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United States Loses S&P AAA Credit Rating
oxide7 writes with this excerpt from the International Business Times: "The United States lost its top-notch AAA credit rating from Standard & Poor's on Friday in an unprecedented reversal of fortune for the world's largest economy. S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government's budget deficits and rising debt burden. The move is likely to raise borrowing costs eventually for the American government, companies and consumers."
Obummer
Just the fact that we were even thinking about defaulting or raising the debt limit should have lowered our credit rating.
You are an idiot. Thank yourself and every other american who voted for every president since nixon.
...that this could end the culture of borrowing the US has?
"People don't want to learn linux" hasn't been a valid excuse since '03.
With a fractional reserve banking system these highs & lows are an inherit trait. Either we accept them & roll the dice for riding it out or economic collapse, or we abolish the central bank for a third time. I for one think an entire society built on inherit debt is but a ticking time-bomb, set off purely by our own fear.
I'm sure retards are going to blame Obama, while ignoring the Republican asshattery that got everyone in this mess in the first place
Two, who the fuck cares about ratings agencys? Werent they the ones putting AAA on CDO's? Shouldnt we burn those fuckers to the ground as the turds they are?
At this rate, I will have a better credit score than our government, at least i can pay my bills on time.
I mean for one, these debt limit things always tend to be a "to the wire" affair so nobody takes it that seriously. However the other thing was the executive branch made it clear they wouldn't default on bond payments. That they don't have enough money means they have to choose what not to pay. That could be things like social security payments, and instead pay bond holders which is what they said was likely to happen.
Makes sense too, not only does the US have an obligation to pay its debts and want to maintain its credit, but doing something like that would piss people off and cause them to put pressure on congress to reach a deal.
Really I don't think this downgrade should have happened. While there are quite likely to be other problems for the US (spending cuts, tax increases, slow economy) it does not at all look like default is in the cards. Since bond ratings are supposed to be a rating of how likely that is, the rating seems to be incorrect. My opinion is it is politicking. The S&P people in power wanted a different deal and this is their politicking of it.
What this is, is the private sector telling the US government to raise interest rates.
Right, teabaggers? Of course, this is the same S&P that told us that all those bullshit mortgage-backed securities were legit.
I swear to God...I swear to God! That is NOT how you treat your human!
Regardless of their rating being just or not - isn't it "interesting" how much power these few rating companies have?
Do like the Greeks, have the richer and harder working guys feed you, for the Greeks it is EU. In the case of the US it will be China.
That would make an interesting poll. How many months since you bought anything "Made in USA".
After all, if the ratings agencies had done their jobs a few years ago, we wouldn't be in a lot of this mess.
Because Obama was the one who took the debt ceiling hostage in order to force people to accede to his nearly religious-cult-obsession with never raising taxes to pay for anything, ever.
If you're going to thank him sarcastically for something, it should be for teaching the Republicans that hostage-taking works. Enjoy this bullshiat happening again in 6 months. Yes, McConnell outright said that: The debt ceiling is "a hostage worth ransoming."
If today's Republican party were described to someone even 5 years ago, they'd assume you were talking about a cartoon villain, with a tophat and monocle, twirling his moustache as he cackles about the latest despicable thing he did just because he could.
and neither are Moody's or Fitch.
If you read the books about the Synethic CDO industry, you will realize that S&P and Moody's are elaborate frauds.
I hope this will drive into the thick skulls of many americans that the lawyeristic infested, paper based economy is long gone and USA needs to GET BACK TO MAKE THINGS and CUT THE LEGALESE MORASS that thas resulted in too much copyright of basic ideas, red tape for any f...ing simple thing and so on...
Shit ! I start sounding like them populists, but it is jus THE HARD FACTS...
Welcome to the brave new world people...
Because Obama was the one who took the debt ceiling hostage in order to force people to accede to his nearly religious-cult-obsession with never raising taxes to pay for anything, ever.
It's only recently that I've seen people get bold enough to field this absurd logic.
Spend and spend and spend on things we don't want, then scream that it's our "nearly religious-cult-obsession" unwillingness to accept tax increases that's to blame.
How about, stop spending what you don't have? God forbid we slow the firehose of outgoing dollars for various programs we don't want or need. But if you say that, then it's, "Oh so you don't want traffic lights? What's wrong with you?" As if that's where the money is going. I've had it with the bullshit political rhetoric, and people just repeating what they heard on Fox News or Jon Stewart.
Stop spending my f'ing FEDERAL tax dollars on crap I don't want, in places I don't live in. That includes other countries AND other states.
The Canadian government did, back when they tried to make the country's debt into a bigger emergency than it was.
I wonder if the US did?
And they're right. This debt ceiling deal did absolutely nothing to deal with the US's budget problems (except for 'Ohshi we need money to pay the rent this week, dude! Call your mom.') It's smoke and mirrors on imaginary future savings - one more way in which California blazes the way for the nation. The other rating agencies that are keeping the AAA are indulging in the same sort of wishful thinking that rated junk mortgages bundles AAA. S&P did too, maybe they learned.
At least they did the administration a favor and waited till Friday long after market close to announce it.
I only have a background in economics 101 and I'm not an investment banker, but could someone tell me how the worlds biggest borrower, the most in debt country in the world, a country so in debt that we're talking about grandchildren repaying the loans, and a country which seems to have for the last 50 years shown only a steady increase in spending and debt manages to have a AAA credit rating anyway?
I thought the purpose of these credit ratings were to determine what is a good investment, with AAA being safe, but how is an economy which has never repaid and only ever printed money a safe investment?
Also why is it that for the past 2 years people have been steadily divesting from the American economy (which can be seen in the fall of the USD vs all other currencies) yet it is only NOW that some ratings agency (which also caused much of the financial crisis to begin with) actually decides to reduce the credit rating, and even then only to AA+?
You don't have to worry about your borrowing costs if you stop borrowing.
Time to start cutting Federal programs we can no longer afford.
Income went down 15.2% in 2009 for Americans. Unless you happen to be taxing the other 85% of the people, your taxes will be going down also.
And unless income bounced back up 115% in 2010, you won't be making enough in taxes to cover your existing programs.
Democrats or Republicans. They are both taking us to the same place and they are not afraid of us anymore.
Because lifting the debt ceiling isn't about spending, it's about paying for money that's already been spent. Which is why you hear folks making those sorts of claims. A good analogy would be back in the 80s when it was common for credit card transactions to be done manually with that device and carbon paper. You'd go in hand the card over and they'd zip zip the machine and you'd be on your way.
What happened with the debt ceiling would be more or less equivalent to your credit card company telling the merchant a bit later that you were actually over your limit and that they'd have to raise it or you'd have to pay off some of your debt or they wouldn't give the merchant the money.
Which is why the folks that were holding the debt ceiling hostage as a preventative measure against spending were so stupid. They could have gotten $4,000bn in cuts had they accepted $100bn in loophole closures, instead the final deal was cuts only and ended up being a little over half what the cuts would otherwise have been.
The real reason was the US politicians were being insane/assholes/idiots about it. Not that the debt ceiling was raised, or had to be raised.
If you just "somehow find the money" to make the interest payments (as you did for how many dozen times), the banks wouldn't give a damn (even if it meant creating more US dollars out of thin air). Because the people working in those banks would just hope that the time you guys finally blow up, they might be safely retired in the Bahamas.
BUT the minute you have a very public discussion about whether you are going to bother to find the money or not, the banks will get worried. And rightfully so.
That's why many around the world were calling the US politicians all sorts of things: irresponsible, reckless, absurd etc.
They can't peacefully farm on the rich dirt by the volcano once the volcano makes crazy noises...
You're ignoring the fact of the economic momentum built up by the previous administrations serious mismanagement.
I like to use this analogy:
If you've got a hole in your roof and your solution is to buy a bucket to catch the rain water. That bucket fills up and then you have to buy another one... and another one... When you're whole house is filled with buckets, that's not the time to say that you're not going to spend money to buy buckets anymore. It's time to say, "it's going to cost a lot to fix the roof but it's something that must be done."
The problem is that Obama tried to get a roofer in but caved into pressure to not pay him enough to fix the problem. So now we've got a huge hole in our roof, no more spending on buckets and water damage being done everywhere.
Yes, it's all Obama's fault, the economy was perfect when he took over.
http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg
Democrats have been so bad for the US debt! Or maybe the last two years are first time it has risen as a percentage of US GDP under a Democrat since 1975. Still Obama's fault, since he started 2 useless wars... oh, wait, that inflection point seems to be set squarely in his predecessor's term. Personally I'll wait until the end of this term to see how much of Bush's damage he can undo.
Or should I just say "you're so right-of-center you don't need facts and statistics, they just get in the way..."
/Obama/Bush - fixed that for you
Are you sure it was Obama who indebted us?
Are you sure it wasn't Reagan's Star Wars?
Are you sure it wasn't Bush's decision to slash taxes when we were running a surplus for the first time in modern history and on course to pay down the deficit?
Or his decision to not only not impose a war tax to pay for his overseas adventures, but for the first time ever cut taxes during a war?
We are buried in debt that was created almost entirely by Republican administrations, due to Republican policies. Federal taxes are at their lowest point in living memory, federal revenue as a fraction of GDP is 20% below where it was in 1980, and we are facing a deficit that will never be closed unless that circumstance is changed. Taxes go up or our deficit continues to accumulate - your choice.
How many large entities who regularly invest $billions in bonds or other debt actually look up the grade rating in S&P's investment index when deciding whether or not to buy debt from the U.S. Government? It's not like the U.S.A. is some obscure Elbonia country where your average economist would have to look up what that country's assets and liabilities are, it has an economy larger than the 7 next-richest countries combined and any investor worth his salt has these figures memorized for the U.S.A.
The reasoning behind the downgrade is of much larger concern to investors -- that the national debt to GDP ratio keeps increasing quickly, and the vast majority of federal government is strongly opposed to either reducing spending or increasing taxes.
I see this as the financial equivalent to moving the Doomsday Clock one minute forward.
Corruption is convincing someone that the selfless ideal is the same as their selfish ideal.
This is sorta the result of nearly thirty years of political conservatism's push. You have to realize a few things. Much of this behavior of US Conservatives came from the civil rights movement. It really boils down to the fact they don't like what the US has become. So they in the leadership are doing everything they can to drive the US into a ditch. The white christian supremacist world they knew of is gone. That is why this is happening. If they can't own the US they will cry and scream about the evils of 'government' and 'liberty'. even when it is a complete lie.
Because this country has also been the primary driver of innovation and increases in standard of living, which matter more than debt. Debt is a tool of bankers used to emotionally manipulate people to such a degree that they forget to ask why bankers should have an exclusive, divine right to create money and automatically attach debt to it, and charge interest on top of that. What bankers are most afraid of is that ppl will realize we can elect officials to create debt-free money and use it to provide us with a basic income so we can unleash our creativity and innovate without the need for the hierarchies and middle managers and the sales forces of business. In this age of the internet (a creation of govt), communication is orders of magnitude easier than ever before. Let's use the technology of money creation to benefit us, to empower individuals, instead of corporations that are sitting on trillions!
Anyone can choose to listen or not listen to them.
It's like challenging why a guy with lots of Twitter followers deserves to have so many.
But if there are a lot of people listening to them, it's because they believe in their track record.
Think about it - if someone came along giving me better advice, why wouldn't I switch to him?
Link to the S&P report which contains their rationale for downgrading, future outlook, etc.
I guess S&P didn't like the 'grand bargain' either.
"I am an Adept of Tantric VAX."
I'd be more careful about this "we" you are throwing around so freely.
"We" the people have for many years supported the existence of social security, medicare, public schooling, and other such programs which provide a pale imitation of the social net found in other developed nations.
And what else can it be called but a religious article when you have people like Grover Norquist, famous for saying he wanted to shrink government with the objective of "drowning it in the bathtub," getting congressional Republicans signing pledges that they will never, ever allow any form of revenue increase ever? When Boehner walked out of negotiations because Obama refused to offer a deal consisting of nothing but spending cuts?
What we are seeing here is the long-term Republican strategy of destroying the New Deal and everything that's come since by forcing the US into insolvency.
NOW the DOJ can feel free to investigate the ratings agencies that gave those CDOs a AAA rating. Or at least S&P
how is an economy which has never repaid and only ever printed money a safe investment?
The USA repays the borrowed money, with interest, all the time. But the volume of the offering grows. It's not a concern until the point where you start suspecting that the country won't be able to service its debt. In other words, your one-year T-bills mature but the government says "fsck you, come later."
That point was reached in several ways. First, the very discussion of default undermines the reliability of country's debt. But then the amount of outstanding debt also makes it possible that the country will either physically run out of money to pay interest and buy matured bonds back, or it prints so much paper money that the profit of those bonds becomes negative, or does something else equally displeasing. The US debt stops being a safe store of value. It wasn't for about a decade already, but events like that serve as excuses for policy makers of countries to reevaluate the allocation of their currency reserves without being crucified.
Also why is it that for the past 2 years people have been steadily divesting from the American economy (which can be seen in the fall of the USD vs all other currencies)
The USD loses to other currencies not because "people are divesting" but because its value drops, and that happens because the printing press works day and night. For most of 2011 the US government borrows money from Federal Reserve which makes it out of thin air. When dollars are created at the rate of a few billion per day, why anyone is surprised that they get diluted?
Besides, most of investments in the US economy are done not by rich foreigners but by mutual funds and the like. This money remains in the system. If you take the money out of the market there will be excess of stock without buyers, and that will result in a serious crash of the stock market. That hasn't been observed. The US economy flounders because the business climate is bad, taxes are high, future is uncertain, labor is very expensive, and whatever you do or don't do you get sued. Can you open a small business and sell goods to China? Chinese can do that and sell their goods to the USA.
They don't. If you have some money, you are free to loan it to your neighbor to start a new company in his garage. You can even charge him interest for it. Now, if you happen to have a supply trading company yourself, and your neighbor uses some of that borrowed money to buy your supplies, you can loan the same money again. Presto, you've created money!
Last I checked, congress holds the purse-strings. If the president is LITERALLY spending money without congress' permission, he needs to be impeached. Today.
But that's not what's happening, is it?
"Prediction: within 10 years, Windows will be a Linux distribution." Me, 7-6-2016
America has the most external debt of any country but is far from the worst borrower. As a % of gross GDP our debt isnt even in the top 30. All of Europe leads us in debt compared to GDP, which is proof socialism doesnt fucking work.
I'd like to see a similar chart graphing debt versus control of the house and the senate. Know where I can find one?
It would also be interesting to see debt as % of GDP plotted along with taxes as % of GDP.
When information is power, privacy is freedom.
That inflection point just so happens to be when the Democrats took both houses of Congress and stopped producing an annual budget.
The game.
What exactly does this mean for the citizens of the United States of America?
Out here in Middle of Nowhere, West Virginia, the poverty margin is 80% of all households, and it only rises as the economy gets worse. For a quick comparison, in Clinton's era it was "only" about 17% of all households. No jobs, no hope for the government, shops keep closing because they can't make enough to stay open... So what's the next thing those disconnected people in Washington are going to do to Main Street?
Obama has raised the national debt by over three trillion dollars. He added more debt in the first 19 months of his presidency than all presidents from Washington through Reagan combined. If Obama supporters are really going to try to pin everything on Republicans, they're going to be in for a big disappointment in next year's election.
First of all, I don't know where you're getting "three trillion dollars" from. Would be awesome if you could, y'know, provide the source for this data.
Second of all, the President didn't increase the debt single-handedly. You cannot point out any amount of programs that he himself pushed for that led to a deficit of $3 trillion since his first budget (the 2010 budget, since the 2009 budget was Bush's).
Thirdly, the deficit would have been greatly reduced if not for the continued impact of the 2001/2003 tax cuts for the wealthy instituted by President Bush and his congress. Obama is opposed to this and claimed to try to get rid of these (although he didn't, really, in my opinion try that hard. He sold out, in my opinion). Anyway, this would have reduced the deficit.
The bottom line -- you can't blame Obama for an addition to the debt of three trillion dollars. Did he preside over a three trillion dollar increase in the debt? Yes....well, maybe -- I'd still like to see the math on this. But George Bush presided over the worst terrorist attack the United States has suffered. Does that mean that he caused it? No -- any number of things led to the attacks; he was just the guy in the seat for when it happened. Obama is the guy in the seat during the period the debt increased.
One other note -- the President doesn't get to choose what gets funded and what doesn't get funded. You know that there are programs that he wants gone, spending that he wants gone that the republicans insist on funding.
Make sense though. Apple computer has more in the bank than our Gov't. Unless Americans wise up and grow enough balls to start taking back the money they themselves earned from the super rich that hoard it, our economy is just going to tank and tank and tank. There's 3 types of people in America right now: Socialists, super rich, and rubes. Jesus people, wake up. There's a class war on, and you don't even know you're fighting!
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
What you can't do though is loan money out to your neighbor and then borrow very cheaply against the outstanding payments and loan that borrowed money out again.
I don't have a master's degree in credit rating, so the mathematical difference between "AAA" and "AA+" eludes me. Why can't they assign a number as a rating, e.g. AAA=100="We expect that you will on average receive 100% of the principal and interest promised by the borrower.", Caa1=40="We expect that you will on average get 40% of the principal and interest promised by the borrower.
Seems using numbers like that would be simpler, more informative, and less obscure than "We rate this debt Baa2." Or do the raters like obscurity?
Regardless, I would be interested in knowing how accurate the past ratings have been. We all know the agencies absolutely blew the whole sub-prime "AAA" crap a few years ago.
Sure, the banks have, due their size, more financial options. But suppose you have good credit, and your neighbor has maxed out his credit cards, you can still borrow cheaply, and loan it to your neighbor for a higher rate.
Of course, what you are doing by that transaction is taking over some of his default risk for a premium. That's a perfectly good business method, and that kind of risk trading is beneficial to a smooth running society.
A credit rating has NOTHING to do with how much you borrow, it has to do with how well you pay your debts. And the US has always payed its debts. It really is not that complex. Borrow lots and pay the interest every single time and you people want to lend you more. Borrow a little and don't pay the interest and people won't want to lend to you anymore.
Isn't this covered in economics 101?
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Although you raise an intriguing point, I strongly doubt that S&P is willing to do this as a favor to Washington while the US Treasury is calling BS on their math:
S&P officials notified the Treasury Department early Friday afternoon it was planning to downgrade the U.S. government’s debt from the AAA rating it has held for decades, a government official said, and it presented its report to the White House. S&P has previously warned such a downgrade might come if Washington didn’t move to comprehensively tackle its long-term fiscal woes.
After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes.
CostOfWar.com: BOTH wars cost $1.1 trillion
According to the CBO, the cost of Obamacare alone: $2 trillion
First of all -- where are you getting that $2 trillion figure? Sounds like a talk radio number, honestly. Your argument is really very uncredible if you don't link to a reputable source. You're at your computer right now -- you don't have to do this stuff from memory.
Yes, but $2T which way?
We needed Obama to be a tough negotiator and instead he consistently gave the republicans everything they wanted. So yeah, thanks a lot Obama.
If you mod me down the terrorists will have won
It's amazing to me that until September 2008, S&P was giving AIG a AAA rating, even though AIG was taking the bad side of everyone's bets on the mortgage market, but now S&P downgrades U.S. debt over concerns about "budget deficits and rising debt burden." The U.S. government still has plenty of room to raise revenue to pay off Treasury Bills, and may even be Constitutionally obligated to do so.
It's just hard to believe that the U.S. Treasury is now considered a riskier borrower than AIG was in 2008. It's also ironic, since a good part of the U.S. debt burden was incurred bailing out AIG and the rest of the financial industry (which assumed AIG credit-default swaps would protect them, in part due to S&P's high rating of AIG).
So why can't the govt do it, and not attach debt or interest to it? And use the money to empower individuals to innovate and create and advance knowledge, so that others continue to want what we produce and therefore the currency stays strong?
While the credit rating thing is unprecedented and sort of iconic moment, the real test of the credit-worthiness of the USA will take place in the bond market.
Computers are useless. They can only give you answers - Pablo Picasso
How about, stop spending what you don't have? God forbid we slow the firehose of outgoing dollars for various programs we don't want or need. But if you say that, then it's, "Oh so you don't want traffic lights? What's wrong with you?" As if that's where the money is going. I've had it with the bullshit political rhetoric, and people just repeating what they heard on Fox News or Jon Stewart.
Stop spending my f'ing FEDERAL tax dollars on crap I don't want, in places I don't live in. That includes other countries AND other states.
What are these trillions of dollars being spent on "crap I don't want, in places I don't live in"? Seriously, the federal budget is X trillions of dollars. What are the programs that you want to knock out to reduce the deficit.
I ask because, frankly, your argument (or shall I say rhetoric) sounds exactly like the talk radio argument a la:
bullshit political rhetoric, and people just repeating what they heard on Fox News or Jon Stewart.
Without specifics, what you just said is just rhetoric.
The republicans are pretty damn obvious with their policies, cut back anything that benefits the poor and keep and increase benefits oops tax cuts for the rich. They don't even bother to try to disguise this as trickle down economics anymore.
Yet West Virigina, which you claim is filled with poor people, colors very red on the election maps I can find.
But hey, if I am a small shop-keeper why should I pay for medi-care or social security for other people. I AM NOT UN-EMPLOYED, I got my own business, I don't need a handout... why isn't there anyone in my store? People to afraid to spend because if they loose their job they need every penny they got? Oops, now my store has gone bust... I need social security to stay alive!
Really, the republicans in the recent debt talks insisited openly that a tax cut for people making more then 250.000 dollars introduced by econimic wonder boy Bush was extended. And every single republican making less then 50.000 was in favor through their vote for the republican party. Because when you are on minimum wage, guys making a quarter of a million are your first priority.
It must be the American dream. Someday I will be rich so I better make sure I vote in the tax cuts for my future self right now.
In most of the rest of the world people vote in social security should their future self need it.
At 25 I stopped drinking to save the liver of a 40 year old man. An American commits suicide at 25 to stop a man from dying at 40.
Washington will take care of Main Street when the people in Main Street stop making it very clear with their votes that the people in Richville are their main concern.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
We can no longer afford 2 wars anfd the Bush Tax Cuts.
We couldn't really afford the wars in the first place really.
The Bush Tax cuts were due to expire anyway, they should have let that happen.
The 'grand bargain' never made it to vote. Boehner walked away from it twice.
Could you provide a source for your 80% statistic? It seems unusually outlandish, and the Census Bureau says that the 2009 number for West Virginia was still 17.8% of individuals.
Taxes are lower than ever right now. Business is booming actually - note the prices of stocks, the amount of cash reserves on hand, etc. The problem is continuing long term unemployment, which suppresses demand, thereby causing more unemployment. Wages have stayed the same or even decreased in almost all sectors, although foreign labor is still cheaper (but still not as productive). I don't see lawsuits having anything to do with the matter.
http://www.youtube.com/watch?v=ZPWH5TlbloU
That's all nice in principle, until you take actual interest numbers into account. You couldn't even implement that scheme profitably once over, because you'd have to provide much more in the way of collateral than any bank does, and you still wouldn't get the money nearly as cheaply as banks do. Banks have refinancing options that are only accessible to them because they're banks, not because of their size.
The lose is due to a lack of new revenue so you can thank the tea party republicans
Lowering sovereign debt rating means that all businesses and individual ratings in US are also now lower than before. That's because sovereign debt rating is always considered to be the highest rating and all other ratings are below it. Of-course that's because the government can unfortunately print money and companies/people cannot legally do that.
Of-course being able to print money is the reason that the credit rating is lowered for USA, and AFAIC the rating of any entity that can print money should always be the lowest out of all businesses that actually produce something. If you can print money means that you can monetize your debts, and that's default. US government has been defaulting for decades now, always printing more money, always issuing more debt, never paying debts out.
