vehicles, and other various creatures of the shadow banking system destroyed all semblance of transparency. modern large banks do not have any idea what their actual financial condition is - it is simply too complicated to properly calculate it or to know what they have at risk.
yves smith covers a lot of this at nakedcapitalism.com
Ugh, republican, yes? let me ask you something...why is your answer to EVERYTHING give the rich people more money? Town is burning, give rich people more money. No jobs? give the rich people more money. Sitting in the street with a broken leg and no money for a doctor? Give the rich people more money.
Ya know what? We've TRIED THAT for going on 30 fricking years now? Forget trickle down, aka trickle upon? or how about how we gave FREE MONIES TO GE who said "thanks" and then sent their best paying jobs overseas which I'm sure will buy the CEO some more gold toilets and hookers, but help America? Naaah.
If anything taxes on the top 5% should be HIGHER not lower! Money hoarded by the rich is "dead money" its not getting spent, its out of the economy, goodbye. When they will get the living shit taxed out of them if they keep it? Well then they invest it in their businesses so as to lower their tax debt, duh! Taxes have NEVER BEEN LOWER on the top 5%, not ever. Are we better off than those times of high taxes? Can you name ONE time your "give the rich more money" policy has EVER worked? Even one? We've had trickle down, voodoo economics, the "free trade" bullshit under Clinton, and of course Dubya cutting like there was no tomorrow. Are we better off? NO.
That horseshit might actually sell to someone that doesn't know history, has never been here, and of course your constituency which is the rich and the poor suckers in red states that think they are gonna be rich someday, aka "lotto mentality" but everyone else has seen this shit time after time after time only now sadly the Ds are just as sold out as the Rs to the rich so it is SSDD.
That is why I believe we will have our Arab spring, because the public no longer believes in your games. They don't vote NOT because they don't care, it is because they have lost hope that anyone will listen. And when the poor, which outnumber you by a good 10,000 to 1 and rising every day decide to fall behind our own version of Uncle Joe or the crazy Austrian? Well lets just say I hope you have your jet filled up because the fall of Saigon comes to mind.
ACs don't waste your time replying, your posts are never seen by me.
Most of the "entitlement programs" are Social Security and Medicare. That money doesn't pay "government employees", it pays our huge (and overpriced, and inefficient) private medical industry and the entire network of many private industries that old people spend their money on (beyond healthcare).
Also, banks can't just "call in their loans" ahead of schedule, or raise the interest on existing loans retroactively. There's no such thing as a "bank-run on bonds" because bonds aren't liquid until their maturity date.
I agree that the US defaulting on debt, or even just cutting the current stimulative spending (other than the military/intel $TRILLIONS, which are far more stimulative spent nearly any other way), would wreak havoc in the bond markets, and in the stock markets that can delete existing wealth. But let's be correct about how the economics actually work, and what actually works. That makes it easier to see what doesn't.
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Rich people pay above 30%.
False. Rich people don't make money from wages. They make money from investments, dividends, and bond interest. That's why the super rich pay almost no tax (and why C-levels get paid in stock as opposed to salary). In the US we tax income from work, but we do not tax income from wealth.
We tax all forms of income, including investments, and then sometimes we'll slap taxes on top of those taxes. You've never heard of capital gains taxes? We often tax wealth twice. First we'll tax corporate profits, and then we tax those same profits in the hands of private shareholders. When corporations get away with not paying taxes... GE is a good example here... it's because they've made crony capitalism deals with the government, often getting huge tax credits for things like "green initiatives". This is why I want an across the board flat tax on all first time income. Not only will everyone, rich and poor, have skin in the game, it'll stop the insane practice of Congress using taxation to shape consumer behavior to their political liking.
Life is hard, and the world is cruel
"The problem is jumping nearly 25% is expenditures in two years. "
Jumping what? Expenditures have not risen 25%, in fact they have barely risen 2%: http://www.angrybearblog.com/2011/02/federal-spending-growth.html There was no meaningful expedinture growth to speak of.
And repealing tax cuts would solve the deficit problem nicely.