This credit lowering is of-course political, everybody knows US bonds are junk and US debts will not be paid with anything of any value.
Now think about how much harder it will be for businesses to get credit in US that government credit rating is lowered. This is what I am talking about when I say that government credit crowds out private credit and prevents any business activity because government gets all the credit first and whatever measly leftovers go to some businesses for investment (if any is going there in a country that decided that destroying its currency and thus investment capital is the way to go, while also destroying business via most regulations in the world and some of the world's highest taxes on work and with most debt in history of the world.)
The fix for the economic problems requires cutting the spending of government by some enormous amount, as during the 1921 depression, which ended in 1923, the government spending was cut by 70%. Of-course at that time personal savings were high, country had an enormous manufacturing sector and was largest creditor in the world. Today none of that is true.
The real GDP is much lower than the government admits at the very minimum because the real inflation is about 13%, not 2%, and they must deflate the GDP by inflation number, and since this year the GDP is seeing under 1% growth, last year it was 2.9% and years before that it was shrinking, the real GDP has actually being shrinking by maybe 10% a year for years now.
So when you are talking about tax to GDP ratio and saying that in US the taxes are lowest ever compared to GDP, this misses all the important points: GDP is shrinking and in absolute terms taxes are highest ever. The raising of taxes on only the 'rich' will never do the trick. The most economic activity and money is in the middle of the country, so if you want to raise taxes to raise government revenue, that's where the taxes will go up, while the 'rich' will simply move their money quicker than they are doing now and you will see even less of revenue from them.
The only solution is enormous cuts, and that's the politically impossible solution because the people are bought by the promise of cradle to grave welfare state, and it's an impossible promise.
You can't handle the truth.
The reason GDP has plummeted is that high tax rates,labor rates, and costs of massive regulation have encouraged business and manufacturing to leave the country in droves for decades for friendlier business pastures.
Labor rates in the US relative to corporate profits are very low today:
Corporate earnings are the highest they've been relative to worker wages (including benefits) since just before the Great Depression...If earnings were to suddenly revert to their historic average relative to wages...stocks would have to fall about 40% to return to their average level relative to earnings.
Have some companies moved production abroad? Yeah. But there are still 150 million people at work in this country full time. That's a freaking lot of people at work.
USA Today reported on a trend way back in 2010 of companies moving manufacturing work back to the US, despite what you characterize as high labor costs and massive regulation:
Chinese wages and shipping costs have risen sharply in the past few years while U.S. salaries have stayed flat, or in some cases, fallen in the recession. Meanwhile, U.S. manufacturers have been frustrated by the sometimes poor quality of goods made by foreign contractors, theft of their intellectual property and long product-delivery cycles that make them less responsive to customer demand.
With the cost gap between the U.S. and other countries narrowing for other expenses, such as class-action lawsuits, making products in the USA is now about 22% higher than the average of nine of its largest trading partners, down from 32% in 2006.
Yeah, because he had so many other choices that it must be his pure evilness that he picked exactly this one after taking over a flaming train heading to a wall with the breaks being removed.
Seriously, if anything this reaffirms my suspicion that the Reps sent the McCain/Palin team into the prez race of 2008 to make sure they can't win and be blamed for the crashing and burning waiting to happen. It was by some margin the most ingenious planned defeat ever. Now the Democrats will be the ones being blamed for the recession that was obvious and to be expected by no later than 2007. If it looks like we'll be out of this mess by 2016, they'll send a winning team into the prez battle next year and emerge as the shining heroes that put the country back on track after the Democrats ran it into the ground. If it doesn't look like the US are out of the shit by 2016, they'll send two more duds into the battle.
And help us God if the Dems catch on and do the same.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Why is it that the government gets downgraded to AA+, but if I was in the massive debt and shitty debt/income ratio that the gov was in, I'd be downgraded from A to "don't let this guy buy a pack of gum" status?
I have another analogy. IMO it characterizes the problem even a bit better.
It's like a train, going full speed, but the first class passengers want it to go faster. The engineer sees that the engine gets way too hot and starts pulling the breaks, and the reaction is to demand the breaks removed. The engineer, now without the ability to break the train, points to the pressure gauge and tells them that it is highly dangerous to keep shoveling coals into the furnace. So the gauge gets removed. When the engineer doesn't stop warning and complaining, he gets told there's nothing he can do and nothing indicates that he could be correct, so he is fired and replaced with another coal shoveler.
And when the engine starts to creak and leak, the machinist gets replaced with one from the rival company, so they have to take the blame for the impending explosion.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I'd like to thank the TEA Party and the Republicans for this 10% tax on my ( and everyone else's ) 401K.
Just spending cuts? No problem. Cut military spending and economy subsidiaries and the budget is on track.
Satisfied?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
At the threat of being modded redundant, I still say military and subsidiaries are a big position where slashing can really save a few billions. Easily.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
An unbreakable debt limit isn't smoothly applying the brakes, it's dropping a girder on the track ahead of you. You don't try to slow a train in one instantaneous movement.
Michele Bachman and other TEA/Republican party members got on the television last week and told the American people flat out that the U.S. government defaulting on its debts wouldn't hurt anything.
Now we have this new economic burden as a result of only solving that argument too late.
I don't expect anyone who is a Republican or a TEA party member to admit that they were wrong about that. People who supported playing chicken with the U.S. economy last week just don't have the character and integrity.
I hope OTHER people now see what these people are about. They are angry, ignorant and DANGEROUS denialists just like the people who will not vaccinate their children and who believe global warming is a hoax.
On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?
Shoes for Industry. Shoes for the Dead.
I've read that this credit rating downgrade will result in at least a 10% loss in most American's 401Ks. This was the result of the Republicans and TEA party playing chicken with the U.S. Economy during the debt ceiling negotiations.....which they did so they could cut money from medicare.
If their conscious, stated goal was to make Americans poor and miserable when they are old, then this "serendipitous" result would be called synergy.
So many people on this list believe in probability, why is it so hard for them to understand that risk is mathematics, not politics.
But start with money. What is money? Money is a measurement standard, used to measure whether people who are trading goods and services get fair value for their trades. Money can ONLY be spent or invested. (Currency, however, can be destroyed by melting or burning, etc..)
The amount of money has to be stable against the amount of goods and services, or no one will trust it. The risk comes in two forms: First, people hold money in the hopes that they will be able to trade it back for a fair amount of goods and services. Since the US Government doesn't have any money of its own, it has to take away money that would otherwise be spent in producing and trading goods and services. If the government takes too much money, it diminishes the ability of the country to provide enough goods and services to trade with the people and countries holding the measurement. Ooops, now there's too much money and the prices rise to suck up the excess; the measurement is skewed. Big risk, puts downward pressure on the credit rating.
Second, Debt: Now the government has borrowed against the future productivity of the nation, but it may have over-borrowed against the ability to trade enough goods and services in a timely manner to acquire enough money to pay the debt in a timely manner. The longer the money is owed, the higher the interest paid for a longer period of time. And the risk is that an irresponsible government, instead of keeping the money supply stable in relation to the amount of goods and services provided, may create/print money instead. The money is worth less and can buy fewer goods and services when the debt is finally paid. Again, fair measurement is compromised, and the more debt, the higher the risk of this happening. The higher risk, the more pressure on the credit rating.
I've been asked to explain this before, so let me try: Suppose the government issued a finite amount of inches and you had to use them all somewhere. Today, if you buy a piece of lumber 24 inches long it will fit into the space you want exactly. But if the government issued more inches, and you had to use them up, then vendors would end cramming more inches into the same size of lumber. Now, if you buy a piece of lumber "24 inches" long, it might be too short to fit into that space. Or, if you do buy a piece long enough to fit into that space, you will end up with more inches. We depend on the measurement to be stable. We also depend on the lumberyard to be able to provide enough wood of the right type to accommodate our project. If the lumberyard messes with the measurement or the amount of lumber it can promise, then it becomes undependable and we start looking for other sources. Either way, the ability of the lumberyard to provide what we need is a probability, and the higher the probability the better the choice. The lower the probability, the more risky the choice.
"The mind works quicker than you think!"
S&P had such a major effect when they downgraded Japan's debt in 2002!!!!!! I'm sure S&P etc are still hoping for another 4 or 5 disasters to make that come true. Let's of course, not forget that S&P rated the rags that we previously knew as collective mortgage assets AAA up unto the last day... and I'm supposed to invest? Heh.
Allow me to elaborate on that. Just in case any teabaggers are reading and not realizing what "cutting tax" really means. And please don't take that 'you' used below personally, English just lacks an impersonal pronoun.
Because for most Americans, cutting taxes means less money in their pockets. Not more.
Tax money is the government's income. It might surprise you, but the feds don't just eat those dollars. They spend it. On YOU, no less. Cutting incomes means for the government the same an income reduction means for you: They can't spend as much. Since they spend it on you, that means less money gets spent on you.
Now, of course, one might argue "hey, who cares? The money I don't have to give them I can spend myself!" True. Very true. And if you earn in the six digits (and not the lower ones), it actually means you gain a lot with every percent tax you pay less. Else, it means that you now have to buy something or pay for something the feds paid for earlier. Because, as it is in our world, TANSTAAFL. Someone has to foot the bill. And if the feds can't, you have to.
Again, who cares? So I pay for it with the money I save on taxes!
No, you do not. You can not. Unless of course you're one of the 6 digit earners. If you're not, you will not be able to afford it. For the simple reason that those that earn more, and hence pay more tax, paid that for you while taxes were high. Allow me to give you a simple example:
Let's assume a flat tax of 10%. Yes, I know progressive tax, but progressive tax complicates the example and it's already evident with a flat tax system. A progressive tax system only aggravates it and makes it more blatantly obvious, but the flat tax already shows it nicely.
Let's also assume that I earn 100k a year, you earn 10k a year. Yes, 10k. There's a lot of people who have to get by on that. At 10% Tax, I pay 10k a year and you pay 1k. Let's furthermore assume that school for a child costs 5k a year. Yes, in my example educating our kids takes up almost all tax. Bear with me, ok? So you have a child and so do I. In a 10% tax system, both can send our kids to school. For "free". Of course, it's not free because it's paid for with tax. But the government just had an income of 11k bucks, so paying 2x5k is quite possible for them.
Now let's slash taxes. From now on, we only pay 8% tax. Huzzah! You just saved 200 bucks in taxes! I saved 2000, but hey, who cares, you have 200 bucks more to spend now.
True. But unfortunately the government now only has 8800 bucks and thus paying for school is no longer possible. Cough up those 5k a year if you want your kid to continue enjoying an education.
It's a constructed example. Granted. But it should illustrate what "cutting tax" really means for the lower income brackets. It means having to spend more on what used to be "free" because the high income brackets paid for it with their taxes.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
A lot of Americans will not go to vote for President Obama on election day because they are disappointed in his performance and that he has not lived up to 100% of their hopes.
Please don't be like that. Please remember this and go out to vote.
As we have seen the Republicans and the TEA Party are working hard to take things away from you.
This credit downgrade will make you lose money in your 401K and increase the costs of credit........whether buying a home if you are one of the shrinking middle class that can still hope to do that.....or starting a business.
Govenor Scott Walker cut people's jobs so he could give a tax cut to the reach and the TEA Party showed up to counterprotest the Americans who were fighting for their jobs.
Republicans at the state level fought to redefine rape away and to deny coverage for abortions to women as a result of rape.
That is what these people are about. Trying to take things away from you either by conscious design or ignorance. They are turning the US into a 3rd world country.
Please go out and vote to keep them out in 2012 elections.
We need to get rid of fucking liars who intentionally misrepresent repaid loans as an aggregate figure. Can you tell me what we should do about brain dead idiots like yourself who keep repeating those lies?
Well, the removing the breaks happened a long, long time ago. When every control instance the US had in their economy was removed one by one when they were supposed to cut into the spendthrift. Now you're right, the only thing that could keep this wreck from hitting the wall is to derail it.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Actually,
http://www.city-data.com/county/Barbour_County-WV.html
Thank you for questioning - It's probably any where from 1/4 to 1/5 of population right now in county.
I had always heard 4/5 as the number over the past couple of years and never really questioned it, but you have double points against it.
In city it gets a bit more absurd, according to the same site about 1/3 of the city rests under the poverty line.
So, no, we're not as bad as I had blindly accepted (again, thanks for questioning), but we're still in bad shape and still just getting worse.
"...and a country which seems to have for the last 50 years shown only a steady increase in spending and debt manages to have a AAA credit rating anyway?"
It's a little like if you took out a $10k loan from your bank, then took out another $5k before that was up, then another $10k before the previous debt was finished, then $20k, so on and growing for decades and decades. You'd end up in a huge amount of debt, but if you *always* managed to pay your repayments on time and in full, and you weren't doing anything that appeared to jeopardise that in the future, youd get your AAA credit rating - it's a measure of how well you handle the debt you have, even if that debt is growing. In the same way someone who has NEVER borrowed money will never get a high credit rating - because there's no credit given to them or any debt they have to re-pay, they're not even in the debt game.
...GWB spent too much.
Obama didn't reverse it, tho, did he? No, he made it worse.
The way to fix this is to pass the Fair Tax. That results in 0% income taxes, a wildly expanding manufacturing sector, and ultimate prosperity for the American people. FT proponents believe it will result in a 3% unemployment rate in 2 years. When asked what they would do if America passed the Fair Tax, 500 foreign CEO's were split, with 400 responding that they would build their next factory in the USA, while the remaining 100 said they would move their entire company to the USA.
The income tax has been chasing jobs out of the country to shores that have less business expense either because of low wages or low taxes or both. We can't expect to have the 2nd highest corporate income tax on the planet, and the highest wage scale on the planet, and not expect industry to invest anywhere-but-here.
But we're going to continue with the income taxes, I'm afraid, even tho they're the 2nd-worst idea this country has ever had right behind slavery, and we will eventually have an economy that will be envious of the prosperity of places like Costa Rica.
"We need to get rid of fucking liars who intentionally misrepresent repaid loans as an aggregate figure. Can you tell me what we should do about brain dead idiots like yourself who keep repeating those lies?"
I'm not terribly surprised that this comment came from an AC. But to give the benefit of the doubt: you are saying that most of -- or even s significant amount of -- $16 Trillion in loans from the past 2.5 years have already been paid back? Really?
I'd like to see that paperwork.
The US government spends, what? 40% (and growing) more than it takes in?
The US hasn't deserved a AAA rating for years. Hell there are trillions in junk MBS which S&P rated as AAA. All you have to do is look at the direction of the chart to see if it is sustainable. Screw the rating agencies.
Deleted
There aren't many things you can do to quiet an obnoxious, tantruming child. You can try hitting them to make them afraid of further pain, but some kids will just use that as an excuse to tantrum more and make the situation worse still. You can try appeasing them, but that just gives them incentive to continue their behavior. You can try meeting them half-way, but some of them don't understand how to compromise. They want it their way or the highway.
Now imagine it's a step-kid where you have even LESS power over them and constantly having their biological parents looking after them, but are being ineffective as parents. Your hands are tied there - there isn't a lot you can do if the child doesn't like you and won't cooperate so you do the best thing you can to try to appease it to make it shut up at least for the interim. Hopefully in a future encounter, his biological parents will intervene or he'll grow up a little.
Nobody cares what the CAPTCHA for your post was.
What do I do? Where do I go if I can't pay my rent? What will be the quality of my life? I've put in decades of income into the system. And I have no family to fall back on for support. Will I loose everything I currently have? I'm considered way too old to work but still sharp enough to have a good conversation with. I don't eat much either. I can live without bingo and some of the small activities I do to keep myself active and happy but my social security checks are vital to my living independently. A retirement home isn't a desirable alternative.
( Hypothetical questions from a hypothetical elderly man/woman. Some food for thought to bring a little humanity into the discussion. )
The problem is that Obama tried to get a roofer in but caved into pressure to not pay him enough to fix the problem. So now we've got a huge hole in our roof, no more spending on buckets and water damage being done everywhere.
Arguably, US politics didn't give him much of a choice.
If the Republicans had caved first, they'd have campaigned on a platform of "Look who raised taxes!". Had neither party caved and the US defaulted, they'd have used a campaign platform of "Look who was in power when we defaulted on our debts!".
As it stands, I don't really blame S&P for reducing the US's credit rating - the last couple of months have sent a powerful message to the world: "If you lend money to the US, there's a good chance the US politics will lead to them bickering internally over whether or not they're going to pay you back".
You know what this means, of course? Next year's Republican platform will be "Look who was in power when our credit rating was reduced!"
I've got another analogy.
If you have an economy over, say, 50 years and induce a cycle where you borrow and borrow then waste it on stuff like wars and military then you play games with your own credit rating by not unraveling the debt cycle and failing to take corrective measures over that same time, you devalue your own economy.
I mean seriously people it's not that complicated and you don't need analogies to understand what is plain to see, just decide you are going to understand it and keep educating yourself until you do.
My ism, it's full of beliefs.
That means all governments have increased it by about the same percentage. Go watch Albert Bartlett on growth.
Bush. Reagan, Clinton, Obama. Republican, Democrat. All, completely irrelevant, they are all the same. Which makes perfect sense when you see that their contributors are the same people; the US government has been bought and paid for for decades.
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Sorry, I don't get all these analogies. Does anybody have anything involving a car?
Quidnam Latine loqui modo coepi?
That's not what they said at all:
We have a spending problem. S&P wanted to see debt reduction, they wanted to see a bigger amount of savings, but they didn't care where the savings came from. If anything, they listed cuts to entitlement programs like medicare and social security as more important than anything else (because they quite frankly are).
Laying this entirely at the feet of the Republicans is just more blind partisanship. Both parties are worthless and ineffective. Arguing about which one is worse than the other isn't going to help us get out of this situation. Our entire system of government needs a massive shakeup at all levels, and it's going to happen one way or another: either at the ballot box in the short term, or in a complete collapse of the government in the long-term.
Maxim: People cannot follow directions.
Increases in truth directly with the length of time spent explaining them
One rang?
Still not an impersonal pronoun. Makes translating from French (where they have "on") or German (where "man" is used) quite difficult. Best translation is still an "impersonal you", not directed at the person spoken to but implied that no specific addressee is meant.
Not to mention that it feels weird, I mean, replace every "you" with "one" in the text, doesn't it sound strange?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Even if we ignore how half-assed your suggestions are, the time has come and gone for the late, great, USA.
Yeah, sure, one of the big problems is that we no longer have many companies that actually make a *thing* and the whole sue Sue SUE! thing has got way out of control, but those are but symptoms of the sickness that is the core of US politics and business. The future has been written by the past and the US will be, at best, a minor player, if we survive at all.
Certainly.
You rev your car like crazy and don't care about redlining because, hey, it still works. It squeaks and clanks, but it runs ok. At least while it's new. By and by the emergency lights go on, your solution is not to have your engine serviced or at least take the foot from the pedal but instead you simply remove the light. No light, no problem.
Later, you hand that car to a buddy of yours and after only a few miles the engine pops. And now you're angry with your friend for killing the engine that ran for you so long.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Sorry, I don't get all these analogies. Does anybody have anything involving a car?
Certainly.
America is pants down, bent over the bonnet of a car.
My ism, it's full of beliefs.
I thought political parties always had duds at the head to use as scapegoats. The same idiots pulling the strings behind the scenes, with the ever changing face of the fall guy up front... But then, I'm Australian, our political system works a little differently. You vote for the party here, and the leader of the elected party is the Prime Minister, whereas in the US, you guys vote for people who happen to be in parties, don't you?
But yes, you're quite right. This is something I was telling people at the last election. The only reason they'd run an undereducated xenophobe and a religious nut against someone the public seem to think is the Second Coming is if they wanted to lose. Or if the Republican party is down to just religious psychopaths and undereducated xenophobes.
Admit it. You post strawman arguments as AC so you get modded Insightful for refuting them, rather than Troll
You sir are the fine example of why usa is so stuffed up. Blaming someone else, blame yourself looser.
Blame yourself for voting ex nazis and old shits.
Blame yourself for overspending the CC, letting corporates steal the wealth and deposit in the cayman islands with zero taxes.
DICK, usa was fucked 5 years ago, before the tea partry, growup and go live in mexico, land of the free.
Liberty freedom are no1, not dicks in suits.
Riiiiiight. So starting not ONE but TWO wars while, for the first time EVER in our nation's history, instead of raising taxes on the wealthy like in every. other. war. having a president go "Hey ya know what, teh rich are only up to 85% of teh wealth! That ain't right, lets give em more MONIES nom nom nom" didn't do anything because.....what? The magic Texas fairies pulled magic money out their teeny tiny asses?
Sadly what is wrong with this country can be described in a single sentence..."Give teh rich more MONIES! Nom nom nom". After all lets take a look at what that policy has gotten us so far. We had Trickle Upon (80-88), Voodoo economics (88-92), Hey lets set up trade deals with countries with NO environmental nor worker laws (92-00), the above "Lets start two wars while LOWERING taxes on teh rich LOL!" (00-08) and finally "Bailout teh rich baby, bailout teh rich!" (08-Present).
The truly sad part, and why the poster above you with their description of republicans as cartoon villains is entirely apropos, is that if they cared about the country instead of their kickbacks and enriching themselves they would see what both the data and common sense tells us, namely that higher taxes on the wealthy increases economic growth and creates more jobs and anyone with the slightest bit of common sense would understand that if they get taxed if they hoard it the rich will instead INVEST it in new businesses, duh. The rich hoard, the poor spend. Is this REALLY so hard to understand?
Apparently it is, because to those on the right there is only ONE answer, the one that they cling to like a greedy child clinging to the candy jar..."Give teh rich more MONIES! Nom nom nom". No jobs, high unemployment? Why "Give teh rich more MONIES! Nom nom nom".A single illness wipes out your family, companies like GE get tax breaks and bailouts and then send the factory to India? "Give teh rich more MONIES! Nom nom nom". illegal immigration, rampant crime, children going to bed hungry in America? "Give teh rich more MONIES! Nom nom nom"..
A truly wise man once said "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants" and if things continue along this path, with ever swelling masses of the poor while the top 1% hold more than 90% of the country's wealth at last count? Well I predict they'll be some watering in our future. There have been plenty of examples in history to what happens when wealth becomes to concentrated, too many poor. The French Revolution and Pol Pot come to mind, neither outcome was very pretty for the wealthy.
ACs don't waste your time replying, your posts are never seen by me.
Actually, you need to go back to Eisenhower; he was the last one to actually reduce the national debt, in 1956 and 1957. Every year since then the US has piled up more and more debt.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
It's easy. Get the government out of anything it has no business being in in the first place. The Federal government has no right to be involved in education, health care, welfare, energy, housing, student loans, etc., etc., etc.. Those are state and local functions.
Limit government to the powers granted to the Feds by the Constitution and the wild spending stops.
I'm sorry, but that's the way it has to be or it won't work. There are only two forms of government - rules or ruler. We chose rules and put them in the form of the Constitution. When the rules are ignored you get what we have now.
Slashdot. News for dealers an brokers.
1. Transfer of income amounts to illegal seizure of private property without a due process. Anybody has a problem with it? I do. USA wasn't built as a welfare state, people came to it not for welfare but for freedoms, and that generally means for freedoms from having excessive government.
2. Any amount of money allocated to government will be spent. It doesn't matter how much, any amount will be spent. The government will grow and more funds will be needed. Notice that any so called reductions are never reductions from last year to the next one. They are reductions in the scheduled in spending.
3. Taxing work in USA, which is lacking exactly that - work, is part of the problem of not having enough work. When you tax something, you discourage it. Income taxes as well as payroll and SS and all other taxes are taken out of income, not out of spending, out of income, that discourages work and re-allocates it, as it should somewhere else. Of-course only decreasing taxes without cutting spending will not make economy any better, as any resources that are not taxed but are spent, are just taxes that must be paid in the future, because that money is either borrowed (and then must be paid and interest as well), or it is printed, and that's a tax on all of your holdings denominated in the currency that is inflated.
4. Higher taxes destroy jobs by allowing the government to transfer that income towards others, who are not working. This perverts the society, so that majority of people get this subsidy from the working minority, and in a 'democracy' this really means mobocracy, where those with businesses and earnings are sacrificed, their work output is stolen from them, so that the 'democratic' majority can eat. This leads to work being moved elsewhere and causes more unemployment, which is what a 'democratic' government prefers, as it wants people to depend on the government, so that the mob continues voting for more draconian measures against those, with money. Obviously those with money fight back, and this causes huge problems in both: economy and politics and destroys the society in the process by killing off production.
Eventually and gradually USA is becoming what USSR used to be, except USSR was what it was based on some form of ideology, while in the case of USA, this is not about ideology, this is about stupidity and subversion of government from being a republic to being a mobocracy, because politicians see it as highly profitable.
You can't handle the truth.
How about the War on Drugs? How much is spent every year on finding, prosecuting and incarcerating non-violent individuals for slowly killing themselves by inhaling burning hrdrocarbons?
I am TheRaven on Soylent News
Would lend to again
So by this logic, society achieves its best if a 100% tax is imposed on everyone. The government takes everything it can and then spends on the people, in a socially responsive way such that everyone is better off. You do know the word for that kind of economy, right?
In your example you fail to consider what could've happened to those taxed dollars that came from those "six digit earners". Wealthier individuals tend to save (read: invest) their additional income. By taxing more (and redistributing the income) you lower investment and raise consumption. Depending on how far you go with this redistribution, the economy may end up in ruins.
Don't get me wrong. Public schools are probably a very good thing for the government to provide. So is the defense and public safety and many many more.
But the main reason we pay our taxes is so the government can provide us with public goods that the free market fails to deliver effectively, not because additional taxes puts more money in our pockets.
(Of course that 100% can not maximize the tax income, as the Laffer curve suggests. It's not the 100% rate I am arguing against but the notion that we are all better off if the government's income is maximized)
That's the total sum of the loans that were issued. Many of them were overnight loans.
There was never $16 trillion in outstanding loans.
Nerd rage is the funniest rage.
Bullshit.
Don't think of it as a flame---it's more like an argument that does 3d6 fire damage
Except that there have been only two times since 1970 that the budget did not result in a deficit. Both occured under Democrats.
The deficit's growth has been interrupted once since Reagan started it... by Clinton. The Republicans actively took it upon themselves to destroy this rather than end the debt which is so horrible and will be the destruction of america^w^w^w^w^w^w^w^w^w^w^w because Reagan proved deficits don't matter.
Without causing mass suffering due to major withdrawl of services during bad times, there is one thing that will reduce or even meaningfully dent the deficit today (other than passively waiting for recovery and the restoration of normal incomes and associated tax revenue): Raising tax rates. And the Republicans fanatically oppose it, while screaming like banshees about the deficit.
can we please have the <strike> tag so I don't have to count ctrl-w's?
Because if you have a degree in economics you would then realize that comparing debt size is not adaquite since some countries have a higher GDP than others. Rather a GDP to assets ratio is used. In that ratio the US is fine compared to Japan, Greece, Ireland, Spain, Italy, and many other countries.
Our debt to assets ratio was much worse in the great depression and WW2 and the 1950s than today. Part of the problem is the low taxes this country has on the rich compared to the past and other countries.
Yes it is high, but if you did study economics 101 you would realize in a recession that people who are not working do not pay taxes. Also businesses that lose money do not pay taxes and so on. In good economic times like 2000 we had a surplus because .com companies and corporate America made bank and kept money here rather than outsource money and other assets overseas.
Trust me the US is fine and this is all right wing scare tactics and manufactored fabrication.
http://saveie6.com/
Y'all ? :)
Going from AAA to AA and we are told this is the AAApocalypse.
Who watches the watchmen ?
Just spending cuts? No problem. Cut military spending and economy subsidiaries and the budget is on track.
Satisfied?
Seriously? Cut the entire DOD - heck, toss in the VA as well. No soldiers, no pensions, no bombs, bullets, no bases, nothing - zero out both. We'll still have a ~$800 billion deficit. In fact, every Federal dollar received just barely covers Social Security, Medicare/Medicaid, and income security (welfare, unemployment insurance, section 8 housing, food stamps). Every other dollar spent - DOD, national debt, EPA, OSHA, DOEs, Justice, DHS, etc - is funded with borrowed dollars.
Heavy social spending is what built the debt, and is the structural problem we're fighting today and will continue to do so in the future.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
The rich should not pay more in the proportional sense. What gives you the right to profit by someone eases labor? Similarly the banks and the wealthy people who own them should not have been given bailouts they have no right to your labor. The PROBLEM with this country is this business of redistribution where everyone rich and poor a like feels entitled, and charity is done at gun point. The direction of the flow being determined by the political whim of the moment.
Oh and the fact that we go on these ridiculous military adventures for "humanitarian" reasons while we selectively ignore suffering elsewhere because they have oil, or it might irritate China, or Russia. What this nation needs is a heavy dose of 19th Century political thinking. 20th Century politics are FAIL, let us not wast the 21st with it.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
Basically a bond rating is supposed to mean how likely is the issuer to default within a given time frame. For AAA it more or less means no risk of default in a year. So the question with regards to US debt is not one of if taxes have to go up or cuts have to be made or how much it might suck for taxpayers, it is if the US is likely to make good on the debt.
Well for that you have the fact that the US hasn't eve defaulted on its debt, which isn't something many countries can say. There's a very strong commitment to pay it back, with history to show that commitment is serious.
There's also the fact that the debt has been higher, as a percentage of GDP, before. After WWII the debt was over 100% GDP, and the US continued to pay.
Also there's countries with more that have made good on payments. Japan is over 200% debt to GDP, and yet has not defaulted. While I'm not arguing that is the way to do things, it is clear that it can be done, and yet not default.
Credit rating isn't, or at least isn't supposed to be, how happy you are with a country's economic policy or how you think there economy will do, only how likely they are to repay their debt.
Finally in terms of people divesting from US securities, I encourage you to take a look at prices on them. On Friday 6 months notes had 0% yield, meaning you loaned the government money for free. The 10 year note was 2.5% and the 30 year was 3.8%. Those are at or near historic lows.
Then remember that for treasuries, lower price equals higher demand. They go out for bid and people bid the interest down. The more demand, the lower an interest the government has to pay.
The government is only paying 3.8% for a 30 year loan, which translates to about 1-1.5% real interest (real being nominal - inflation) and nothing at all for 6 months. That is strong, STRONG demand. People want US securities. Compare it to, say, Mexico, which has far less debt to GDP (41%) which had a yield of 6.6% for 10 years.
People aren't putting all their eggs in the US government basket, but demand for US securities is still very high. Consider in the 1990s the 10 year note was above 5% for most of the decade and in the 70s it was as high as 14%. At this point, many investors are voting that they think US securities are safe. You don't take 2.5% for 10 years when inflation is usually targeted at 2% if you don't think the investment is safe.
The lose is due to a lack of new revenue so you can thank the tea party republicans
Raise taxes to the historical post-WWII average - 18.5% of GDP, instead of the 14.5% we have now. That extra 4% puts another $560 billion in the coffers. We'd still have a ~$1.2 trillion deficit this year.
Two-thirds of the deficit is from overspending; you cannot solve the deficit problem without addressing that. And since Congress has shown a distinct lack of resolve in cutting spending any time in the past, it's best to address that first before trying to paper over the issue by raising revenues.
Cut $560 billion in annual spending first, then boost taxes back up to the historical level, and we're down to a $500 billion annual deficit. Still massive, but considerably better than where we are (for a point of reference, our budget deficit alone is greater than the GDP of Canada - it is that big).
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
The $16 trillion was not made out like a loan.
Basically the fed reserve made a nightly loan that the banks paid back each day and retook and paid back and so on and so on. After 30 days it was $16 trillion, but it is more like I give you $1 and you give it back then I give it to you again and then you pay it back 16 times. Then I say I gave you $16 worth of debt when we only played hot potato. This is a lot like Beavis and Butthead in the girlscout cookie episode if you have seen it 15 years ago hehe?
This of course made the banks sheets better but the fed reserve did this to keep them afloat until the bailout became law. No money was lost in the process but it is strange accounting.
Not that I agree with what is going on, but I do wonder and feared what would of happened if we did nothing? Our debt to assets ratio would be much much worse if half of us were unemployed right now and so would our credit rating. This assumes we would enter an even worse depression than the 1930s and the fact is we do not know.
http://saveie6.com/
Welcome on the same boat as other lands
same roots, same effects
Not true.
Again, the US debt to assets ratio is good compared to more than a half a dozen countries.
AIG made no income and betted agaisn't gambling errr investing $76 trillion in assets. That is scary.
http://saveie6.com/
Your post represents perfectly the causes of the problems the US has right now: partisanship. You want to fix the blame on the other side instead of fixing the problem.
Regardless of what Bush II did, the spending under Obama stuck up in that level. If it were really Bush's fault Obama could have simply got the spending to the levels they were when Clinton left office. The reason why he didn't do that is because his Administration seems to have an unlimited belief in keynesianism. Obama's policy seems to be to spend his way out of debt.
It's not quite fair to say that it was Republicans who held the government hostage, because it was Obama who insisted on standing right on the ledge. If you do not stand too close to the precipice no one will be able to tell you "do it my way or I will push you over".
It would be good for America to remember what happened when Germany had a debt, imposed by others on them, that they felt they could never pay.
Except that is bullshit and if Obama wasn't as wishy washy as Carter he frankly wouldn't have had this problem! He could the same as FDR and hosted in his own little "fireside chat" where he laid out "THIS is what they want to take FROM YOU and THIS is what I WANT to do" and left it at that. He is the fricking president! The president has always had the power of the bully pulpit.
Instead he was more worried about kissing booty and how some poll number looked rather than stepping up and being a leader. if he loses in 2012, which unless they run a teabagger like Palin is VERY possible, he'll only have himself to blame. Personally I'm telling everyone in earshot to vote Green, as it is obvious we only have one party now. The Dems couldn't agree on what to have for lunch if you put twelve of them in a room, much less lead a country, and the Reps only have ONE answer which they repeat like a mantra, "Give teh rich more MONIES! Nom nom nom". right now a vote for either is a wasted vote, pure and simple.
ACs don't waste your time replying, your posts are never seen by me.
Apart from this not being true. Yes, some European countries do have a higher % of debt vs GDP than the US, but many don't, including one of the most socialistic countries in Europe, Sweden (and Finland, Norway, Denmark, Croatia, Poland, Latvia, Turkey, Russia, Bulgaria + more).
Not only that. What should happen is looking if it is going in the right direction and then give him another 4 years.
What will happen is that the democrats will be blamed for all the debts that were created by the republicans. The republicans will take over and ride a nice 4 years on the work of Obama, get reelected, do more harm and then it will be time for another democrat.
One step forward, two steps back.
Don't fight for your country, if your country does not fight for you.
The move is likely to raise borrowing costs eventually for the American government, companies and consumers.
Spoken like a true talking [air] head. It won't raise costs at all because:
The FED/SEC already said organizations can still treat US Treasurys as treasury grade. So Banks do not have to increase capitalization at all. Not that it would be an issue anyway, the FED has goosed the M3 so much Mellon Bank is talking about paying large depositors a negative interest rate, in other words they are so well capitalized they don't want deposits!
Investors do not think about the rating of large sovereign western nations, the way they do about a business or individual because the risk profile is not remotely an analog. Its kinda dumb to even rate sovereigns bonds this way as politics can redefine terms and rules any time; see my first point.
US Treasurys are still a safety play, witness market action all last week. Banks will continue parking money there just like they have been; business as usual all the way.
People will continue buying Treasurys at near zero rates; their is little in the way of better options out there if you need to park a great deal of capital.
Treasurys are at near zero rates, some types like TIPS have even gone NEGATIVE lately. They are therefore not competition for consumer debt, when it comes to shopping for a good interest rate for an investment. If rates don't go up and they won't consumer rates won't go up either.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
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Why has it become so commonplace to think about government debt in a macroeconomic way? US citizens and companies hold 68% of the US debt.
Or to use the modern way of thinking about this issue: if you have $10, but you owe Billy $3 and owe yourself $7, how much money do you have?
is here: http://blogs.wsj.com/marketbeat/2011/08/05/sp-downgrades-u-s-debt-rating-press-release/
It is interesting that deficit isn't the only, nor it seems, most important issue. FTA:
Business is booming actually - note the prices of stocks, the amount of cash reserves on hand, etc.
Factor the fall of the USD in to the stock prices as well; you'll find a hefty chunk of those increases is gone. Add in real inflation, and stock prices are nearly flat for the last 4 years.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
US the taxes are lowest ever compared to GDP
GDP is shrinking and in absolute terms taxes are highest ever
Does not compute.
Well they dropped and kicked the ball last time around so this time they're making sure they get way out ahead of any issue so they can't take any flack when the US debt nose dives in 10-15years like Greece or Ireland did given run away spending and worthless and stupidly complex loophole ridden tax code that lets multi-billion dollar companies like GE pay no real taxes. We don't need to raise taxes we need to fix the shit pile that is the US tax code so people actually pay the existing taxes
well, that's unfortunate for you that you can't read.
My EXACT statement:
So when you are talking about tax to GDP ratio and saying that in US the taxes are lowest ever compared to GDP, this misses all the important points: GDP is shrinking and in absolute terms taxes are highest ever.
Which means that I am telling anybody, who says that US taxes are lowest compared to GDP, that they are wrong. GDP is much lower than the government admits and GDP is shrinking at the rate of 10% a year due to inflation, which is more than 10% higher than the government admits.
An advice for you: learn to read.
You can't handle the truth.
"which can be seen in the fall of the USD vs all other currencies" -- doesn't hold up under scrutiny. Compare the dollar to the next biggest currency in the world which doesn't have its exchange rate officially manipulated -- the Euro. They've danced around each other for the last five years with little relative change. During the 2008-09 financial crisis there was a flight to the USD (because it was/is considered a safe haven); much of its relative decline since then can be attributed to unwinding those holdings.
Then you start to realize that if people are going to live together in a society, there's going to be a price to be paid in terms of everyone can't just do whatever they want because it effects others. Part of that price is a government that does things (like bail out the banks, distasteful as that was. The manner in which they bailed them out, and that their boards of directors were not thrown out on their asses, stripped of their assets and left to suffer in the catastrophe they created is another problem) in order to mediate the highly oscillatory tendency of the economy. The benefits of cooperation (i.e. the existence of society and all that implies) are so overwhelming that this overhead is tolerated.
And why should not the rich pay a larger fraction? It is they who benefit. The richer you are, in the US, the more you owe the US government* (as the proxy of Society) for creating the background of infrastructure, stable laws, an educated workforce and providing the economic and military security and legal protection via contract and copyright/patent law that made your wealth possible in the first place. As Ben Franklin put it,
*offer may cease to be valid if GOP goes completely off the deep end
Personally, I get a snooty upper-class British vibe, so yeah it's sort of weird.
:P
I assumed/thought English "one" was a rarely-used cognate to French "on" so I'm not exactly an authority on linguistics
Better than breaking the pulls.
The USA repays the borrowed money, with interest, all the time.
So did Bernie Madoff... until he didn't.
#naabhaprzrag, #sverubfr-000, #agi-fcbafberq, negvpyr[pynff*=' negvpyr-ary-'] { qvfcynl: abar !vzcbegnag; }
And you know what that means, of course? In 2016 the Democrats' platform will be "Look who was in power when our credit rating was reduced again!"
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
BLUE TEAM RULEZ ...We're fucked. No, not the US.
Humanity.
Seriously. The US is on the downswing. Who's going to step up? Europe? Please. There's a reason we had a little party back in the 18th century, and then another, much more violent party in the 19th century. Europe is shit. Europe has failed.
The Middle East? We go down, I'd like to see where their oil profits are going to come from. No where, that's where; the Middle East is going to descend into craptidude.
Captcha: Terror. Fitting.
China? The next superpower, to be sure. Let me know how well selling to say, India, is going to work out for them. If we fall, China is fucked.
Speaking of India - India? Land of endless slums? Hahaha. Give me a break.
South America? Any candidates there? With so many countries greedily sucking at the teat of US aid?
Africa? Hah.
If we fall, the world falls. And we're falling.
And progress will be set back. And humanity will rue it. Mark my words. All because of our fucking arrogance. All because on one hand, we have religious fucks who can't take dicks out of their asses long enough to realize it. Because on the other, we have leftist pricks who feign intellectualism, deeming themselves just as right, just as wrongly, as the righ thtye despise.
Go fucking team.
Fuck you, my fellow Americans. Fuck you. You're the harbingers of death. You're leading us all to our end.
And it isn't going to be a fucking new planet where we can fuck robot chicks.
And the prime reason for that is?
The TEA Party and the sensationalist horse shit from Fox and the AM Talk Radio dipshits. The Republican TEA Party candidates and the morons who voted for them are the ones who made all the fuss and caused the problems.
you hit the nail on the head.
100% agreement.
imo, much has been done to divide the american population through manipulative politics and the engineering of consent to conquer it.
the longer they can keep one partisan zealot believing their group can do no wrong, and all the wrong has been coming from the other side, the longer it will prevent the majority of the population from realizing every possible side has failed us-- most importantly, ourselves.
ultimately, we the people are to blame. not bush, not obama. us.
our laziness has compelled us to believe what we watch on the screen in those tiny 5-15-60 minute segments to be truth, rather than study the matters out for ourselves. indeed, had we, there would have already been bloody revolution decades ago like when the USA was selling arms to actively participate in the genocide of the people of east timor (all while simultaneously denouncing pol pot for his).
much blood is on our hands because we have allowed ourselves to become self seeking, lazy, vain, pathetic creatures that only seek enjoyment and relaxation rather than putting our head on the chopping block to stand for the greater good. those that do are few and far between, and their willingness to stand for the right only brings choler to our hearts and sardonic insults from our lips because we are too afraid to admit that they are in fact morally superior to us.
http://edition.cnn.com/2011/BUSINESS/08/02/china.us.rating/
"Beijing (CNN) -- Although the United States narrowly avoided an unprecedented default following congressional approval of a last-minute compromise plan to raise the debt ceiling, China's leading credit rating agency Wednesday downgraded U.S. sovereign debt after putting it on negative watch last month.
The Dagong Global Credit Rating Company, which lowered the United States to A+ last November after the U.S. Federal Reserve decided to continue loosening its monetary policy, announced a further downgrade to A, indicating heightened doubts over Washington's long-term ability to repay its debts."
After the US itself, China is apparently the single largest holder of US debt, followed closely by Japan, so perhaps we should be more worried about how they perceive US debt than US ratings agencies?
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
This has happened to many economies... even to Japan which at the time was the world's second largest economy. Japan has a debt to GDP ratio of over 100% (USA is about 90% depending upon which set of numbers are used).
Who was it said, "Reagan proved deficits don't matter"? Oh ya... Dick Cheney. No wonder we're in this mess.
No one ever had to evacuate a city because the solar panels broke!
A quick check of Wikipedia says different: http://en.wikipedia.org/wiki/United_States_public_debt
In straight dollar terms, the national debt started dropping after WWII (Truman) and kept decreasing until about 1975. As a percentage of GDP, it decreased year on year until it went up slightly under Ford. After decreasing during Carter's term, it began to climb after Reagan was elected and continued to climb under GHW Bush. During Clinton's term, the curve was reversed and the debt began decreasing again. Since 2000 it has been back on an upward climb.
Franklin was on of them there commynists? Like no way!
Why you should not always trust Wikipedia. Actual debt dropped in 1957 under President Eisenhower, and has increased every year since then. Per the US Treasury.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Yes the Chineese can do that, but they cannot afford the same standard of living as the Americans (or rest of the "western world"), and that is the real problem. That we are living over our standards. We want a better life than we can afford. The Chineese (on average) are still on a very low standard which means that the wages are low and they can produce cheap stuff. (even if the actual engineer that designs the "cheap stuff" earns 50% of an American that doesn't matter if the 10 factory workers, the cleaning lady, the truckdrivers and the cargohandlers at the dock all earn 5% of an average American equivalent).
I don't think the "high" taxes and bed business climate are the basis of the problem, the basis is that we (I say we bacuse I live in Sweden, as you could probably tell from my spelling, and we face the same problems, albeit of a different scale) choose to live above our standards.
Our govenrnments needs to start breaking even, govenrments should only lend money for investments, never for running bills, and absolutely never to cover old debts.
"The raising of taxes on only the 'rich' will never do the trick. "
Alone, yes. But it still makes sense to do so because you *can*, whereas raising taxes on everyone to increase revenues would be foolish and counterproductive at this point. Everybody I've ever heard advocating that the Bush-era tax cuts should be rolled back for people with high incomes has also said that cuts in spending must also occur. Purely cutting government spending has risks too, because cutting government spending will affect jobs and economic activity negatively.
A "candle to grave welfare state" isn't an "impossible promise", although it may be for quite a while now because the debt has been run up too high. However, it doesn't have to be this way. Other countries managed just fine providing more services than the USA did (e.g., universal healthcare), albeit with higher tax levels, and were running budget surpluses until the economic crisis of 2008 (e.g., Canada). The US government could have continued running budget surpluses itself and started paying down its long-term debt (thus decreasing interest payments) if it and its legislators hadn't changed course in about 2002 and decided that keeping more money in the hands of its citizens was more important than paying the accumulating bills for the services it did provide. It's that decision that has slowly but surely backed the country into a corner from which neither pure cuts nor tax increases alone are the way out, because you've basically been living on a credit card for the last decade or so. The seemingly prosperous economic activity of that period was a sham built on cheap credit and bogus investments, a problem that came to roost in 2008 and which won't be sorted out for years. And to make things worse, you've got people in power now that think blackmailing the country over its debt ceiling and resolving the matter with only one strategy (cuts) is the only acceptable way forward. It's going to take more than that. Making cuts *and* eventually rolling back the clearly unsustainable Bush-era tax cuts is the only sensible way forward.
The right thing to do would have been to decrease taxes AND implement corresponding deep spending cuts and service decreases back then when the tax cuts were made. That would have been honoring the principle of achieving a smaller government. But no, they did dick all and just kept on spending into a hole. Starving a government of funds and then doing nothing to cut services gives you crappy services and a huge debt. But at least we can say the experiment has been done. Now the problem is several times worse than if it had been dealt with back then, and yet you still have people in power who think radical cuts alone will somehow lead to better government and a better future. No, it will probably put the economy into a tailspin. Meanwhile you have half the multi-millionaires out there saying "No, please, we can't survive on a few percent less net income", and sending big donations to their representatives to obstruct any thought of tax increase on them to help the country get out of this financial mess.
The problem isn't the "cradle to grave welfare state", it's that nobody was willing to pay what it actually cost to get the services they did have, and when the costs and revenue seriously started to diverge, you had a bunch of idiots in power who thought "starving the government" would somehow magically work out better. Except, you didn't starve the government, you just put it on a tab. Heck, you even had the vice president at the time saying that "deficits don't matter", and at least half his party thinking the same thing as they presided over a spectacular deficit increase.
Congrats. You've conclusively proven deficits do matter, you fricking idiots, and now the tab is due.
What does the wall represent in this metaphor? What could possibly be worse for the economy than a completely uncontrolled and instantaneous breaking of obligations and established services? Even massively high inflation from being dropped as reserve currency would be only about equally bad.
You don't drop a girder in front of your train just so that you can avoid the girder ahead.