You mean like trickle down (80-88) voodoo economics (88-92) free trade with countries with no environmental laws (92-2000) and of course lets cut them taxes on the rich a lot! (2000-2008) and finally bailout baby bailout! (2008-present) like that?
Look at what the tax rates were during the best times of this country such as the 50s (which the Rs idolize) and today. You will see that taxes on the top 5% have never been lower not in the ENTIRE history of our tax system. Not once.
So if the libertarian/republican trickle down "Its the gubment!" theory held true, we are living in a utopia right now. Are we? hell in just the last 10 years with EVER lowering taxes on the top 5% we've lost 21,000 FACTORIES even as the politicians tripped over themselves to give ever larger tax cuts to the top 5%, oh and the middle class? They are just about DOA. If the "give the rich more money" theory was sound, where are the results? Where is the trickle down?
Oh right it is actually trickle upon, as in they piss on the peasants while lining their pockets. well that is how revolutions get started my friends. ever hear a little ditty called "no taxation without representation"? Or what the tree of liberty needs to be watered with? If those at the top think the other 95% are just gonna go quietly starve to death in a corner you got another thing coming. Hell we have our own soldiers taking oaths to FIGHT THE GOVERNMENT that trained them! Think this is a coincidence? I think when the shit hits the fan they are gonna find like old Mo Mo the military? Well they got families too and they ain't rich.
It ain't gonna be pretty but perhaps it is just what this country needs. No government lasts forever, just look at how many they have been through in Asia and Europe. Maybe it is time to start over.
ACs don't waste your time replying, your posts are never seen by me.
And we could return to Clinton's tax rates, which were as obviously consistent with a growing economy as Bush's (ie. current) tax rates have been consistent with a collapsing economy.
Clinton had an economy artificially buoyed by the dot-com bubble. When this collapsed, Bush allowed a property bubble to take its place. Neither economy was supported by actual production, both were propped up by wild speculation.
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Socialism has worked well in big parts of Europe for longer than your country has been around.
I'm not well versed in history, but I thought Europe was mainly controlled by monarchy when the US was founded. Which parts of Europe had socialist governments in 1788?
You're just afraid of equality because it's the antithesis of wealth. There's nothing wrong with earning your keep and getting paid according to your job, but once you no longer have to work you're about as productive and useful to society as the poor slob begging in the streets.
If I make something I should own it. Justice demands it. So if I build a house, it should be my house. If my neighbour works harder than me and builds a better house, we no longer have equality but we do have justice. If he continues to work while I am enjoying relaxing and entertaining in my house and builds another house the inequality is greater, but still just. Now if another neighbour doesn't want to build a house, perhaps because he plans to move cities in a few years, he can pay rent to the first neighbour. If he continues to build houses, the inequality continues to increase but with no injustice to anyone. Eventually the rent will enable him to retire. That his greater productivity obligates him to donate his work to "society" is incomprehensible to me.
Equality of opportunity is good, equality of outcome is gross injustice.
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First of all, the question is not whether to "give the rich people more money", but whether to take more money from them. Eliminating a tax exemption is raising taxes, so call it what it is.
Second, this tax hike will not take money from the rich - it will take money from you. The proposals under debate would raise taxes on oil companies, not "the rich". The oil companies are simply going to take that increase and pass it on to the price of oil, which raises the price of gas, which in turn will be paid by you and other poor shmucks all over the recession-hit-unemployed country.
Can you name ONE time your "soak the rich" policy has EVER worked? Even one? Whenever you try to tax the rich, they always pass it on to you. Any business owner will pass the increased costs to the customers. A wealthy man can easily afford lawyers and accountants to find a way around the taxes. If no way can be found, he can pick up and move to another country - something you can't afford to do. In Maryland, for example, the governor recently decided to raise taxes on millionaires to raise revenue. Did any revenue get raised? Nope. Instead, the state's millionaire population was reduced in half. They just picked up and left. If any of them owned businesses, they probably took them too (that's not a public statistic, so I don't know)
In California, the governor decided to soak Amazon to get more sales tax revenue. Did that work? Of course not. Amazon stopped doing business in the state, taking all those "affiliates" and their jobs out of state. Here at least you have a plain example that raising taxes kills jobs. Here you can point to each business and say: the lost jobs went that way.