We don't really pay off debt as much as we keep rolling it over to another set of bonds. The best analogy would be using one credit card to pay for another. It doesn't really matter at all though as we can not pay off the debt under our current monetary and banking system. Even if done slowly, it would be a massive deflationary event that would remove more reserves from banks than could possibly be made up for by reserves from the Fed, which would have to be paid back, and the system would collapse. That's the price we pay for fractional reserve accounting.
So Linus, what are we going to do tonight?
The same thing we do every night Tux. Try to take over the world!
Oddly, there have been NO times since 1970 when the National Debt didn't increase relative to the year before.
Which strongly suggests that those two incidents of a "balanced budget" you speak of were likely just accounting tricks....
Note, from the Treasury's own website, that the last time National Debt increased was before *I* was born - and I am old enough to have watched Armstrong take his "small step for a man" and remember it...
"I do not agree with what you say, but I will defend to the death your right to say it"
And why should not the rich pay a larger fraction? It is they who benefit. The richer you are, in the US, the more you owe the US government* (as the proxy of Society) for creating the background of infrastructure, stable laws, an educated workforce and providing the economic and military security and legal protection via contract and copyright/patent law that made your wealth possible in the first place.
Taxes ARE a percentage, you know.
The real question IMO, is: Will we see increased interest costs for federal borrowing?
Right now, the federal government spends roughly $400 billion per year at ~2.5% rate on the federal debt. If the rate goes up 0.5% as a result of the downgrade, it costs us roughly $80 billion / year in increased interest payments...that is money the feds need to come up with from taxes that result in NO services or benefits to the taxpayers.
So the tea party asshats may end up costing us 10% (or more) of our 401k's and shrinking the amount of services delivered by the feds without actually shrinking the amount of money we have to pay in taxes. That's not a good deal. On the other hand, if the dollar falls precipitously against other currencies that helps.
Well, the War Powers Act requires him to get an Authorization for the Use of Force (or a Declaration of War) for Libya, which would come from Congress.
Since when does US have high taxes? Hello, Sweden! At least in some states you can get by with far less than in EU, mostly because of laxer standards of living and cheaper gasoline. Even in redneck parts of EU from where this Anon hails many of your redneck cars would get scrapped as too broken down to even consider repairing (for thousands of EURs) and then trying to pass the state's rigorous car safety requirements like having good painting and no serious dents and obviously not being too rusty under the hood. And did I mention exhaust gasses being within EU standards? Lastly, a real American pick-up here would have yearly taxes equal to about 100% monthly income, yes, that's roughly 10% of your yearly income just so that you can drive your 4L small truck (did i mention mandatory insurance yet or the gasoline price being north of 1.50 EUR per litre?).
Business and finance bought themselves a whole bunch of Tea Party candidates back in 2010 and now they're unhappy with the results.
QQ moar.
The reason this is such a big deal is because there are many, many, many large edge funds and mutual funds that have contractual obligations that PROHIBIT them from taking on non-AAA rated debit. The main source of debt for these companies used to be the USA. Now it is going to have to go to other countries (like Canada,Finlaned,Sweeden, etc) and/or AAA rated corporations, like Microsoft or Johnson & Johnson.
Debt "as a percentage of GDP" can still increase as long as GDP increases more. Don't believe everything you read.
-- $G
No the rating systems are different here sovereign debt vs corp. debt.... not that this doesn't seem political (as you said plenty of room to pay debt and possibly required to do so).
Standard and poor is evidently also "so left-of-center", since their own spokesman cited not swiftly raising the debt ceiling before addressing the rest of the cuts that needed to be made as the very first reason they reduced the rating. It would appear even a bunch of wall street bankers are too hippy-commie-liberal from your POV, which is why America is swiftly going to hell.
Who is John Cabal?
Funnily enough, the regulations that require those groups of investments be placed in certain quality of investments were written to say either AAA investments or US Treasuries.
SEC's got the Government's back, yo.
It rubs the lotion on its skin, or else it gets the hose again.
You are welcome on my lawn.
Except, GDP hasn't been increasing for a long time. Your type of rationalization is exactly what caused this problem. Politicians expect perpetual growth in order to justify deficit spending. The theory states that if you leave taxes and all other things at the same level, growth will increase your income over time and make deficits disappear. Except all other things have NOT been equal. Fuel costs have increased. Commodity costs have increased. The cost of doing business has increased. The cost of labor has increased. Capital costs have increased. All of this has taken away from growth. And on the other hand, debt has not remained the same, but increased (rather sharply).
So now we're at the point where almost no amount of growth will cover the debt. Increasing taxes will only destroy growth. Issuing more debt will destroy the currency and the country's credit rating. This is the proverbial rock and hard place. What the government is going to do is inflate away the debt (there's talk of QE 3)- which solves the paper problem of the debt. However it wipes out the wealth and savings of everyone who has US dollars across the globe in the process. Not to mention that the US dollar will be dropped as a reserve (it looks like the Swiss Franc is the new contender for now) which means that America will finally have to pay for its imports in real goods and services, instead of by running the dollar printing press. It's going to shock Americans when they find out exactly how expensive and hard life is for the rest of us. Truly we live in interesting times.
Seven puppies were harmed during the making of this post.
Well it's a matter of usage. Sure, using "one" sounds weird now, but if people used it consistently in the manner of an impersonal pronoun (without the ambiguity of "you"), it would cease to be weird. Of course, one can't force those things, and, ambiguous or not, impersonal "you" works and sounds all right.
I took a few English/German translation classes in university, and the German "man" was one of those things where one invariably had to take a closer look at the sentence. Sometimes "you" lead to misunderstandings and "one" sounded weird -- occasionally a tough call if it's just one's own impression -- so one had to re-arrange the whole phrase. FWIW, German also has an (informal/coll.) impersonal "you", though it's used much less frequently.
Switch back to Slashdot's D1 system.
The gold standard served to keep a lid on the GDP to debt ratios though ... which is why Nixon got off it (the oil based trade deficit necessitated an ever increasing debt to GDP ratio to maintain economic growth in the non oil producing countries).
That said, I fail to see a reasonable alternative ... if the world is ready to give you oil for IOUs for decades at a time allowing you to maintain a much higher standard of living than otherwise possible, why not take the deal? You can always default on IOUs ... of course you do need to have contingencies plans for the inevitable default.
If we had started building trillions worth of nuclear and solar-thermal plants instead of fighting 2 completely fucking useless wars we could have weaned ourselves off our oil dependency ... now we're quite simply fucked, there is no solution. Just a great decline (not a depression, a depression suggests a dip ... while we are going to experience a great reset, with no accelerated growth at the end).
Each and every one of you that is blaming the Republicans or the Democrats for this are being fooled and you should, as critical thinking engineers / scientists, cut through the noise and find the signal.
The Banks are in charge. This is the Banks punishing us for not piling on debt as quickly as they would like. Remember how the Republican Bush gave the Banks $750 billion then the Democrat Obama gave them $800 billion?
The end goal is 100% of GDP being paid as interest to the Banks each year.
Yes we repay the borrowed money... by borrowing more money. If a business borrows money from new investors to pay the older ones, they call that a Ponzi Scheme. Here we call it Government.
You need to learn how to read the very charts you're linking to. The Clinton administration absolutely did have a surplus, and you can see it in the taxpolicycenter.org spreadsheet which you linked to, specifically in 1998, 1999, and 2000, including the first year of Bush's term, 2001.
This is also where you learn that surplus refers to a budget surplus, as in the difference between revenue and spending. It does not refer to outstanding debts in any way, which is what your treasurydirect.gov link refers to.
I recommend you take a look at their faq here, specifically the second question, which explains your misunderstanding of debt and deficit: http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm
Thanks in advance for not spreading misinformation in the future under the pretense of stopping the spread of misinformation with your newfound experience with statistics and FAQs.
it's supposed to show the risks that might be in foreseeable or unforeseeable future as well and not just next year or the year after that, so you can assess your risks better. of course the rating is just that, a rating, it doesn't tell the future so the lenders have to read the news on their own.
so of course there should have been a downgrade, the debt/budget ratio is such and it was growing in an unsustainable fashion. in fact, they should have downgraded years and years ago, not to junk status but some other one, one that would give meaningful indication of their debt paying ability vs. amount of debt. also, the expected or guessed future value of dollar is of course a major part of if you'll get back your moneys worth.
world was created 5 seconds before this post as it is.
Filthy liberal lies ... everyone knows all the Founding Fathers were pure free market capitalist Christians believing in the literal truth of the bible.
You're still not listening: It rubs the lotion on its skin, or else it gets the hose again.
You are welcome on my lawn.
Debt "as a percentage of GDP" can still increase as long as GDP increases more
LOLWAT? Debt "as a percentage" of GDP can't be increasing if GDP is increasing "more" than debt.
Here's the report:
http://sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf
Feel free to read it.
Nerd rage is the funniest rage.
Sweden is doing just fine, with good governance a wellfare society can be maintained ... not to many modern examples of a maintainable anarcho capitalist/social darwinist society though, but good luck if that's what you want to try ... you will need it. Have fun with rioting on the streets in a country with more guns than people, you don't have the same type of population as in the 30s any more.
America's debt is a combination of foreign oil dependency and simply being backwards hicks who don't want to pay taxes.
Because if you have a degree in economics you would then realize that comparing debt size is not adaquite since some countries have a higher GDP than others. Rather a GDP to assets ratio is used. In that ratio the US is fine compared to...
Japan
Been in recession for decades.
Greece
Needed 2 bail outs from Europe and going though a massive austerity program that has caused civil unrest.
Ireland
Economy collapsed, needed a bail out.
Spain
Property market collapsed. Economy in real trouble. May need a bail out shortly.
Italy
In real trouble and may need a bail out too. Also marred by corruption.
Thankyou!
The problem is that as long as you are in a currency/trade union you need central funding for these programs or all the states get locked into a race to the bottom.
Which is fine if anarcho capitalism is your goal any way, but if you want a welfare society you can't afford to be in a currency/trade union with countries with far lesser standards.
Except that Republicans like McCain actually stood up and said "whoa whoa whoa let's not get too hasty with this Constitution thing, what if our guy feels like he needs to violate it too? Let's not do anything that might hold our guy back."
If I have been able to see further than others, it is because I bought a pair of binoculars.
That inflection point just so happens to be when the economy started tanking, reducing tax income, increasing spending on safety nets, increasing the deficit at the same time the GDP went down, decreasing the basis of the percentage.
The Dems couldn't agree on what to have for lunch
This is the root problem with our party structure now. "Progressivism" boils down to "change", "Conservatism" boils down to "don't change". The Democrats can't agree on what to change, the Republicans agree to refuse to change despite the fact that the course we're on leads straight off a cliff. Our choices are herding cats or herding stone statues.
If I have been able to see further than others, it is because I bought a pair of binoculars.
They have a plan. Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years
Down here in the south, we solved that with "y'all". And its plural "all y'all".
If I have been able to see further than others, it is because I bought a pair of binoculars.
Out here in Middle of Nowhere, West Virginia, the poverty margin is 80% of all households
You will believe anything "they" tell you, wont you?
If you stop LISTENING to them, and instead start WATCHING them.. you will enlighten yourself to the actual real-deal situation.
Nobody in the media has a vested interest in the truth, and investigative journalism died 30 years ago. Everyone in government has a reason to mislead you, and the media just reports what those misleading fucks in the government are saying (when they arent manufacturing news themselves.) You can go on about FoxNews or MSNBC, but these are just two sides of the same coin. They have divided up the market, one settling for conservative eyes the other settling for liberal eyes. Neither has a vested interest in telling you what the truth is.
Stop listening to what the people in government are saying. Start watching what they are doing.
You will find that the Democrats have been especially bad these past 30 years.. telling you one thing but doing exactly the opposite of what they say. The Democrats had the House, the Senate, and the Oval Office starting in 2008 with such a majority that they never needed a single Republican vote for anything (the Health Care Bill got exactly 1 (unnecessary!) Republican vote in both House and Senate combined.) What did they *do* during this period of Democrat dominance? and compare that to what they *said* during this period.
They did things that are pretty much the exact opposite of what they are always saying. They never raised taxes. They increased spending at the fastest rate ever. They gave Wall Street trillions of dollars. They gave the insurance companies the biggest gift ever given to any industry in the history of the world. They continued the Wars. They strengthened and renewed The Patriot Act. They gave the RIAA and MPAA a front-stage pass to legislation... we can go on and on about what the Democrats did with their dominance of the House, Senate, and Oval Office.
When you compare what they did to what they said, you cannot conclude that the Democrats have the solution. They are the biggest part of the problem.
"His name was James Damore."
Point 1 seems to come from a Rothbard type argument. Could you explain to me again how land ownership in the USA is not mostly illegal? On one page Rothbard says the Indians didn't use the land enough to be able to claim it as natural rights property, on another he says any first human use at all is enough to make it property ... so which is it?
It seems to me that the US is built on theft from a natural rights perspective, seems to be a bit miserly to complain about taxes with claims to it's history given that ...
Tax can only be a disincentive when there is an alternative ... so income tax might be a disincentive when you're rich enough to be able to retire, but that's not a meaningful part of the working population ... there aren't a couple of thousand Randian uber-beings keeping society together ... the people at the top are important, but if they said "fuck it, I'm just going to retire" there will be plenty of competent people to take their place ... and it will take a while before their income from investment to become large enough for them to do without income, so no harm done.
Those figures appear to be "actual dollars" uncorrected for inflation. So you're technically correct, but if you want to compare years, the Wikipedia graph is a more accurate way to look at it. And it's not just Wikipedia. Other sources which have corrected for inflation look the same.
http://www.usatoday.com/money/economy/story/Government-Debt-Graphic/39255812/1
http://www.supportingevidence.com/Government/fed_debt_over_time.html
This site looks at the debt in a lot of different ways: http://www.marktaw.com/culture_and_media/TheNationalDebt.html
Yep Bachmann FTW. She would have never raised the debt ceiling at all. DOW would be up to $15,000+ now if only it was Bachmann in the White House. Because she would not have signed any bill to raise the debt ceiling. Oh and it was Obama that took a surplus and turned into a 10 Trillion dollar deficit. You know... the two wars he started.... The search for "weapons of mass destruction" I remember when the previous Obama administration said "There are stockpiles of weapons we know where they are" and the huge tax cut that the previous Obama administration gave to us rich people. It was Obama that wanted to raise the debt ceiling in order to pay off already racked up debt from the previous Obama administration. Yep... I agree its all Obama's fault.
I'll recap one of my earlier points from a few days ago, and say that "Oh Really, *now* we have decided that too many/much deficits are bad? After ten years of the most expensive yet useless propaganda campaign in history?"
Also, I'm not buying the credit downgrade either. Some bankers are going to make a killing on the spreads of "new higher riskier debt", but I don't have the vocabulary to describe it. (Selling Short?)
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
The obvious solution to this is to declare war on credit ratings. But who to make the focus of this evil?
- Dan.
~ People that think they are better than anyone else for any reason are the cause of all the strife in the world.
The number of elderly is not at post-WWII average, the number of man hours (directly and indirectly through medical R&D) and other resources spend on keeping a person healthy is not at post-WWII average, the value of uneducated labour in relation to per capita GDP is not at post-WWII average ... to expect social spending to remain at a stable percentage of GDP as society is changing is just plain silly.
Redistribution will have to go up as labour becomes less valuable, medical costs increase and society ages if we want to maintain the median standard of living ... given increases in productivity from automation this could be perfectly possible, the rich would get richer a little slower is all, if it wasn't for foreign oil dependency.
Foreign oil dependency is the biggest problem, it's the only problem worth talking about ... and thus the problem almost completely ignored (a couple 100 million in subsidies is nothing, it requires a moonshot like social investment).
Bloomberg (hardly a liberal organization) picked apart what's making up the debt. Two Wars, "Bush" Tax Cuts, Medicare Part D Drug Program and the TARP make up the vast majority of it. Guess who voted for all of them?
John Boehner
Eric Cantor
Mitch McConnell
The S&P downgrade adds 1.25Trillion to the debt because of additional borrowing costs. That pretty much wipes out the so-called gains the GOP made with the debt. If only the GOP actually cared about America make some real debt cutting could be made.
What does your point about "Rothbard" have to do with the people, who are paying most of the taxes in US? Most of the taxes that are going to be raised will have nothing to do with 'uberrich', those guys are smarter than that, they move their money away from the government tax train and they are highly mobile, as is their money.
The people who will be hit hardest will be in the mid-business bracket. Will all of them close down shop? No, of-course not. What many will do is fire some people, hire less, work harder to avoid taxes rather than to build up more production, and it's understandable and the right thing to do under such circumstances.
As to the alternative - you move production. I moved my business to Asia out of American continent (USA and Canada), I personally know a few other guys (and 2 women) who did the same thing. You move your investment capital out, where the production is. You don't stay in US and European economies to subsidize consumption of the welfare state.
You can't handle the truth.
If you threw a party that cost more than you could afford, and it went on day after day after day and everyone that came enjoyed it, of COURSE you'd be pissed when the nerd shows up and says, "Er, your credit cards are maxed, you're deep in debt ... maybe we should turn the music down, close the open bar, and start figuring out how to pay for this?"
Yeah, it's HIS fault. Let's blame him!
-Styopa
06August2011; Saturday & the markets are closed - however...,
"some" bankers "might" take S&P for real. However in the real world S&P says
'look at me, I'm important'! Since we botched the mortgage crisis in such a bad
way - still singing the **buy & buy more** mantra (with 'AAA' reports - even up to & after trillion dollar defaults)
to banks up and over their ears in toxic mortgage paper. I guess this downgrade news will generate
a lot of ink plus bits and bytes on computer screens and smart phones worldwide
and change about nothing. Except the big "I" (as in Me/Myself&I) officially downgrade S&P cred
to that rock band out-of-Texas. "ZZ" __ ha, ha a millions laughs... cheers world debt crisis,
cheers, USA {and, of course, Long Live the Naked Emperor}
ps: album title of a early Supertramp album from the mid-70's 'Crisis, What Crisis'?
It repays and at the same time, prints money, so the only point of borrowing money to US was to level the inflatory losses, i.e. to mantain the value (compared to most common goods). Now they will have to print even more.
It is interesting how other countries in debt, like Greece easily got to junk bond, yet it was that hard to downgrade US (and it wouldn't happen without the debt ceiling crysis). I think the problem is that all these rating agencies are a part of the same circle of power, people who know each other, are immensely rich, and decide where US and world politics and economy will go (so even stranger how only S&P downgraded, I guess others will join too).
Grandparent post: It seems to me that S&P, along with the other credit rating agencies, lost a lot of credibility when they were giving AAA ratings to the guys holding bundles of sub-prime mortgages in the lead up to the financial crisis.
Yea, that's what I thought. People are still treating the ratings agencies- who so obviously got it wrong- seriously after 2007/08?! (But see below)
Parent reply: Caveat emptor. If you don't do your own due diligence on your investments then don't complain about the consequences.
The question is how much do people actually believe these ratings in the first place, and how much are they privately sceptical but playing along? I can guess two "good" reasons the industry still supports them... neither of which are to do with their accuracy.
The first is that maintaining the pretence retains confidence in the market, even if that confidence is ultimately baseless.
If the industry was to openly accept that they were unreliable and couldn't predict financial crises like 07/08, and if there wasn't anything that could replace them (which there isn't, AFAICT), there's the danger that they- and people in general- would lose confidence and panic.
In this first case, I'm unclear how much of it would be intentional self-delusion by those in the industry, and how much is everyone knowing it's crap but keeping their mouths shut because it benefits no-one to say otherwise?
Secondly, they're a very useful back-covering mechanism for those in the industry, basically, the "no-one ever got fired for buying IBM" of the financial world. By which I mean one is *way* less likely to be hauled over the coals for a bad decision if they can point to the fact that an industry "respected" rating supported that choice. Or put another way, using them to demonstrate that "due diligence" was supposedly done.
This would work for individuals within companies, and for companies justifying themselves to investors and/or courts.
I don't know all of this for a fact, but it seems a sensible guess given the way that corporate behaviour and humans in general work.
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
Spending during difficult economic times should be higher than tax revenues. It's not unreasonable that the US government be borrowing heavily right now. The problem is that politicians never prepare properly for the next recession by stabilizing their budgets and then paying down debt. Then recession-time governments have room to respond....except, of course, politicians would always prefer to spend their successors' tax revenues to buy popularity rather than do the right thing. GWB was borrowing heavily at a time when he should have been paying back debt; so was Gordon Brown in the UK; so were many of their predecessors. Even when debt was paid back its always been half-heartedly. Greek and Italian politicians have spent years dodging fundamental problems partly by borrowing because its politically easier (deal with corruption in the tax departments and break down entry-barriers to industries that let insiders do a cushy job badly at everyone else's expense [gasp], no way!). And its US government debt which has helped China keep its currency artificially low and allowed the US to import from China without needing an export industry.
What really is shocking to an outsider is the ludicrous, fantasist faction of US politics that treats tax rises of any kind as the ultimate governmental evil. Even if the budget were balanced right now there are still huge quantities of government services provided years and decades ago that haven't been paid for. The US population needs to accept it must start paying for those soon, and hopefully learn that it needs to keep its politicans spending under control even when things are good and there's a republican in charge. And, personally, I think a good way to do that would be to impose an income tax separate to the normal budget of something like 1/20th of the national debt as a percentage of GDP, adjusted anually. Having taxes go up whenever the debt goes up should at least get people's attention.
Apparently hubris continues to dominate the financial sector. The whole world financial market charade is BS. I learned as a young boy that "what goes around comes around". These idiots at S&P and elsewhere had better brace for the onslaught that is coming their way. I for one will laugh at their plight -especially when the underlyings roll on their masters ;)
It would be good for the rest of the world to remember what happened in Germany when Germany had a massive debt they felt they couldn't repay. And you thought the current military misadventures were bad?
I'm not really saying anything specific or advocating any sort of political philosophy with this sentiment, I'm just saying that if you stick to the historical precedent, it doesn't look pretty no matter what choices might be made here and this is going to have a global impact no matter what is done.
Three of the four credit rating companies are *IN* that country (Standard & Poor's, Moody's, Fitch Ratings).
The fourth one, Dagong Global, is in the PR China.
Recently Barroso grumbled about needing a European credit rating agency, when Portugal (where he also comes from) was downgraded again just for the kicks.
In other news, Dagong downgraded USA from "A+" to "A" with a negative outlook; that's a bit between Poland and Spain on table 3 (p.4-5) of "Review summary at 1st anniversary of issuance of sovereign credit ratings for 50 countries and regions by Dagong" (PDF) .
You may think Dagong is probably a tool of the Chinese government. Yes, that's probably so. So what? I find it hard to believe that the three US credit rating agencies would be 100% independent if their government would lean on them.
To be, or not to be: isn't that quite logical, Slashdot Beta?
Clinton did have a surplus: they collected more in tax than they paid out under the budget. The salient point is that the surplus was not used to pay down any of the massive amounts of debt the country was already saddled with. Go figure.
A large number of congressmen said 'We need to stop paying our bills.'
Congressmen that wanted to pay our bills were only willing to do so if other congressmen agreed to their pet projects.
Many congressmen were willing to stop paying our bills if they didn't get what they want.
A deal wasn't struck until the last possible minute.
While the deal passed on a heavy centrist vote, both parties are moving away from the center, indicated that things will get worse.
how the FUCK do we still have a AAA rating with any agency? Yes, we have the money to pay our bills, but we just showed that we are very willing to not pay anyways, even when we are fully capable of paying.
When dollars are created at the rate of a few billion per day, why anyone is surprised that they get diluted?
Yes, that would explain the record high inflation we've had since the start of the recession:
https://research.stlouisfed.org/fred2/graph/?graph_id=50467&category_id=0
Err, wait. OK, but surely exchange rates went off a cliff? Um, OK, I'm not turning up much there either....
Can you open a small business and sell goods to China?
Googling.... From http://www.cato.org/testimony/ct-dg06132007.html, "In 2003, the most recent year for figures, a total 16,874 U.S. SMEs exported to China." Too lazy to find something more up-to-date.
And if you want to help exports, you could worrying about the dollar being to *low* against foreign currencies....
taxes are high
Compared to other countries: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
Historical revenues for US: http://en.wikipedia.org/wiki/File:Revenue_and_Expense_to_GDP_Chart_1993_-_2008.png
Role play time!
"Do you love me?"
"Uh... yeah... Sure bitch, I love ya!"
*pork* *pork* *pork* *pork* *pork*
"Oh, yes Mr. Party Man! Fuck me harder!"
And voting one way or another just seems to change who's fucking with your head, and who's buggering your arse.
It's just like all credit ratings. You don't get a good credit rating by saving money and not getting into debt. You get a good credit rating by borrowing a lot and repaying it, borrowing more, repaying it, and so on and so on.
The US is king of that game.
This is simply the industry doing payback to Obama for regulating the financial industry. They dearly want to get a rubber-stamp president back in the WH to line their pockets. Always follow the money- it's Wall Street, it exists solely out of greed and is driven only by greed.
We raised the debt limit, but did not address the problem. Note that they hope this raising will get us through another year or two until it needs raised again!
If I was nearing the limit of debt that our household could sustain, and our solution was to get another credit card, the credit agency would not give us a favorable credit rating either.
As long as US-politicians give presents to the rich, this is not going to change. And while the rich became richer and the poor became poorer, the US needs more money for social security (at least it should). As the existential minimum to live has to be provided. I know this is not the fact in developing countries. However, in the so called Western World, this is possible and done by many Western states.
As more money for the poor requires more money. This money has to come from the rich. As it is their obligation to help their fellow humans. And BTW they get almost the total GDP so they are able to pay for their poor fellows. And before someone cries: "The poor shall go to work, then they have money". I have to point out three things:
a) Many of them work, but they get not enough money for their work to get a decent living.
b) There are no jobs (especially ones where you get paid).
c) It doesn't matter if they are lazy or not. They are humans, they deserve support from all of us, so they can have food, housing, health care, education etc. (see the human rights declaration if in doubt).
However, all these things do not play any role in Us politics. And therefor the US is in big trouble and will get in bigger trouble in the near future. I am really afraid that the US can become a failing state in one or two decades.
> I don't really blame S&P for reducing the US's credit rating
Yeah, they kept it "AAA" long past what any hypothetical honest rating company would have done.
They knew they would lose the four people who still paid attention to them if they failed to acknowledge that the derailing train really shouldn't continue to carry their highest safety rating, so they knocked their rating of the train's safety all the way down to "really-really-super-secure-safe++what-could-possibly-go-wrong".
Ca-ching!.
This was marked "insightful?"
Look, all this boils down to the multiplier effect: when an entity (such as the government or a local municipality or a company factory) takes in money (either through taxes or through selling a product), they then spend that money on goods and services in a particular area, which then is taken in by others, spent by others, etc., etc., etc. This creates a form of multiplier effect, whereby a dollar of activity by an entity causes a ripple effect in the overall economy that is greater than that dollar spent. It's why an entire town with millions in economic activity can evolve around a factory which only employs a fraction of the people in that town; the rest provides goods and services to the factory and to the workers there, and to those who support the factory and so forth.
(As an aside, your example about cutting taxes saving someone $200 but then they don't get $800 from the government--(a) government wealth redistribution is macro-economically neutral: as long as someone has $800 to spend, that will create $800 worth of activity--and it doesn't matter if that $800 is spent on food or as a down payment on a luxury yacht. And (b) your statement "Because for most Americans, cutting taxes means less money in their pockets. Not more." assumes a zero-sum game, which wealth creation certainly is not.)
So the real question is not "how can we spread the wealth around." This may matter if we assume wealth is a zero-sum game (but if it were we'd all still be living in caves), and it may matter if we want to help the destitute and the hungry, but from a macro-economic perspective it just doesn't matter. No, the real question is "what is the government's multiplier effect verses private industry?"
Meaning if we take a dollar from a corporation and gave it to the government, will that dollar turn into more dollars or less than if we had left it with the corporation?
Now if we left it with the corporation, the corporation could spend that dollar on investing in new hardware for their plant, or in paying salaries to their workers, or paying dividends, or saving the dollar, or giving that dollar to some rich CEO who could then spend it buying a bigger Mercedes Benz. WIth the exception of saving that dollar, the dollars kept by a corporation generally will go out on goods and services--even if that good is the rich guy's big ass car. But then, even if that dollar is spent on a car, it will then eventually go to buying more factory equipment or spending it on the guy who hand-tooled the leather seats, employing his leather-making craft long after the market for horse saddles has disappeared.
Point is, don't discount the idea that leaving the dollar with some corporation wouldn't have a net positive public good.
The fundamental argument over taxes between the right and the left basically boils down to who, right now, has the larger multiplier effect. President Obama is on record claiming the government has a net multiplier for government purchases of 1.57 (that is, for every dollar the government spends, $1.57 is added to the GDP), and the tax multiplier is 0.99 (that is, for every dollar the government taxes, the GDP is lowered by $0.99.) There are those who believe that these multipliers are wrong; otherwise, the right thing for the government to do right now is to raise your taxes 30% and spend it on whatever.
Other researchers suggest that the real tax multiplier is much larger: for every $1 in taxes, GDP is actually lowered by $3. That's because when the corporation doesn't have $1, that's $1 less net profits they have. That's $1 less they can spend on equipment or on salaries or on that Mercedes, which is $1 less their suppliers have; even the guy making leather seats by employing his ancient craft of horse saddle making has $1 less due to fewer Mercedes being sold to fat cats.
(source), follow the links t
So what was the surplus used on? If it wasn't to reduce debt, then it must have been spent. Which means there was no surplus because it was spent on something. Surpluses mean that yes there was more tax in than paid out. But if you pay it out on something other than debt servicing you don't have a surplus on the federal level. The only possible argument is that the extra increase in debt was on debt servicing (interest) but the interest is a mandatory item, so it would have to be counted in that budget. So the only possible conclusion is there was no actual surplus.
That we're worried about having a credit rating downgrade from the people who graded those junk mortgages and got us into this mess in the first place?
for toying with the likes of assholes like bin laden and all those other motherfucking terrorists. We should have first declared a new name for them, something like puddledgraymatter or pink termites. Then we just blow up general areas where they could be hiding promising to anihilate their countries if their nationalities are determined from post attack forensics. This would have saved The US approximately $10 Trillion. We promise the rest of the world a swift asskicking if they can't keep their radicals under lock and key. We would be looking at a completely different world. We would only have been acting in self defense as reactionary policies would be beyond reproach. Look at what we are in the middle of now and come up with your own conclusions.
Wall Street the place were anybody can make money except investors.
... until you run out of other peoples money. (Margaret Thatcher)
This is what just happened.
Well, the obvious solution is to chop a hole in the floor and let the water drain out so you don't need anymore buckets. But then the government will come along and tell you that you're interfering with interstate commerce and will force you to buy buckets anyway.. that or bucket insurance...
For justice, we must go to Don Corleone
Not entirely true. One of the fairly common criticisms of Reagan is that it was during that particular administration that debt accelerated so much, in spite of a so-called "conservative" president. (Not that it really makes sense to hold presidents totally responsible for Congress' budgets, but they do deserve a share of the blame at least, and for better or worse the president tends to be the highest profile person in government.) Republicans explain this by saying that luxurious military spending was justified to win the cold war.
If they want to make that argument, ok, but that's just becomes another one of that many ways that Republicans distinguish themselves from their laughably inaccurate stereotype. (It's one of the reasons that when someone says they want small government, but then also say they support Republicans, that person it outed as either a liar or a fool. You an take one position or the other and still look principled, but taking both positions just looks silly.)
Of course, we have Bush II to use for illustrations now; there's really no reason to bring up Reagan anymore. Bush II is not only more recent and relevant to the current situation, but helps make the point to a more extreme degree. It's in retrospect that we've stopped batting our eyes at the Reagan years; at the time, though, the huge deficit was a big deal. It's almost quaint to think that people used to be pretty concerned when the debt exceeded one and two trillion dollar milestones, since even at that time, so many people thought it could never be paid off, and would therefore be a permanent injury to the country.
Even multiples of trillion might be arbitrary places to draw lines but still hold some pretty big psychological powers. This century we think in tens of trillions, though. At least until we hit one hundred trillion... ;-)
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
The problem is that politicians never prepare properly for the next recession by stabilizing their budgets and then paying down debt
Exactly. Politicians behave like there's always a crisis that can only be solved through more government spending.
And its US government debt which has helped China keep its currency artificially low and allowed the US to import from China without needing an export industry
The problem here is that the US is transitioning to a services economy and it's very difficult to export services. An industrial worker makes products, let's say telephones, that can be sold to other countries. OTOH, how do you export the services of a hairdresser?
If all the jobs in the country are for lawyers, accountants, realtors, insurance adjusters, etc, from where will you get the valuta to pay for the smartphones and oil you import?
Well, logically if you want to blame a single administration, or really a point in time, look to the Urban Renewal and Development Program which looked to loan money to the disadvantaged. Now add Bank deregulation to aid the programs development, regulated capitalism which will punish all Banks which do not play the game, and you have set the stage for the nightmare we are in. A bunch of parties owing money they can never pay back.
Thank you Bill Clinton and Newt Gingrich.
Sure there was a surplus....of borrowed money.
Now had the money stayed in the country, it may not have been all the bad, but thanks to Ronald Regan and George H. Bush, money was traded out for foreign goods, many times to countries with less than good intentions for the US.
Now enter dumb and dumber, followers of Keynesian economics. You cannot buy your way out of money being gone by borrowing more money. George W. Bush (large ears) tried with stimulus 1, then Barack Obama (larger ears) with stimulus 2 (now twice as big as stimulus 1).
It's done now, US Presidents where not supposed to have so much power, and that is Congress's fault for not stepping up. You cannot place blame on this Congress's for trying to do what the previous congress failed to even address (even though it was their job, for two years).. And you cannot blame a group of good intentioned people for pointing out the obvious (The Tea party). We are screwed.
Yeah, Obama started 1 useless war, so I guess that makes him only half as bad. Of course he has the power to end all the wars, but we don't want to discuss that..
For justice, we must go to Don Corleone
Based on data just released by the IRS How many Millionaires are out there? Millionaire defined as a person or family earning more than $1,000,000 per year.. People and households earning $1 million or more annually made up just 0.1 percent, or just over 235,000, of the 140 million tax returns filed in 2009, and just 8,274 returns were filed by people making $10 million or more. So then.. 235,000 people/families making $1 million or more and only 8,274 people/families making $10m or more. Lets tax them more and solve ALL our problems!! How does that work out mathematically? The Fed collects = if we raise their taxes by $X $235,000 = 1 $2,350,000 = 10 $23,500,000 = 100 $235,000,000 = 1,000 $2,350,000,000 = 10,000 $23,500,000,000 = 100,000 $235,000,000,000 = 1,000,000 So.. if we take EVERYTHING from the people making $1 million per year, almost everything of the majority of the rest and an extra 10% of the remaining 8,000 or so people the Government will collect a staggering $235 billion. So then.. We only need to find another $1,200 BILLION more to cover the deficit ALONE.. Not taking into account the future growth of spending. But that's not fair.. only 10% from the 8000 making over $10 million!! Well then.. Let's take an additional $4,000,000 from them making it 50% of their wealth.. $32bn Extra!! WOOHOO!! $267bn total!! We're still $1.1 TRILLION short. For the DEFICIT alone. We haven't even touched paying for Obamacare yet. We haven't even touched the fact that SS and Medicare will be completely bankrupt in 20-30 years.. We haven't touched the baseline accounting that guarantees increases in spending for every single Government entity. So. Since it's mathematically impossible to generate enough revenue through tax increases on the rich.. No matter how severe.. Why do it? It's like trying to balance a household budget by cutting your $0.50 weekly gum allowance out. Tax the businesses as well!! I looked that up too. According to the Forbes list of most profitable companies.. If you confiscated 100% of their profits of the top 2-300 US companies you'd end up with another $500bn or so. Lets be very generous though.. We'll call it $700 bn for the sake of Argument. So. $267 from the tax increase on the rich.. and $700 bn from the tax increase on corporations. ALMOST $1tn. We're still $400-$500bn short.. For now. That doesn't take into account the massive increases that are coming. And you can only take ti all once. So by taking everything from the corporations and everything to nearly everything from the rich you've managed to come within a half trillion of cutting out the deficit.. for this year alone. So.. Solving this through taxation is mathematically IMPOSSIBLE. Say it with me. MATHEMATICALLY IMPOSSIBLE. So now what? What do we do? What choices do we make? A balanced approach of taxation and cuts? Remember.. The only way we got to our high numbers of revenue through taxation was to take EVERYTHING or nearly everything. You can't do that. Ever. You can't even do ½ of that. But lets say that you can. The country pulls together (meaning the rich and corporations pay more while the almost 50% who pay nothing continue to pay nothing) and we get $450 bn in new revenue. That leave $1 trillion in cuts.. PER YEAR. Not 10 years. Not 5 years. You must cut $1 TRILLION dollars today. Right now. This very second. And then you need to freeze spending where it's at. Not 1 more dime in increased expenditures. Not 1 dime in growth. Not 1 dime in increased SS/Medicaid/Medicare spending. At that point and time we're living paycheck to paycheck. A water heater failure away from disaster. I NEED for someone to explain to me how this is sustainable. How it's just a matter of squeezing a few more dollars out of businesses and the rich.
"The U.S. government still has plenty of room to raise revenue to pay off Treasury Bills, and may even be Constitutionally obligated to do so."
Except as others point out, it's obvious to pretty much everyone that the US Government:
1. Is unlikely to ever cut it's spending until after it defaults and thus has no choice.
2. Is unlikely to institute a sane taxation system - and in any case where it DOES manage to raise taxes, it won't last past the very next election when a republican gets back in office and axes them.
3. Has been shitting on it's own constitution for the last decade or more and proven that it will ignore it when it suits it.
This.
Why anyone would listen to any of the ratings companies that whitewashed the mortgage debt disaster that got us into this mess is beyond me. It's astounding that they are even in business, and that people would pay them money to rate anything. There should be Federal indictments coming down for the executives of every one of these guys, not news stories on their "ratings" of the Federal debt.
I got the worst grade imaginable:
An A-minus-minus!
Yup, partisanship is what could break the world now, as people look at their savings and wonder if they are safe. At some point they might cave in,and go and take their money out, and then someone will publish some news about how they are all taking money out of the banks, and pretty soon lots of banks will have to go bankrupt. When this happened in argentina, only 250 dollars a week were allowed per family. I wonder how much there is now.
There is no secret fuel over the horizon like with petrol after WWII, and there is no magical alternative fuel that's going to move all our food and pharmaceuticals around the world if the US goes bust and takes europe with it. The US is not going to grow again in 6 months, or in 12 months, because measuring a country's wellbeing via GDP growth was a mistake in the first place, and it's now become very harmful to continue seeing the world that way.
So what happens as countries go bust is that a disposessed middle class goes out into the street, camps out, riots, but generally protests peacefully for stuff to get better. This is happening in egypt and north africa, but also in across southern europe, in chile, in marocco, belarus, iceland, turkey, the UK, israel, south america and pretty much anywhere you might have thought of as a stable or safe place even just a couple of years ago. And so the government becomes opposed to it's people, and the old alliances of media, police and bipartisan states start falling apart. We are at this point in Spain, where the Police now speak throught the police union, and beat up journalists and protesters alike, issuing public messages that are harshly critical of government and protesters. Meanwhile people lose jobs, houses, hospitals etc and everything is more and more extreme each day.
But I think there is a way through, which is through dialogue, through agreements by all parties - citizens, government, business, media and police or army forces, to collaborate because we have a huge crisis on our hands. Here is some timely viewing: http://www.youtube.com/watch?v=i8EYN1iBPdc
We all have to voluntarily take over as government and business fails, and keep basic services functioning. We have to relocalise, and figure out how to drastically reduce the need for transport, and most importantly, produce clean supplies of water, basic medicine and food. This can only happen with an active volunteer force, able to be creative and effective, and it just so happens that the pro democracy protests are basically formed from spontaneous voluntary acts from people across all (or most) aspects of society, and now at least in europe, by assemblies, allowing for high levels of organisation and very participative democratic decision making, and now - with social networking software like Lorea (based on ELGG), soon to be complemented by an information system allowing faster decisions and ability to organise complicated activities across a wide geographical area. Lorea can be found at http://lorea.cc/ or https://n-1.cc/ to see it in action.
I don't know if you see how hard that is going to be to reach this level of unity, with all the fighting going on at the moment. We need a huge amount of unity, and for a feeling to surface across the financially sick "western world" with some of what in the UK is known as the blitz spirit - an idea of shared catastrophe, that gets everyone out helping each other. I think a lot of the protests so far have embodied these feelings, of the drastic need to revolutionise our culture, politics, financial system and pretty much everything else, because of how harmful the damaged older system is(if we let things go on we will starve), and I really hope that October 15 - where wall street itself will be subject of a protest camp, can help bring more people to awaken to the idea that they have to take responsibility for this situation, and actively make things better, even if it means adapting
And Adam Smith
“The rich should contribute to the public expense not only in proportion to their revenue,” Smith believed, “but something more than in that proportion.”
http://news.heartland.org/newspaper-article/2003/11/01/adam-smith-taxes
Bullshit. I listened to this argument 15 years ago at the start of 15 years of trickle-down failure. It has now been proven and proven and _proven_ that trickle-down doesn't work. when we were "causing rich people to go away due to high taxes" we were in a hell of a lot better shape.
If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
Good post by Klein: how our debt happened.
It is also worth to note that the downgrade is not because of any near term debt problem in the US. The reason given by S&P is that the disfunctional political system in the US at the moment (i.e. the extreme elements taken over the republican party) makes S&P believe that the long term debt problem (i.e. the next decades) will not be dealt with properly. Like this statement:
Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.
A last point is how misinformed people in general is on this topic about the US economy and debt (just read some of the slashdot posts here getting modded up). It seems to be the medias responsibility to be fair and balanced and actually call out republicans talking nonsense about what the debt problem is.
--- guns don't kill people, people with guns kill people ---
http://www.bbc.co.uk/news/world-us-canada-14430598
"China has scolded the US over its "addiction to debt" after rating agency Standard & Poor's downgraded the US' top-notch AAA rating to AA+.
State news agency Xinhua said unless the US cut its "gigantic military expenditure and bloated welfare costs," another downgrade would be inevitable."
It may go faster than anyone would like.
> OTOH, how do you export the services of a hairdresser?
It might not be possible to export hairdressing services, but it's most certainly possible to export services like "answer the telephone and do customer service for the customers of some company living in a country 6,000 miles away on the other side of the planet and (in theory) speak the same language you learned in high school" (ie, Indian call centers).
Ditto, for things like database administration. There's absolutely *nothing* to stop a company from Florida from leasing servers and rackspace in London that are 99.999% administered off-site by DBAs in Bangalore. It is, however, significantly cheaper to locate the servers themselves in the US or Europe. Why? The one thing that saves US & European competitiveness in data centers is the fact that it's fairly cheap and easy to get multiple levels of redundant communications and power infrastructure in place. And this partly goes to show why having good infrastructure is so important, even if it's built with deficit spending. It also illustrates why I've grudgingly come to see why allowing profit-maximization in things like power generation isn't necessarily a great idea. It might be cost-effective to bleat about "smart grids" and accepting a few hours of rolling blackouts per year in exchange for 3% higher quarterly profits by eliminating excess peak capacity, but those same decisions can disqualify entire regions from consideration by companies looking for reliable power. Rolling blackouts are something that happens in fucking second-rate countries, and the fact that there are people who'd willingly allow them to happen by design in the US as a matter of cost-efficiency should have elected officials getting hung out to dry on election day.
Thank you, I will. If I am the victim of bad reporting (wouldn't be the first time), then at least I have the information to correct it.
The hubris of the American Empire continues even as they eat their system from within. Decades of indoctrination has left a population incapable of doing much more than chanting "USA! USA!" while the Chinese own the US debt and the mid-east keeps thumbing its nose at Uncle Sam. Empires fall from arrogance and the US is one of the leading producers. Naturally when the US does inevitably default their political masters will convince the populace that it is everyone's fault but the American people: still believing that the world owes their resources to the US economy. Training the population to salute the flag while spending themselves into debt is the national pastime now: keep them stupid and give them a credit card.
Didn't know there were so many stupid people that read /. "It's the Republicans fault. It's the tea parties fault." Guess what it's not, it's a combined fault between both democrats who want to spend more, and Republicans. As a country we are out of money, though if the 50% of americans who don't pay taxes paid, we wouldn't be as bad off. We need to cut spending, like in areas like welfare. I am gosh darn tired of going to school and seeing people who are on welfare have their parents drive up in Escalades, benz's, bmw's, or some other luxury vehicle. While their kids in tattered or tacky clothing come in, and they are on federal free lunches, which they throw away and whip out cash to buy a bag or doritoes(everyday occurance). If the government stop paying these people to reproduce, then we wouldn't be in the shit situation we are today. Kill this mundane healthcare bill and kill medicaid as well. I don't mind helping people who need it, for instance I will be more that happy to help veterans, and disabled people(mentally, or born physically). But helping the so called "poor", what a load of crap that is. While I sat at the doctors office one day, a couple came in who happened to have medicaid (I only knew cause I overheard the overly loud secretary). Once the couple sat down they began to both pull out ipads, well geez I work full time and can't afford one of those overpriced hunks of crap...But I am a bigot if I say something about that. See America garauntee's you have rights, none of those rights included success. This means in simple terms for you liberals out there, Gov't help programs aren't out there so you can keep up with the Jones's. If someone decides that they are not going to succeed at a career or higher education, well that's their fault, they chose that path. You don't deserve nice things and use Gov't programs to provide the ammenities that you NEED. It's not my job as a taxpayer to provide these things. Your responsibility as an American or just a person in general is to provide yourself and your family with necessities before ammenities. Though America did provide the right to fail, I've come to determine that the democrats have come in to "save" us from that so everyone can be equal, but some are more equal than others. But, I believe if we target the 50% of americans that don't pay taxes, kill the healthcare bill, and cut the hell out of medicaid. Money wise are country would be better off, though it still would take a couple of years to pay off China for all of our debts. Thanks Obama, real good one there.
Or if the Republican party is down to just religious psychopaths and undereducated xenophobes.
I think you've got it!
'Your brain is God.' -- Dr. Timothy Leary
Use yer brain. People respond to incentives and punishment. When we want normal folk to put out extra effort we reward them with overtime. Most new jobs are created by small business. An expanding small business is typified by the small business owner working hundred hour weeks, chugging maalox and chasing a dream of becoming a medium or large business. So his reward for extra effort is to keep a smaller share of any additional income? You really believe smart, motivated folk won't respond to incentives and punishments in the tax code?
It is documented fact that in the bad old days when we had 90% marginal tax rates Hollywood types would work until they hit that bracket and then coast until Jan 1. Who in their right mind will work for ten cents on the dollar? And in England it was 95%, see the Beatles' Tax Man. So if we can agree that 90 or 95% taxes kill the motivation for any work, and would certainly stop people from making the sort of extreme efforts that would create jobs, we are left with the Laffer Curve and the eternal arguments over where the peak is for various taxation schemes. I'd assert that 50% is danger territory and we are there now.
Simple question for those who talk about fairness. Riddle me this: Elin could only take half of Tiger Wood's stash, but that was after tax loot of course. So what share of Tiger's income stream do unwed mothers in housing projects who didn't have to screw Tiger deserve to rake off the top before Elin can take her half of what is left? If over half, please explain.
Democrat delenda est
I am listening. How do you propose to create more production? Do you believe that it is possible to have a welfare state that takes care of people cradle to grave and do you want to live in such environment? I refused to live in such environment, you can yell 'bullshit' all you like.
You can't handle the truth.
The debt ceiling may have increased with Clinton (don't know), but debt was on heavy decline when he left.
I rarely respond to comments. Also, don't ask for clarifications: a brain and Google are faster, believe me!
I was merely addressing your first argument ...
"Transfer of income amounts to illegal seizure of private property without a due process. Anybody has a problem with it? I do. USA wasn't built as a welfare state, people came to it not for welfare but for freedoms"
You made an appeal to history and some kind of inherent illegality of taxation ... this implies a rather extreme natural rights argument of which Rothbard is simply one of the more famous proponents, an argument which has some obvious inconsistencies (Locke had some caveats concerning natural resources, a much better thinker ... which natural rights proponents either carefully ignore or criticise). I think it's inconsistent and hypocritical, the US was built on appropriation of land used by other people, you might argue it was underused but still, people came to it to profit from that ... and now they want to be free from taxation because they term it theft? Fuck that. All wealth is derived from natural resources which belong to no one and everyone, the privilege of living on the land and using it's resources is what the fundamental legality of taxation is derived from.
Moving production and capital is only an option because government allows it to be an option ... free trade and movement of capital is hardly a given (for instance China certainly doesn't have them ... currency controls, capital controls and tariffs to keep low value added material inside the country abound).
The US "debt burden" is due to tax cuts and ridiculous military spending as well as the bailouts. How many military budgets would be dwarfed by the Pentagon's budget? How many countries present a legitimate threat to US security? The way to destroy the US is by pandering to the American need to spend: give them enough credit to hang themselves. There is a good sized chunk of the American public that believes their country has no need to deal with foreigners, that US "exceptionalism" and their role as dog's real chosen people will let them keep running up the bills. They believe that the US has the right to obtain resources through any means necessary, and they will believe any lie that helps them justify killing innocents to fuel the US economy.
Debt ratings agencies are part of the problem with the economy. They are not independent bodies: they have vested interests in maintaining the fiction of stability and profitability. The bond rating agencies were complicit in the collapse of the Greek economy, as well as collapses in the private sector, because they are not providing unbiased information. They are subject to the same payoffs as the SEC and other oversight agencies that failed horribly. The system is corrupt and corruption erodes confidence and confidence rules the market.
This, without further documentation, demonstrates that the $16 trillion figure isn't mean what people parrot it to be. As in, $16 trillion was never loaned out as such, money has been flowing back and forth with the total outgoing transaction amount being $16 trillion, something entirely different.
Again, what does this have to do with land? Most businesses, where people are making money are not about land, most businesses rent property, they don't own it.
As to wealth, that is derived from natural resources - all people live based on natural resources, but some produce something with those resources, it's called work. It doesn't happen just because majority will it to live, it happens because somebody sacrifices their time and instead of living off some hand outs they run a business. Nobody is entitled to anything they produce, but they make their profit by working, and if they succeed, the government is standing there with a gun and a hand sticking out, asking for its cut. If they fail nobody comes to their rescue. When government DID come to the rescue was a huge mistake, this must never be done, it makes economy worse, not better.
As to moving capital being an allowed option - please, this has been tried time and again, the only thing that's achieved is complete discouragement of work, as the former USSR has positively proven. It doesn't improve anyone's wealth but it surely prevents wealth from being generated, and wealth is what society benefits from, as wealth is the productive output - products and services.
All of those things: tariffs, price, currency, capital controls, they will not achieve any useful goal but one: destruction of economy.
You can't handle the truth.
... and you still won't be able to solve the debt problem.
Rating agencies tend to be lagging indicators about the stability of debt. They react far after the crisis has hit or when the crisis becomes exceedingly obvious. In this case, a large number of US policies have been building in an unsustainable fashion for a long time. S&P is reacting only now.
Any reaction from the bond rating agencies is a clear sign of a massive unresolved problem. The US is almost certain to short foreign owners of US debt, either by devaluing the dollar or by defaulting, and will probably do so much sooner than most are expecting.
I only have a background in economics 101 and I'm not an investment banker, but could someone tell me how the worlds biggest borrower, the most in debt country in the world, a country so in debt that we're talking about grandchildren repaying the loans, and a country which seems to have for the last 50 years shown only a steady increase in spending and debt manages to have a AAA credit rating anyway?
Because it's also the largest economy in the world? The US debt is just reaching a 1:1 ratio with GDP (~$14T). Japan for example has a debt that is over 200% of their GDP!.
Now while I would NEVER argue this is a good position to be in, you have to understand that up until a couple years ago we weren't in dire straits.
dammit, meant "commonplace to think about government debt in a microeconomic way?"
The only solution is enormous cuts, and that's the politically impossible solution because the people are bought by the promise of cradle to grave welfare state, and it's an impossible promise.
There is only a grain of truth to this. In most countries, social security is self-funded by payroll taxes and compulsory employee contributions. i.e.: you pay for your retirement.
In the USA, the lowest taxed developed country, some people have invested themselves in the notion that "welfare" thinking is what is behind economic decline. There are many reasons for the decline of prosperity in the USA, and one of them is unbridled faith in "job creators", who have pissed a lot of money up the wall.
Hayek was the father of modern laissez-faire capitalism, and ideological champion of Thatcher and Reagan. Hayek understood full well the consequence of concentrations of power with a free market -- that the market would fail. Hayek saw the governments responsibility to intervene in the market, and break up powerful corporate interests. In the USA, in particular, his ideas have taken on a sharp twist of irony, in that laissez-faire capitalism is the cover for the new corporate oligarchy, which is proving more powerful then congress.
The republican party in particular is invested in destroying government regulation, which will simply raise the bar of corporate malfeasance, which is an economic inefficiency. I am sure that tea-partiers will always continue to blame "welfare-thinking" for the stagnant nature of an economy run by corporate interests that legislated their way out of free and fair competition.
Like all pain, suffering is a signal that something isn't right
The House Republicans took a lot of heat for wanting to decrease spending so we can merely lower our planned and projected annual budget deficits. Meaning, we stop adding to the accumulated debt. I think that is the absolute LEAST we should be doing right now. Not only are they not even attempting to actually pay off the current accumulated national debt, but President Obama's current projections are that we will owe more than $20 trillion in 2020. And this assumes someone is willing to loan us that money so we can continue our deficit financing.
Last week, even before S&P lowered our rating, China's largest rating agency lowered our credit rating. Their evaluation of our fiscal situation is much more pessimistic than our own. That should say something, considering China is are largest lender.
China's Yuan is expected to become the world's reserve currency by 2020. Their monetary policy is much more strategically long term than our own. Also notice that China isn't wasting trillions of dollars on wars in Iraq, Afghanistan, Libya, and the so-called drug war from our failed drug prohibition policy. And while the President can fume about Congress pushing for real spending cuts, the truth is as the President, Obama can stop the wars immediately as Commander and Chief. If he did just this one thing alone, he could take those trillions being spent on all our wars and actually invest in rebuilding America for the 21st Century. More than a campaign slogan with pretty patriotic banners, but actual change. You'd think of all people, a Democrat would do that. He hasn't. We aren't. But China is.
I've read over a dozen posts in this topic by you, and every single one has contained massive factual errors that are trivial to contradict with ten seconds and a search engine. How do you get to hold such strong opinions based entirely on wilful ignorance?
I am TheRaven on Soylent News
Am I the only person left who knows it's the Legislative branch that controls the purse strings?
The legions of people who blame every change in the weather on the White House are some of the dumbest shits in the long, storied history of dumb shits.
People are protesting in Greece, Spain, Portugal, wherever the government proposes austerity measures in order to keep functioning. They are protesting against proposed cuts in their benefits. In a way, they are right. Their benefits are guaranteed by laws approved by popular vote in democratic systems.
However there's no money available to pay for those benefits. It's not right to cut benefits that were approved by the popular vote. The solution? Increase taxes on the rich.
The problem with that approach is that it was tried before and failed miserably. The top marginal income tax in the UK in the 1970s was 98%, how much more do you think you can tax the rich? And it still wasn't enough to maintain the salaries, pensions, and benefits of the workers. In the end the Winter of Discontent brought down the Labour government and brought Margaret Thatcher to power. In the following years the UK came close to becoming a single party state.
I see no other way for most of the industrialized countries today than to make deep cuts in workers pensions and benefits. No matter how you handle it, there's no available funds to keep paying them at the current level. But the people will not accept that, they have worked all their lives to get those benefits, they have earned them.
Unfortunately, democracy has that weak point. The majority of the people will accept a situation that's not maintainable. It's easy to get elected by promising the workers increases in their pensions. It's easy because the problematic situation is in the future, when the politicians who proposed the populist laws will be retired or dead.
In the US many people think Social Security is not a problem because it's self-maintaining through payroll taxes. Wrong. It would be OK if every worker had stored that money in gold buried in the backyard. As it stands now, what the payroll taxes bought were US government bonds. In the day when the US government defaults in its obligations, Social Security will stop paying pensions.
Yeah, you can't legislate competition, when all your actions are directed against it.
Government is the only reason for formation of monopolies, there is no reason more pervasive than government regulations (laws), taxes, subsidies.
As to US being lowest taxed - this is nonsense. In particular when I had corporation in Canada, it was paying much below what corporation in USA would be paying. Same with Switzerland, and more so with Asian economies.
You can't handle the truth.
And your comment was so good up until that point...
I think you mean least regulations and lowest taxes.
If you want to see a country with many regulations and high taxes, look at Germany.
Which also happened to have a really bad debt after two world wars...
US banks were definitely given ratings they didn't deserve.
But that doesn't mean the US debt isn't a risky investment.
You didn't actually think the US government (or any indebted government, for that matter) really planned to pay back the debt?
At some point, creditors are just going to stop lending.
Then how are governments going to meet their obligations?
What does for a long time mean? During the recession of 2008?
The GDP is growing now and has been growing for a long time. Of course, during a recession the GDP is not growing that has been the case for every recession in history.
If you cut spending you buy less. If you buy less, most employers see fewer sales. So they have lower capital utilization, and employees with lots of idle time, so they will need to fire, an in some cases close doors. Into a vicious circle.
Unless. Unless someone else outside your economy wants to buy more from you. You can work for someone in another country, in exchange for their currency. This is why China has several trillions in US debt. It keeps their people busy, and as most are poor (regardless of the fact of China having more people with fortunes $1 million+) but can work in jobs that gets their employers dollars, they kept that strategy for several decades. They get the privilege of doing things and getting more investments for doing more things. And since they don't have as much welfare or real benefits nor any reasonable security, and they have hundreds of millions of people that must work to eat, then, the owners of China, keep accepting dollars and grow really really fast. If a worker doesn't like that, he can choose to starve.
But how to make the game last longer? Making the rich feel richer, and the poor feel richer at the same time. The poorer you are, the more that you'll need to satisfy immediate needs, or even spend on some luxury by being optimistic about the future, or careless. So with expanding credit to consumers (see start of this post), the employers still see more than enough demand to keep growing and investing. And the poor see that they can keep if they can keep borrowing. This gets even better if the single most price item you have keeps increasing. You bought a house on credit with $100,000 10 years ago and now it's $300,000. You feel worthy. So the poor and the rich are happy.
Today that game is over. Other countries not sure about collecting more dollars.in the future (bonds). Who do they lend to? If China stops exporting, they will collapse. So they have two choices, they keep lending the US (but a bit less each year, relatively), or they let their own population have those items. This means raising salaries, given them much more credit and cheaper, extracting more taxes from corporations and giving it back to people as retirement, healthcare, etc.
But for the USA, it means either exporting more (what?) or producing more internally (of the things it now imports). This brings back dilemmas of the '60s. Like increasing the taxes of things made in other countries (which today seems more blasphemous than it really amazes me), or subsidizing things that are bought by other nations (the same).
The problem is not capitalism. The problem is being naive at what capitalism is. Now the US in a situation that they need to stop the free trade agenda - it imports much more that it exports, it's not serving the country, and US firms had been forced to do most things elsewhere, to survive. Now it's time to raise taxes for imported goods, subsidize exported goods, and favor investments in things that are imported. In a transparent, capitalistic and competitive way (transparent incentives, and transparent and much higher import duties). Yes, prices will be higher until national industries pick up.
When will this happen? When a group of people with sufficient power and love for this country decides to do something patriotic and truly capitalistic for the first time in decades.
unfinished: (adj.)
That would be interesting to see. Though it's still irrelevant to the OP's inaccurate comment about Obama being to blame for everything...
Yes We Can have some dipshit president like Obama.
I'm going to save the world. Here, let us spend money we don't have. That will fix things.
Idiot.
As for the US being lowest taxed
Tax as % of GDP.
To really make the measurement fair, you would need to add private medical insurance (and comparative bills) onto the US tax base, but that starts to make things very complex.
As for monopolies coming from government regulation, perhaps you should read something about the history of the Sherman Antitrust Act. Human nature doesn't change, but the laws we make to curtail abuses of power are important.
Like all pain, suffering is a signal that something isn't right
1) are you calling the NATO actions in Libya a *war*? A few air strikes do not make a war, and there are no ground troops and have been no casualties. Current statistics:
cost casualties
Iraq: $800,000,000,000 4442
Afgh. $400,000,000,000 1584
Libya: $550,000,000 0
Yep, they are about equivalent. And while the estimate for Libya is about $750M, the other two could easily double.
2) The "war" phases of Luckily Obama (and most Democrats and Republicans in Congress) have the sense to understand you can't just go into a county, wipe out its infrastructure and government, and leave. We did the damage, now we get to clean it up.
Though I'm not sure why I even bothered, you already advertised yourself as a troll up front...
I am right now sitting in Baden Baden, that would be Germany. I can see and compare, since I spent 16 years in America and moved out 2 years ago, moved my business to Asia.
Now, Germany is in much better position than the US, because Germany is a net producer, Germany allows cheap labor to enter the country from Eastern Europe and some Middle Eastern countries. Germany has a trade surplus with China. But Germany also prints Euro and is actively bailing out various banks, that loaned money to failing European states.
Eventually Europe will have problems that USA is in right now, but at this very moment, European problems are much smaller. The entire Greek problem is tiny, compared to the US problem. Germany could in principle bail out half of the European Union, but of-course if it does, then that would mean imminent destruction of Euro and European economy, just like bail outs in USA mean imminent destruction of US economy.
You can't handle the truth.
It would be good for America to remember what happened when Germany [wikipedia.org] had a debt, imposed by others on them, that they felt they could never pay.
Wow, was that a proto-Godwin? Impressive, sir!
We can start with federal subsidies to build highways and bridges, airport subsidies (and not just for the ones in democrat voting states), and mortgage interest tax breaks. Oh wait, you probably don't want to cut *those* entitlements, you mean you want to cut entitlements that other people use instead.
So what was the surplus used on?
Blackjack and hookers, of course!
Why would reducing the subsidies increase the price of gas? Why wouldn't it just eat into the massive profits? Are you suggesting it would reduce the supply?
Sherman antitrust act is a bunch of political nonsense. It didn't have anything to do with fighting actual monopolies, there were no monopolies to fight. It was there to provide some people, who had access to government with ability to enter business on terms, that would undermine the market, because they could not actually compete with effective economies of scale.
As to GDP, I wrote on this. GDP is nonsense, it's overestimated, it consists of nonsense, not of anything productive and because US government underestimates inflation by 10-12%, the last 5 years should have been showing a 10%/year decline in GDP numbers.
You can't handle the truth.
A better, more precise link to the comment I made on GDP.
GDP is as meaningless as it is weak, since it was revised down this way:
GDP estimates for the first quarter of 2011 were revised downward to 0.4 percent growth, a sharp drop from the previous estimate of 1.9 percent. GDP for 2007 through 2010, previously thought to have grown by an average of less than 0.1 percent each year during that period, was also revised downward, to show an average decrease of 0.3 percent per year.
Besides, GDP in US is fake, the way it's measured is fake, it's based on a fake economy and one more thing about it: they didn't use the appropriate deflator, because they believe that the inflation is about 2%, but in reality inflation is at about 10% level, and closer to 13% the way I calculate it:
sugar Dec 2003: 20.40 cents/pound, Apr 2011: 36.97 cents/pound, price up by over 81%
Beef Dec 2003: 105.40 cents/pound, Apr 2011: 193.00 cents/pound, price up by over 83%
Barley Dec 2003: 100.77 USD/Metric Ton, Apr 2011: 208.70 USD/Metric Ton, price up by over 107%
Rice Dec 2003: 197.00 USD/Metric Ton, Apr 2011: 500.57 USD/Metric Ton, price up by over 154%
Cocoa Beans Dec 2003: 1,646.58 USD/Metric Ton, Apr 2011: 3,113.52 USD/Metric Ton, price up by over 89%
Tea Dec 2003: 205.22 cents/KG, Apr 2011: 325.33 cents/KG, price up by over 58%
Rubber Dec 2003: 57.31cents/pound, Apr 2011: 265.49cents/pound, price up by over 363%
Corn Dec 2003: 111.98 USD/Metric Ton, Apr 2011: 318.45 USD/Metric Ton, price up by over 184%
Bananas Dec 2003: 371.43 USD/Metric Ton, Apr 2011: 1,013.47 USD/Metric Ton, price up by over 172%
Propane Dec 2003: 0.63 USD/Gallon, Apr 2011: 1.45 USD/Gallon, price up by over 130%
Wheat Dec 2003: 165.57 USD/Metric Ton, Apr 2011: 336.30 USD/Metric Ton, price up by over 103%
Oranges Dec 2003: 583.00 USD/Metric Ton, Apr 2011: 881.00 USD/Metric Ton, price up by over 51%
Salmon Dec 2003: 3.12 USD/Kg, Apr 2011: 7.86 USD/Kg, price up by over 151%
Chicken Dec 2003: 68.98 cents/pound, Apr 2011: 86.42 cents/pound, price up by over 25%
Pork Dec 2003: 48.68 cents/pound, Apr 2011: 92.06 cents/pound, price up by over 89%
Silver Dec 2003: 565.33 cents/Troy ounce, Apr 2011: 4,279.79 cents/Troy ounce, price up by over 657%
Alluminum Dec 2003: 1,557.78 USD/Metric Ton, Apr 2011: 2,667.44 USD/Metric Ton, price up by
You can't handle the truth.
The people renting out real estate don't have a natural right to it either, the natural resources business consume in producing products are not property by natural right either ... all business is made possible by the privilege of ownership over natural resources, of which land is just the prime example.
Work alone produces nothing when you don't have resources to work with ... as wealth equality increases getting access to resources to make your work count gets harder and harder, rent seekers take a larger and larger share of the fruits of your labour by charging for access to "their" resources. Government should be there to grant access to the resources necessary for gainful work to those who seek them, even where that means taking back some gained by people in the past. The aim is not to punish the successful, but to make it impossible to turn past success into a perpetuity of easy living for a dynasty of descendants.
There is no more land to homestead, there is no more cheap oil to build an empire on. Rent seeking is not useful work to society, so the privilege of property ownership can and should be selectively revoked (ie. taxation) to provide a disincentive. Now of course taxation in the US is mostly dysfunctional, but that's a different issue.
"All of those things: tariffs, price, currency, capital controls, they will not achieve any useful goal but one: destruction of economy."
China didn't destroy it's economy, of course they had decent education and low costs as well ... but they used regulation where appropriate. China like every other successful economy is centrally guided.
Oops, meant to say "as wealth inequality increases".
I don't see this as being a party's fault.
I blame a single man, and a family: Reagan and the Bush family.
Either that or the Republican party changed around 1981.
For large sets, this will be our guide even unto death, for the LORD will work for each type of data it is applied to...
The US had 1-2% deflation per year during the years after the Civil War.
Anyone who borrowed money complained, farmers and small businessmen, that was the basis of the silver-standard populism of the time.
However, the economy grew normally, interest rates adjusted to the expectation of low deflation, ...
The idea that inflation is necessary, or even desirable, is based in Keynesian ideology. I think there isn't empirical evidence to support that notion. Certainly all of the countries that have followed the Keynesian ideology/policies are going through the same economic crises as the US ( sovereign debt load, banks bankrupt as a result, low economic growth, ...), and none have gotten out of their problems via Keynesian policies.
In fact, what country has succeeded over 50+ years with Keynesian policies? (Everyone answers 'Germany', but Germany has only done relatively well, not absolutely well, e.g. 1% average GDP growth over the last 12 years.)
"The Constitution, the WHOLE Constitution, and nothing but the CONSTITUTION."
I don't know what you expect him to have done? The moment the Republicans wrangled back a legislative majority the power backing that hard negotiation position crumbled away.
For large sets, this will be our guide even unto death, for the LORD will work for each type of data it is applied to...
Nice rationalizations you got there.. I heard them all before.. a little over 45 years ago..
For justice, we must go to Don Corleone
The people renting out real estate don't have a natural right to it either
- your point is? Either you have a Constitutional republic or you do not, so if you are saying you do not, then fine, you are correct. Private property doesn't mean anything, but that's what I've been saying for YEARS, including on this site, that eventually USA will become what USSR was - collectivization will happen, what USSR had due to ideology, USA will have due to stupidity.
Let me see something, I want to check. Aha, here it is:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
and also
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
So there is at least SOMETHING in the Constitution that is specific to people's right to property. Something is there.
Work alone produces nothing when you don't have resources to work with
- that's what we have markets for. To provide us with resources we need for our work.
as wealth equality increases getting access to resources to make your work count gets harder and harder, rent seekers take a larger and larger share of the fruits of your labour by charging for access to "their" resources.
- it's not "their" resources. It is their resources. Unless you want to change that part of the Constitution, which by the way, wouldn't be unheard of.
The entire idea of income taxes is against Constitution basically, since income tax is a tax on work, which forces one to give up property and at the same time forces one to testify against himself by giving access to private property/papers/information to the IRS.
Government should be there to grant access to the resources necessary for gainful work to those who seek them, even where that means taking back some gained by people in the past.
- AHA. That's what I am talking about - collectivization. No, thank you, but no thank you. My great-grandparents went through this process and were murdered with some of their children, I am not interested, that's what I immediately saw was going to happen a few years ago before moving out. It's going to happen, there is no stopping it. There will be a bloodshed, I am sure because of this as well.
The aim is not to punish the successful, but to make it impossible to turn past success into a perpetuity of easy living for a dynasty of descendants.
- Which is what the Free Market prevents in the first place, and which is what government intervention into the Free Market creates.
China didn't destroy it's economy, of course they had decent education and low costs as well
- Chinese growth story would have been much stronger if it weren't for government intervention.
.. but they used regulation where appropriate. China like every other successful economy is centrally guided.
- their political process is centrally guided, it's a communist regime in name. But their economy is much freer than US's economy is.
You can't handle the truth.
Rather since Carter. If you look at economic figures and was there during that time you realize that Carter don't deserve that much bashing, and a lot of the troubles during his time at the office was caused by external factors triggering an oil price spike. Blame the right circumstances.
Also see this graph.
Nixon was a fool to try to keep his position through illegal means. Carter was politically naive and tried to change the system and thereby trampled just about every political toe that was around Washington at the time even though he had good intentions.
Many says that Carter was a bad president, but the reality is that he just had bad luck. And the US and the rest of the world didn't learn anything from the oil crisis during the 70's. The medicine was just too bitter.
Reagan did a lot of populist stuff and shocked the shit out of the Soviet Union which put an end to the Cold War. But at the cost of initiating the movement of national debt out of control. He never had to worry about clearing that up himself.
Clinton did allow for the home loans to get wild. That could have been put in control during Bush, but he was busy with the effects of 9/11 and didn't want to alienate his voters with some "insignificant" action putting the loan landslide in control.
Obama inherited an out of control landslide of the economy, and I'm surprised that we did see candidates for the post at the 2008 election.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
The S&P *said* they would do this if the deal wasn't larger.
Oh well.
Sic gorgiamus allos subjectatos nunc
You didn't respond with real arguments to the parent post.
Also, how is it that all of Western Europe, with no Republican Party and no Tea Party, have exactly the same problem as the US? Much worse in most cases.
You base your assertions on Keynesian ideology. No country has prospered in the long term basing policy on Keynesian notions.
The problem which lead up to the current 'crisis' is perfectly illustrated through both the arguments of the right and the left as exemplified in this very subthread.
The cause, and solution for, the USA's massive debt load is quite complex and intertwined. Yet all one hears is bullshit simplistic answers which, while appealing to their respective bases, utterly fail to address the problem.
The recent ascension of the Tea Party is a predictable reactionary movement to the fact the world is fucking complex, and only becoming more so. The fact a large percentage of the citizenry is charmed by someone saying "The world is black and white, and here's what I'm going to do" is to be expected. My only fear is a similar movement arises on the left. That said so long as the pendulum is swung in this direction of false monochromatic pandering there will be no long-term solution. The pendulum will swing back, those who rise to power by the sword of simple answers die by the sword of simple answers. When one's charm is "yes" / "no"s it's hard to defend failed decisions with "maybe"s.
More and more people are waking up to the reality of things. Politicians play politics, period. It doesn't really matter which side you happen to be on. The "game" has the same goals for either party, really. It's all about getting enough votes to get into and stay in power. I blame just about everyone in the Senate, in Congress, our current and past few presidents, and the rest of the folks more concerned about their short-term political success than the long-term welfare of the nation.
It's immensely clear when you look at the lies spread, all around, about the entire issue. EG. Threatening the American people with the fear of a default if the debt ceiling legislation wasn't passed by a specific time? Pure B.S.! If the debt ceiling wasn't raised, government would simply have to prioritize who it paid first and who had to wait longer.
Heck, we spent most of the debt limit increase in a DAY:
http://www.washingtontimes.com/news/2011/aug/3/us-eats-most-debt-limit-one-day/
Take it with a grain of salt.
After all, wasn't S&P part of the guilty cabal granting AAA ratings to subprime mortgage backed securities?
'+' comes before 'A' so 'AA+' is smaller than 'AAA'. A small step to SMall Government, but an important one. Go TeaBaggers!
Subsidiaries? You want to incorporate the branches into head office? Not quite sure why you think that will help.
We are buried in debt that was created almost entirely by Republican administrations, due to Republican policies. Federal taxes are at their lowest point in living memory, federal revenue as a fraction of GDP is 20% below where it was in 1980, and we are facing a deficit that will never be closed unless that circumstance is changed. Taxes go up or our deficit continues to accumulate - your choice.
You neglected to mention an alternative option. Government spending can go down. Way down.
Taxes are percentage-based and rise with inflation. There should be no reason to ever raise the tax percentage, unless your government is (1) operating less efficiently or (2) providing additional services.
I find it amusing when the solution to government cash shortages is always "raise taxes." If you keep doing that, eventually citizens' income will be taxed at rates above 100%. Is that what you really want for your children?
Here's the relevant chart. Screw GDP. GDP is a function of money creation... From debt creation. Jeez.
Federal debt (all debt growth) is an exponential curve. You notice Clinton did NOT reduce the debt, or even stop it growing, he merely slowed it a little.
http://www.project.org/images/graphs/US%20National%20Debt%20.jpg
And here's one with an 8.3% pa increase exponential curve fitted to it.
http://8m.quarkweb.com/images/FedDebt_02b.png
You also notice that 8.3% fitted curve, means that the more recent 8.3% increase numbers are much larger than the earlier 8.3% increase numbers.
All the governments are the same. 8.3% increase. Obama's 2.5 trillion increase? 2 years.... Then it'll be 18.3 trillion, then 19.7 etc etc. Doubling every 8 years.
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Probably yes. People who were owed money by AIG got their money because the AAA rated US government bailed them out. The concern now is that they US government doesn't have any headroom to raise revenue to pay of Treasury Bills because the Tea Party will block any measures to increase taxation.
Because for most Americans, cutting taxes means less money in their pockets. Not more.
Tax money is the government's income. It might surprise you, but the feds don't just eat those dollars. They spend it. On YOU, no less. Cutting incomes means for the government the same an income reduction means for you: They can't spend as much. Since they spend it on you, that means less money gets spent on you.
Now, of course, one might argue "hey, who cares? The money I don't have to give them I can spend myself!" True. Very true. And if you earn in the six digits (and not the lower ones), it actually means you gain a lot with every percent tax you pay less. Else, it means that you now have to buy something or pay for something the feds paid for earlier. Because, as it is in our world, TANSTAAFL. Someone has to foot the bill. And if the feds can't, you have to.
So are you arguing that the US government dollars being spent on military operations in Afghanistan and Iraq are actually being spent on me? How about the cash for clunkers and US mortgage bailouts? Explain how those helped me even though I was not eligible to take advantage of them?
I have a novel concept for you. Some of us don't want to the government to spend money on us and we don't want free handouts. We want to retain our own income and responsibly control how we spend it. Government as a whole has demonstrated itself to be a highly inefficient machine that is prone to corruption and waste at every level. Unlike corporations or individuals, there is no penalty to the government if they fail to run in the black... congress thinks they can always raise taxes. To prevent this problem from growing, the government should be given the minimum possible funding necessary to sustain itself.
This keeps it from getting involves in extended and unnecessary conflicts, dicking around with our free-market economy, and conditioning its citizens to adopt irresponsible spending habits... because they are sure that a new bailout package is just around the corner.
Since I'm apparently the proponent of socialism and big government here, allow me to answer the points. Yes, we have had a social democratic government (think left, way left, of the US Democrats. At least originally). Allow me to boast a few things before I get into detail.
1. Unemployment rate of 4%. REAL 4%. Meaning, 4% of the people who could work don't have a job. Not 4% of the people who ever bothered insuring against unemployment, plus about five times as many who never got into the statistics. There's no option for unemployment insurance, you have unemployment insurance. Mandatorily. Still, our unemployment rate floats between 4 and 5 percent, even during those "dire" times we are in. Actually, in 2008 when the financial crisis hit, we hit a relative minimum of 3.5% unemployment.
2. Criminality is on the decline. Despite the downturn of economy which "should" increase crime. And despite being on the eastern edge of the European Union with open borders towards countries where, allegedly, a lot of organized criminals cross over and commit crimes over here. Put another way, a murder in our capital makes headlines in the national papers. A murder elsewhere in the country is certainly food for a political evening discussion. We simply don't kill each other. There is no place in our capital where I wouldn't go alone, no matter the time of the day, knowing that I'll not only make it out alive but also in possession of all I took with me. So far, I've never been robbed, and I tend to spend a lot of my time at night walking the streets. I like long walks in the quit night of our capital, it's beautiful at night when everything's asleep.
3. Talking about our capital. Our capital (with a socialist government since WW2) has been named one of the 5 cities "most worth living in". Worldwide. In the areas low crime, low pollution, good public transport, low rents and affordable infrastructure (gas, power, water...), we take the top spot. Our public schools suck, though. I should probably not mention our PISA results.
The list goes on. Does that mean I have to hand in 100% of my income as tax? Not by a longshot. Even despite being one of the better paid people in my country. I actually do make 6 digits a year. Gross, at least. And yes, I pay about 40% of that in tax. And, believe it or not, I like doing that. Because I can see that my tax money is spent well. I have an affordable flat (due to poor people getting very cheap social homes and don't compete with me for "good" homes, hence rents have to go down since there is no demand from poor people), I get dirt cheap water and power (and considering the amount of computers running at my home, paying more for power would sure cut into my budget considerably), I can get around town without a car (500 bucks a year and the public transport systems is yours to use, round the clock), our police force is well funded, well equipped and well staffed and keeps me safe no matter where I go. You'll actually see a lot of police on the roads, even during the nights, gives you a much safer feeling than a few CCTVs hanging about who cannot really do jack about you being mugged.
It's not perfect. And not all roses. Our bureaucracy is certainly something worthy of being ridiculed in a sitcom. But that's a small price to pay if you ask me. And yes, I've spent some time in the US, and bluntly, I don't want to trade. But enough rambling and boasting, let's get to the answers I promised you.
1. Keep your "illegal seizure" and stick it. You might notice that the beef the founding fathers had with the tax from England that it was without representation they didn't say "no taxation". They said "no taxation without representation". If you don't feel represented, vote the jackasses out of office. If that can't be done, kick them out of office. Your country was founded on the shoulders of revolutionaries, what worked then can just as well work now. If you do not feel represented, try to find out if enough people feel that way and kick the jerks out.
And no, the
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
More production? What for would you want to produce more? Everyone is already producing more than could be sold, what we need is more demand!
The economy crisis is due to people not being able to spend anymore, it actually is that simple. Did production suddenly plummet and hence economy hit rock bottom? It's the demand that suddenly vanished when people simply didn't have money to spend anymore.
Allow me to take you to my home country again, that socialist hellhole. For some odd reason, the economy crisis didn't hit us nearly as hard as many other countries. Yes, the economy is slowing down, but calling this a recession would throw anyone into a giggle fit who experienced the 1930s. We still have jobs, our economy is not growing, but we're far, far away from the troubles the US are facing. Why? Because our people still have money to spend. They don't have to default on their mortgages and try to squeeze out their last pennies to keep their houses.
Export you say? Produce more and export it? Great plan. Where to? And how to compete with Chinese prices? Besides, in case you haven't noticed, products has become a minor part of the economy, at least in the developed world. Most of our economy depends on services today. And they're great for the GDP! You're creating revenue from thin air. No crops to sell, no raw materials needed, you sell pure work force. A dream!
But services are a fickle thing. They're pretty hard to export (pretty much the only way to "export" services is tourism, i.e. when your customers come in from abroad and buy your services here) and they're also the one thing that gets hit the hardest when the economy plummets, aggravating the effect. Because services is the one thing people can cut the easiest. I'd need a haircut, true, but I prefer to eat. That haircut has to wait. The faucet is dripping, but it will have to drip for another month or two before I call the plumber. And I will watch the game at home with my friends instead of the bar, sure, I'll have to clean up afterwards myself instead of having the waiter do it, but it's just a whole lot cheaper that way.
And so on. People first cut services when money gets tight, and our economies are highly dependent on services today.
What you need is money in the people, so they can go and spend that money. Not more production. The supply is not lacking, what's lacking is demand!
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
If we were to put those people unemployed to work we would be able to produce and consume much more than we do now, so how is it that we can't afford to consume again?
First: I moved my capital and business out of US and Canada to Asia, though I live between countries, I spent time in Switzerland, Germany, Singapore, Hong Kong, St. Peterburg and London. The company is registered partially in Cyprus, partially in Asia, partially somewhere I don't want to mention. All of this is done to minimize any amounts of income taxes by any authorities, there is a strategy to move money around as well as my person in order to avoid pretty much any authority, and again, that's the way I like it.
The effect of this on economy? It costs the economy, because instead of concentrating more on business at hand, I spend plenty of time making sure taxes are minimized and also this hurts the economy because I make sure to minimize numbers of employees, and the hiring is done strategically as well, to avoid regulations.
There is a huge difference between free market capitalism and socialism/Marxism, it's this: in free market capitalism the productive capacity has a feedback from the market, the mis-allocated resources will be restructured, failing companies will fail, investments will be reallocated and invested somewhere else, where the market will not punish the investor but will reward him. In socialist economy the government regulations ensure a completely inefficient (read expensive, lacking choices, resource mis-allocating) market, where choices are limited, companies become and stay monopolies, innovation is stifled, people don't want to and don't have an incentive to try something new, something different, something that may disrupt the economy, and it's generally looked down upon - disrupting the economy, but this means the economy is stuck being less efficient and less productive that it can be. This has the effect of not satisfying the consumer demand and thus people are generally less wealthy, because they have less access to innovation, to new ideas and technology.
In this environment any innovation and inventions that could be made are delayed by an uncertain amount of time. What does that mean for individuals? Well, consider that there are products that could change the way people live and do business, the quality and yes, the length of life, all sorts of innovations that could happen that may never materialize or may happen at much slower pace.
I don't want a steady nice existence for all, I am not interested. I want crazy break throughs, I want technological leaps beyond what is allowed by the government regulations. I want insane speed of development, none of which is possible in controlled socialist economies, which never produce these break throughs. I know, born in USSR, we didn't have major breakthroughs in almost anything, it was always the West or far East that produced such innovations and better life through them.
So AFAIC the nice life you are describing is not worth it if it means I will never see things/products/innovation/wealth that I could otherwise see in this life time.
You can't handle the truth.
Any extreme is bad. Government without money is bad, me without money is bad. For different reasons that I don't have to explain, I guess.
But allow me to erase another myth: "Wealthy people will take their money and invest it, creating jobs". They won't. Why? Because creating jobs is their least concern. It's a necessary evil, if anything, and they will try to do that as little as possible. Why? Because it costs money, DUH! Also, investing money in this economy? I'd rather cling to it, and that's what they do too. They try to stash it somewhere safe, preferably abroad. Investing is currently the maybe worst thing you could do with your money. Instead, hoover up some real estate, it's getting cheaper. And 'til that hits the rock bottom (we're not really there actually yet), put it into precious metals. But you wouldn't invest it.
Also, supply is not the problem currently. We have enough products, our stores and storages are full to the brim, there's just nobody to buy it because those that would want it do not have the money to buy it. The rich people should you say? They have money, and since they won't invest it, they'll maybe spend it? They already did. Why build another pool house or buy another 100" flatscreen? Besides, rich people don't really benefit the local economy when they go on a spending spree. They don't go shopping at the mall, they go to Paris. They don't buy domestic wine, they import it. And when having a new suit, they don't go down to the local store, they hire an Italian designer for that.
Poor people do not have that choice. They have to buy local stuff. But they have no money to do that.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
That is the most "down the rabbit hole" definition of "production" that I have ever heard of. What BS.
No, not borrowed, invested. If a company uses money invested in it to pay off initial investors it's called a Ponzi scheme.
Whoa, a lot of myths to debunk this time. Ok, lemme start at the top.
"It does not matter for the economy who spends the money, me or the government"
At face value it seems that way. Whether I buy a new car for my money or the government builds some homes for my taxes, somehow this ends up in the economy. The difference is the intent. When I spend money, I want to spend as little as possible for as much benefit as possible. When the government does, the intent is the benefit of the country (ok, should be, and usually it actually works out). I won't care if it's imported and hence creating jobs abroad instead of locally. I also won't care if I actually hurt someone else, e.g. by buying some rare resource that the other party would need direly. Unlike any private party, the government actually has an interest in creating jobs because it not only causes lower unemployment and less strain on the unemployment funds, but it also generates more tax income. So unlike any party, the government will spend its money with the intention to benefit the country instead of a single person.
"A dollar in a company will be a dollar spent on local goods, one way or another"
No, not in this economy. Investment is currently not really a sensible idea for any company, since the demand is already hitting rock bottom. Producing more would only result in more unsold goods. So what's left is saving it or dropping it on the CEO. Let's assume it goes to the bonus check. What will that CEO do? Now, he could either save it or spend it. Let's assume the latter. Investing is, again, not a wise decision, so the CEO won't invest. He will spend it. The CEO has a lot of options to do that, though, unlike the government or one of his workers. He needn't spend it locally. Imported goods sure have a higher status than some domestic crap, and the chances that this dollar is going abroad are quite high. Imported wine, imported leather for his car seats, a new imported car or a new suit from a foreign designer, his options are quite numerous.
Bottom line, while a government dollar is almost certainly somehow dumped into this economy, a dollar in a company is most likely either stashed or exported.
Multiplication is a nice mind game, but only part of the equation. Especially if you take social services completely out of it. A dollar spent on unemployment can lower crime rate. Plus it's one dollar more that will almost certainly be spent on local services. Which, as I pointed out abroad, is one of the driving forces behind the domestic economy in almost every country in the western world. We're dependent on services, not goods. I can't think of a "western" country that isn't at least 70% dependent on the tertiary sector for its GDP, and local services are highly dependent on lower income people having money to spend. You'll notice that the more "socialist" a government in Europe is, the less the country was hit by the economic downturn.
Again: Our problem is not supply. Our problem is demand. And domestic demand, especially for services, stands and falls with poor/middle income people having money to spend.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
...as pointed out above.
Bear with me, it's getting late in Europe.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I'd like to see a similar chart graphing debt versus control of the house and the senate. Know where I can find one?
Here.
Where does this free market capitalism exist that you speak of? Again, on the danger of being redundant, we're not talking the ideal system, we're talking reality, ok? And in our real "capitalist" (I'll use the term loosely here) system, failing systems do not fail. They bribe laws into existence that ensure their survival and if everything fails, they get bailed out for being "too big to fail". The market feedback is a weak joke, if that. Since patents and other agreements pretty much keep those goods that people actually would want (like, say, a BluRay player that allows me to copy the content, everyone'd buy that instantly), only corporation approved goods can be created and sold. Where's the feedback in that? And what innovation do you expect to come out of this? Innovation only exists if there is an incentive for it. The incentive being simply that your product, being better than the competing product, gets sold while the competing, inferior, product sits on the shelf. Since the competing company will certainly wrap you in enough legal red tape if you dare to step out of line, why bother? And why bother anyway, since everything is pretty much the same, all of them sell.
Innovation is dangerous in such a system. And counter productive. Someone certainly already patented what you'd want to do, and he doesn't produce it because, well, why bother developing it if the old one sells just as well?
That's the real existing capitalist system. Not the fairy dream of free market, supply and demand regulating the market and the customer awarding the superior good his money and hence better goods thrive while inferior ones fail. That's as much a fairy dream as the marxist ideal of everyone works to his ability and everyone gets to his requirements. Neither system ever was even close to this ideal.
You moving from place to place to avoid taxes is a perfect example why such companies should neither get tax exemption or any subsidies at all. They're locusts. Reaping the benefit from what a country has to offer but not returning anything into it. I can understand your motivation and it's quite sensible to do what you're doing from your point of view, but the sensible response from a government would be to consider you a parasite and treat you as such.
As for breakthroughs and innovation, you'll notice that none of these happened lately in the west either. The reasons are similar as they were in the USSR: Lack of motivation. Why bother? In the USSR, innovating would get you a worthless award and a pat on the back. Gee, invest your life for that? And risk getting sent to prison for stepping on the wrong toe of some party lackey who had a different but wrong idea in the process? No, thanks a lot, hand over the vodka instead.
In the US, your problem is that you won't even get the award or that pat on your back, and your innovation will be snatched up by the company you're working for. Plus, you might get into trouble for stepping on the toes of the wrong company who sues your pants and more off just to make sure your better product won't cut into their revenue.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Subventionen. Sorry, mein Englisch ist leider nicht auf dem gleichen Niveau wie mein Deutsch, aber wir können gerne diese Diskussion auf Deutsch weiterführen.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Umm... the country? Though by now, I guess it's even too late to save the country. The whole economy became too big to fail. Or rather, too big to fail without pulling the whole country down with it into the abyss.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
More production? What for would you want to produce more? Everyone is already producing more than could be sold, what we need is more demand!
- and that's why you don't have even basic understanding of economics.
Production is what economy is based on. Consumption is a trivial consequence of production. I want more products. I want more services. I want more different types of products that I can't even imaging that somebody else can imagine. I want cheaper everything.
I want cheaper food.
I want cheaper clothing.
I want cheaper energy.
I want cheaper transportation.
I want cheaper medical attention.
I want cheaper insurance.
I want many and cheap robots to help me in my life.
I want cheap computers everywhere, up to wazoo.
I want more ways to improve my health with new products that could be created that are not even thought of today, because there is all this government around, which destroys any genuine thought and opportunities and promotes monopolies. I want healthier life based on more innovative products.
I want to go to space.
I want to go travel under the sea.
I want to have my own flying car.
I want to have my own space ship.
I want everything that can possibly be.
I hope you understand that "I" here is not all myself, many people want things, and those are just some of the things they want. Innovation and competition is destroyed by government mis-allocating resources towards government spending and removing incentives to start new businesses. Government destroys any innovation by granting patents, by supporting copyrights and by limiting liability of corporations.
Government destroys ability of market to produce all the things that market wants to consume.
It's not demand that's lacking, it is NEVER the demand that is lacking, it is SUPPLY that is lacking.
Where are the sources of cheaper energy? I want my OWN NUCLEAR or THERMONUCLEAR REACTOR NOW.
I want it. Unfortunately government actively prevents people from working in this area with their own ideas.
The government stands in my way.
The government stands in everybody's way.
The government stands in the way of technology.
The government stands in the way of investment.
The government stands in the way of opportunity.
The government stands in the way of economy.
The government stands in the way of progress.
Did production suddenly plummet and hence economy hit rock bottom?
- OF-COURSE. What else do you think the problem is? Lack of paper money?
Ha.
Money itself is not what stands in the way of production capacity. It never stood in the way of production capacity, which was demonstrated clearly by USA 19 century and is today by Asian economies. Government destroyed money with inflation, it destroyed ability to start businesses to compete with established ones with regulations, it destroyed ability to allocate resources efficiently with subsidies and it destroyed ability of people to take care of their own needs and to make their own investments into their own businesses with income taxes.
I don't know what country you specifically are referring to, when you talk about 'your' country it sounds dramatically awful. However even Sweden is moving away from the pure socialist ideology, and moving closer to capitalism, they know they can't have a system where nobody is producing and everybody keeps consuming.
Export you say? Produce more and export it? Great plan. Where to?
- Did I actually SAY export? I don't think so.
I said PRODUCE. Exports will happen all on their own if you produce something that somebody else somewhere else wants. That's how you trade for real, not printing worthless currency and expecting the world to absorb it, while giving you all of the products you are too high brow to produce yourself, but actually producing something of value and exchanging your products for foreign products.
Excha
You can't handle the truth.
Where does this free market capitalism exist that you speak of?
- I find the freest market in existence today in Asia. Hong Kong, Singapore, China.
they get bailed out for being "too big to fail".
- that's the problem with allowing government to regulate business, participate in business, print money, set interest rates, accrue debt, tax income. The system that allows it will be always subverted by special interests, no exceptions.
Innovation only exists if there is an incentive for it.
- the only effective motivator for innovation that humans have invented is profit.
Someone certainly already patented what you'd want to do
- that's why I like the Asian economies, it's a mixed bag, but mostly they don't give a hoot and they shouldn't. There must be no such thing as 'patents'. If you want to keep secrets keep them. Have your trade secrets, etc. Don't expect me to give a shit about your patent.
Neither system ever was even close to this ideal.
- USA 19 century. Asia today.
you a parasite and treat you as such.
- whatever you say, government boy. People get huge benefits from my products, which make their businesses more efficient and at the end allow more competition and thus more choice for end consumers.
happened lately in the west either. The reasons are similar as they were in the USSR: Lack of motivation.
- in USA the lack of motivation comes from government stifling any attempt at innovation. Regulations, taxing income, labor laws, subsidies to monopolies, etc.
You can't handle the truth.
Hard to believe, and while I can see a lot of ways that money could be spent better, yes, that money funding the war in Afghanistan was spent in your interest. Well, maybe not yours personally, but generally for the US, yes. It's too expensive a program the goals I'll describe below could be reached much more cheaply, but then I might not have all the facts to actually see what the benefit should be.
1.5 million people currently serve in the US armed forces. That's 1.5 million unemployed more if they are sent packing today. Plus, the ammunition and weapons they used are built in the US. And the beauty about weapons, and even more so ammo, is that nobody questions that you need to buy more and more continuously. How'd you want to explain, as the government, that you keep buying GM cars? That's another few jobs not eliminated. Of course, the whole thing could be done much cheaper (bluntly, for that money you could keep those 1.5 millions and every unemployed person in the US busy as some kind of government worker, and if they do nothing but run down highways and collect litter all day), but that's pretty much the immediate benefit from it.
I think we needn't discuss that government also has an inclination to spend money on things that we cannot really support. One way or another. Axing government 'til it is pretty much unable to fulfill any of its duties is not the solution either, though. Get a government that spends your money on the things you want instead. That's pretty much what we do over here and most of the time it actually works out.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
they make money. Most of the real innovation, meaning base line research, is being done on the public dime. Then businesses refine it into a product. Take a look at the state of Bell Labs, or the state of cancer research in the world. Innovation costs money. Why spend it if you don't have to? Remember, the world's all about capitalism for the poor and socialism for the rich.
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
There is quite a lot in your constitution, among which the 16th amendment ... when you said taxation was illegal I was assuming you were arguing from a natural rights perspective since from a constitutional perspective you'd have to be a bit obtuse.
"- Which is what the Free Market prevents in the first place"
No it doesn't, in the absence of taxes once you have sufficient ownership of land you can live handsomely on rent ever more ... no work required, just rent seeking. To a lesser extent the same goes for sufficient levels of ownership of companies with natural (local) monopolies ... but especially land. Neither the free market nor technological advancement will create more land.
The US still has a very strong economy, and it's one of the biggest manufacturers of goods and also agricultural products worldwide. But like every other developed nation it is very highly dependent on the tertiary sectory, i.e. services. Services are hard to export, though. And also hit the hardest once recession sets in, because demand for services is very dependent on economic development and almost immediately reflected by it, increasing the effect even more. If people have money to spend, they love to spend it on services, lazy bums they are. If money gets tight, services is the first thing that gets the axe.
The problem isn't capitalism per se, as you identified, the problem is that we do not have a truly capitalist system. What is produced is not, as a capitalist system would demand, dictated by what the customer wants, it's dictated by what patents and regulations allow you to produce, which in turn get heavily influenced by large corporations who want to make sure the products they create will survive on the market, even if someone came along with a better product. You may rest assured, if I invented a revolutionary system that would allow TVs to have a resolution of a billion pixels per inch and could be produced for a cent per 100" panel, I would be shot down instantly with enough legal bullshit up my rear to make sure the current market leaders won't get kicked off the planet by my product.
Tariffs are a good idea and actually a very sensible one. Won't happen in an economy that is dictated by the corporations, though. What will happen if you do that? Do you think that suddenly a lot of companies will be founded to produce locally what can no longer be imported cheaply? Unlikely. The corporations will hold the US ransom. They'll continue to produce in China and sell the goods at higher prices, lamenting to the consumer that the higher price is due to the US government jacking the tariffs up. Why no local companies will rise up to take over? Because patents will not allow them to produce... well, pretty much anything. No TVs, no BluRay players, no nothing. All covered by patents which these companies will certainly not release or at least license. Why should they?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
16 amendment, ah, yes, the proof that SCOTUS is just an arm of government and doesn't give a shit about the Constitution it swore to uphold. Same as with Congress and the White House.
I would say that 4th and 5th amendments are more important and 16 amendment was the time of beginning of decline for USA.
No it doesn't, in the absence of taxes once you have sufficient ownership of land you can live handsomely on rent ever more ... no work required, just rent seeking. To a lesser extent the same goes for sufficient levels of ownership of companies with natural (local) monopolies ... but especially land. Neither the free market nor technological advancement will create more land.
- not true. More land can always be created. Be it highrises or be it even artificial islands or whatever. But that's not the point.
Land is not always a good asset to own, and people buy and sell land all the time, so I don't your point at all. You want to BUY some land? You can always do that. But that's not what you are talking about, you are talking about stealing other people's investment that they made by saving the money they made from working and not spending it.
You can't handle the truth.
So what was the surplus used on? If it wasn't to reduce debt, then it must have been spent.
Uh...it was kept in the treasury until the budget was no longer balanced, and then spent?
One more thing you may have missed in all the political theatre is that the Senate Democrats filabustered their own bill!
http://paul.senate.gov/?id=275&p=press_release
The debt deal was a manufactured crisis and everyone except the poitical class lost.
Bring back the old version of slashdot.
Judging by the vast majority of comments on here blaming the Tea party for this crisis, remind me not to ask Slashdot anything related to stocks, finances, running a business or even which bank to use. The users on this website have all fallen into the trap of group think and swallowed the Keynesian Economic model hook, line and sinker. Just wait till you realize your mistake and end up top deck flopping around like a freshly caught fish.
Isn't that a big part of how the "rich" get rich in the first place?
Sorry, the taxpolicycenter.org data is for budgetary data; it shows the correct revenue and on-budget expenditures. Actual debt numbers (which includes off-budget items - basically a full record of spending) shows the debt always increased.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Operative phrase "under the budget". Include the off-budget spending and there was no surplus. Which is why the debt increased every year under President Clinton. I'd like to move my mortgage to off-budget as well - it would certainly help my cash flow and savings account, but I feel that it would not be an accurate reflection of my real spending.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
You can find those graphs here:
http://helpthe99ers.blogspot.com/2010/10/debt-congress-or-president.html
"For every right, an equal responsibility..."
Redistribution will have to go up as labour becomes less valuable, medical costs increase and society ages if we want to maintain the median standard of living ... given increases in productivity from automation this could be perfectly possible, the rich would get richer a little slower is all
Do you make more than $67K per year? Then you're part of 'the rich' - those who pay 60% of ALL Federal tax receipts. Your money needs to apparently be redistributed as well...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
http://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis
"The Financial Crisis Inquiry Commission reported in January 2011 that: "The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened without the rating agencies. Their ratings helped the market soar and their downgrades through 2007 and 2008 wreaked havoc across markets and firms."
I am not saying our credit/money printing ability is correect - but why not ignore them as incompetent?
GDP hasn't been increasing for a long time.
Except for recessions and depressions, GDP is usually growing.
What the government is going to do is inflate away the debt
Yes. This is a good idea, IMO.
However it wipes out the wealth and savings of everyone who has US dollars across the globe in the process.
It can, but it may be better than what happens if the US economy goes Greek.
-- $G
Well, he said we would have "change". The people who voted for him didn't realize he meant thats what their savings was going to be... Pocket change.
"Computers are a lot like Air Conditioners" "They both work great until you start opening Windows"
Are you kidding me? Are you honestly saying we are lacking products? Now, what product could we actually lack? Is there anything you could not buy, provided you had the money? Food? There's more food getting produced than we can possibly eat. Hell, government subsidies exist to destroy food, if anything could be more backwards I can't think of it. So we need cheaper food? Food IS already as cheap as it could possibly get, there is a certain amount of work and investment to get food produced and the margins are already razor thin, how much cheaper do you want to make it?
Please tell me one single area where there is simply not enough supply to satisfy a possibly existing demand. There are very, very few areas where supply doesn't outmatch demand by some magnitudes. Most of them either due to a lack of resources or a monopoly situation. Else, I'd be very interested in hearing your examples.
Supply on the other hand is not limitless and not just the trivial consequence you try to make it. Demand is crucial for the economy to work. No demand, no sale. No sale, no revenue. No matter how much your produce. I don't really know where you get the idea that if there is enough supply, demand will automagically come into existence, but it explains why nobody seemed to learn a thing from the big crisis of the 1930s. It had similar reasons. An uninhibited production without considering that what you produce has to be sold somehow and somewhere. It's quite useless to produce cheaper if your potential customer cannot even pay the cheaper price because he has no money. Plus a stock market bubble that even outmatches the one that's popping right now.
Demand exists if a someone want a good and have the means to afford it. If either is lacking, no demand. The simple problem today is that people lack the means to buy what they want. The interest would certainly be there, what is lacking is the money. It doesn't even matter whether you'd sell it at cost, people could not even afford that. Producing more will not change that people cannot afford what you produce at any price. Wanting something even more will not change that at all.
The only reason why production was reduced is simply that it was obvious to the companies that sales plummet. Why produce more, or at least the same amount of goods, when there is nobody to buy them? Do you really think a company reduces its output because they don't 'want' to produce the same amount of goods anymore? Where's the sense in that? Why would supply drop if there is no reason to reduce it? There are two possible reasons why the output of products is reduced, one external, one internal. The external one would be that you cannot get the raw materials needed for production anymore, or only at extremely increased prices which would make continuing production uneconomical. The internal one is to deliberately lower production because you notice that you simply cannot sell your products anymore. Now, raw material prices did increase, but then again, why did it hit the US the hardest despite having the probably cheapest source for oil? It's a lack of demand. No demand, no reason to produce.
And yes, services is a big sector. In every economy of the western world. For the US, this would be:
By GDP:
agriculture: 1.2%
industry: 22.2%
services: 76.7% (2010 est.)
By labour force:
farming, forestry, and fishing: 0.7%
manufacturing, extraction, transportation, and crafts: 20.3%
managerial, professional, and technical: 37.3%
sales and office: 24.2%
other services: 17.6%
In other words, 4 of 5 people are not "productive", and 3 of 4 dollars are earned by services. It's very similar in most western economies. Problem is, there's little chance of changing that. What would you propose to do? Put more people into production? And sell that additional produced goods... where exactly? Exporting requires someone to import your stuff, and that returns us to the problem of demand. Who do you want to sell it to? How do you want to tell another country that t
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Land and income derived from it is taxed at the moment ... it obviously wouldn't be in your no tax utopia. I'm not talking about stealing anyone's savings, I'm talking about talking about taxing them for the privilege of claiming natural resources and occupy land to which they have no natural rights.
BTW, they didn't necessarily work from it ... it could just be handed down wealth, which I dare say would be even more common in your no tax utopia.
After decreasing during Carter's term, it began to climb after Reagan was elected and continued to climb under GHW Bush. During Clinton's term, the curve was reversed and the debt began decreasing again. Since 2000 it has been back on an upward climb.
You're playing word games "public debt" isn't the same as "national debt". And there's this canard about a Clinton surplus that decreased the national debt. That's a myth. The truth is that even though the increase in the national debt slowed down under Clinton, it rose every year of his presidency.
LK
"Hi. This is my friend, Jack Shit, and you don't know him." - Lord Kano
Congress controls the purse strings. It doesn't matter what his administration wants. It all has to go through congress.
Returning spending to Clinton era levels would require CONGRESS to propose such a thing. The president can plead, beg, threaten, whatever but if congress doesn't go along with it than it doesn't matter.
And it is fair to say the Republicans are to blame since the whole crisis was a non-issue until they made it. In fact, the Republicans planned this out exactly to cause the most political damage possible. When they agreed to the budget earlier in the year, everyone knew THEN that the debt ceiling would need to be raised. But instead of keeping to their agreement on the budget, they deliberately used the opportunity to basically be hypocritical assholes. Most of these career republicans have voted to raise the debt ceiling a dozen or more times without so much as a word of protest, so the fact that they are doing so now says more about their political agenda and how far they are willing to go (trash the economy) to get their way.
I'll give credit where credit is due though. I didn't think they would have the balls or the brains for such a move. So kudos on that score. But even now, they are already portraying the credit rating loss as Obama's fault, which is complete bullshit because a) Obama doesn't control the money, congress does b) the S&P report blames the general asshattery of congress (specifically, lack of new revenue) for the downgrade and c) 80% of our current debt was generated under Bush II and a Republican congress.
There's a reason why congress is plumbing new lows in public approval polls.
~X~
Because the last motherfucker kept lying about cost of his his holywars in the middle east.
It does not matter who bought the land, money was not spent but it was saved up and invested at some point to buy that land, and if you want to buy it from the current owner - make an offer.
Stealing other people's property because you believe they don't own it goes against the principles of private property at the very least in USA and in many other places, so your bizarre notion that owning a piece of land somehow means you stole something makes no sense.
There is always a price to buy a piece of land for, and you are welcome to go ahead and buy it.
You can't handle the truth.
Here is an excellent video reviewing the event in question.
You can't handle the truth.
"Now a days a president has only one, solid good chance to have a [memorable] legacy" /. so i'll add my .02
It hasn't been raised on
Vietnam
No president since, incl BOB, has been free of its shadow. Barack goes to bed at night refraining
"i'm not going to be remembered as the guy who lost another war". In fact, quaint and old as it is, I'd say that the bulk of USA's ills are comming from the blowback of the 60's.
From 3 assinations to gov dope dealing to agent-orange. Those memories may not be in most people's headspace, but you can bet it looms large from highest command to the homeless and incarcerated.
Obama needs the military for his legacy more than he needs the people who elected him. "His war" is what drives him at the end of the day.
No public option, no closing gitmo, renditions, domestic surveilance, sucking bankster ass...
With a big sigh of relief GWB wispered in BOB's ear: "at least i managed not to lose a war, that's all yours now"; and now the full magnitude of body bags and returning vets with missing bits
(to say nothing of the costs of what we owe them)
being 'his legacy' intrudes upon his sweeter dreams of being the great mediator.
Banish the warmongers and everyone will have better health care.
resist propaganda
Am I wrong or is it not the banking community that sets the credit rating? The same banks that were given bail outs so that THEY would not go under.
Why doesn't the government simply require those same bailed out banks ( and there were a lot of them,) to give back the bail out money with interest. I'm sure the amount would cover a good portion of the debt. As a ruff estimate of the amount given out for bail outs as in excess of 100 Billion.
Are you kidding me? Are you honestly saying we are lacking products?
- absolutely.
We are lacking people producing. We are lacking production. We are lacking investment. We are lacking capital. We are lacking ability to successfully put capital and labor and other resources together to produce more products that we want and I have given but a tiny subset of the products that we are completely lacking in the comment you are responding to.
You are lacking economic understanding, that is why you believe that economy is about consumption and not about production. You are wrong, but it's not surprising, you were 'educated' by a system that doesn't understand it either.
Food?
- absolutely. With all the government regulations and subsidies into the food market in various countries, the prices are high because of the government regulations and taxes, food is expensive. Just because YOU do not understand it in your (current) socialist paradise doesn't mean the Middle Easterner doesn't understand it or an African doesn't understand it or an Indian doesn't understand it or a South Asian doesn't understand it or a Russian doesn't understand it and in fact many Americans understand it well enough.
What is lacking is cheap food. What is preventing it is government intervention and taxes and subsidies. What should be done is government must be removed from food business. What will happen is many lands that are currently outcompeted by government subsidies become profitable, mainly in Africa and South America and some in Eastern Europe and some even in the Middle East. More food would be grown and it would become cheaper and we would have more choices of different products at better prices.
Hell, government subsidies exist to destroy food
- hell indeed. While some are TAXED so that some others can be SUBSIDIZED to DESTROY an asset like that, some other starve because of those exact actions taken by the government, which taxes and subsidizes destruction.
Food IS already as cheap as it could possibly get
- go and say it to somebody in the Middle East or Africa or South America or Russia or even North America and obviously China (which creates the problem for itself by following the USA footsteps of currency destruction.) Are you being purposefully obtuse or is this a natural state of affairs with you?
how much cheaper do you want to make it?
- the production must satisfy the demand, this means that there is always a way to make more money, more profit, by selling into less wealthy markets. This means literally the food could become FACTORS cheaper than it is today if only the governments didn't participate in destruction of that market.
Please tell me one single area where there is simply not enough supply to satisfy a possibly existing demand
- are you from THIS planet? People want IMMORTALITY, how about THAT for a demand? Government will absolutely not give it to you even if it could, government wouldn't understand what to do with such a product.
Most of them either due to a lack of resources or a monopoly situation.
- monopolies are always created by governments, never by free markets.
Supply on the other hand is not limitless and not just the trivial consequence you try to make it.
- I fucking never said that SUPPLY was a trivial consequence, are you drunk?
Demand is crucial for the economy to work.
- DEMAND is the TRIVIAL CONSEQUENCE. I am beginning to doubt you have a brain cell that is still operational.
No demand, no sale.
- you are again, completely off on what economy is.
Demand always exists and will always exist as long as there are living creatures.
Supply is limited by ability of the economy to
You can't handle the truth.
The rich should not pay more in the proportional sense. What gives you the right to profit by someone eases labor?
Let me explain how a sustainable civilization works. In a sustainable civilization, people not only work for their own benefit but also work for the benefit of society in general. If someone is exceptionally prosperous, then they should give back to the society that allowed them to become so. That's not communist or socialist, it's common sense. Your civilization won't last long with a bunch of greedy self-serving leeches sitting on top sucking everyone else dry, which is pretty much what we have today.
The top 20% control almost all of the wealth, and keep getting richer while the poor and middle class keep getting poorer. We're the richest country on Earth, and yet we have a large and growing poverty population. Our healthcare is a joke. Our infrastructure is falling apart. And our education system lags behind most of the developed world.
The only thing sustainable in this country IS the rich. The only ones prospering ARE the rich. Everyone else is getting fucked. And now the cracks are starting to show up. This is not sustainable for much longer.
~X~
If we were to put those people unemployed to work we would be able to produce and consume much more than we do now, so how is it that we can't afford to consume again?
Well, of course the situation is not unrecoverable. But there are obstacles.
Currently (before I apply your "if") working for anything less than the social security and unemployment assistance pays you is a bad business decision. People still do that if they intend to maintain continuous employment on their resumes. OTOH an engineer can't say that he was working for 3 months flipping burgers. He'd better say that he was a self-employed contractor, try to disprove that. But most people are actively prevented from working.
Another obstacle is the minimum salary. It's currently something like $6 or $8 per hour. This makes sure that jobs that are less productive than that can't exist (or are paid for under the table.)
Another obstacle is payroll taxes. Some of them count toward your income tax; other are paid by the employer. This increases the cost of labor even further, guaranteeing that cheap jobs are illegal in the USA.
Now if we apply your "if" and all these problems are corrected, we still need to outcompete China and India and other developing nations if we want to sell. This can be done by lowering prices on common goods (TV, phones, etc.) or by maintaining high prices on goods that the USA has near-monopoly on (high-tech R&D, CPU, etc.) The latter can't occupy many people, and those are already employed anyway. The former is an option, assuming that tens of millions of unemployed people can overcome their habit of not working and go to work every day (instead of going to work on some nights, when the Moon is not shining.)
However you do it, the whole structure of prices in the USA will have to go down, about to 1% of what it is now - to match Chinese quality of life. Cars will be a luxury; bicycles will be the common way to move around; horses may become a good option for rural dwellers. The USA will survive, but it will not be the USA that we know today. Perhaps that is unavoidable, and perhaps it is better than the Mad Max scenario that is the other possibility.
With regard to "consume again" thing, the USA is living on borrowed money and borrowed time. We aren't supposed to be consuming what we are consuming. This level of consumption is unsustainable. You should be able to consume only as much as you are producing. If you are mowing lawns five days a week, expect to pay 20% of your salary to have your own lawn mowed by someone else one day of the week. But right now you are sitting in the office 5 days a week, playing games on the computer, and you expect to pay 0.5% of your salary to have your lawn mowed.
isn't the rating agencies to be blamed for missing the whole sub-prime mortgage crises .........not a confidence booster in their abilities.
we deserve a lower credit rating....until we can balance
I honestly don't understand where you're coming from here. You do agree that the point of these agencies is to evaluate how likely US is to pay its debts in the future, right? But you disagree that the stability of the government (which is affected by the changes in political climate) and the attitude of the government towards its obligations (which has also been less certain recently than before) affects the likelihood of government paying its debts?
The war in Afghanistan is hadly "completely fucking useless". Osama Bin Laden killed thousands of civilian US citizens. The Taleban were being financially propped up by OBL, and they had given him free rein to do as he wished. Then when we sent our diplomats to talk to the Taleban about this, they stonewalled us and gave him shelter.
By almost any standard I have ever heard of, this is an act of war (on the part of the Afghan government). It's so clearly an act of war that if you were to take a course in the causes of war, 9/11 would be in the textbook.
I'm not at all saying that there weren't problems with that war. There were. It's going badly for us now because of these problems. But it furthered the national security interests of the United States to defeat the Taleban and get Bin Laden, dead or alive.
A sad fact of international politics is that you can't seem to be weak. If other nations think you're an easy mark, they'll try to get in on the action. Ask China how that worked out for them a hundred years ago, when every major European power repeatedly embarrassed them and demanded all kinds of humiliating special treatment afterwards. The US absolutely cannot be seen to do nothing in the face of something like 9/11.
Furthermore, your post implies a choice between invading Afghanistan, and investing in nuclear. But the US government is more than willing to spend money it doesn't have. There is no real either-or choice here. If the government were united behind alternative power, then it would happen, budget be damned. They simply aren't.
Secondly, there's a number of people who believe that the War Powers Act itself is an unconstitutional restriction on the power of the Presidency. The Constitution says that "The President shall be Commander in Chief of the Army and Navy" (Article II Section 2) For its part, Congress is given the powers to "Declare War," "Raise and Support Armies," "Make rules for the government and regulation of land and naval forces," "to provide for calling forth the Militia," and "to provide for organizing, arming, and disciplining the Militia." (Article I Section 8.) Basically, Congress approves spending money, and then the Executive oversees the programs on which it is spent. Just like every other law, program, and department the Constitution provides for.
McCain is among those who oppose the War Powers Act as unconstitutional. I know he was part of the effort to retroactively provide for an Authorization for Use of Force because not doing so would cause a situation where the Executive branch was openly violating the law of the land, and that Shouldn't Happen. I don't know the status of that effort*.
Obama, on the other hand, supports the War Powers Act and has throughout his public life. Except, apparently, when it requires him to explain to Congress why military action is necessary. Somebody's a hypocrite here, and it's not McCain.
*It should also be noted that at the beginning of the Libyan operation, Obama could have gotten his Authorization if he had made a case, any case, in favor of it. There's a lot to choose from. Gaddafi was gunning down civilians from airplanes. Hell, he BLEW UP a passenger jet back in the 80's. This is a bad dude, and if the rebels we're helping are any better, there's a serious case to be made to do so. But since Obama has refused to give basic information (like criteria required for victory) nobody's going to support it.
I do agree with all the post. Except that they will continue to manufacture in China. First, if Toys (just an example) imports tarifs made toys 4X more expensive, people would chose to buy less. And people would start to manufacture locally. But in any case, you still have all the tariffs.
I think that US corporations want to bargain with countries saying that they can export goods to the main buyer, the USA, if they pay for patents and all kind of intellectual property ideas (to create scarcity of "intangible goods" or monopoly power over ideas and concepts). But those ideas are typically ones that do not employ the larger population, and further, they can keep producing decades after work stopped. This is the reason why "services" economies will fail.
I think it's hard to base an economy just on intellectual property. And if you do, you need to be well into welfare and redistribution, Which is the opposite interest of the owners of the IP.
unfinished: (adj.)
Regardless of what Bush II did, the spending under Obama [wikipedia.org] stuck up in that level. If it were really Bush's fault Obama could have simply got the spending to the levels they were when Clinton left office. The reason why he didn't do that is because his Administration seems to have an unlimited belief in keynesianism. Obama's policy seems to be to spend his way out of debt [wikipedia.org].
Keynesianism gets a bit of a bad rap because people think the federal government follows Keynesian rules, which it hasn't for many decades. According to Keynes, the -only- way Keynesianism can ever work is if you increase spending during recessions and reduce it during non-recessionary periods. Unfortunately, what we see instead is "increase spending in good times, and increase it even more in bad times." That's not Keynesian.
I'd like to see actual Keynesian policies, but I don't think the Federal Government will ever have the discipline.
1) are you calling the NATO actions in Libya a *war*?
Yes, yes I do. Misguided hands-tied war that will have little effect, but a war it is.
A sad fact of international politics is that you can't seem to be weak. If other nations think you're an easy mark, they'll try to get in on the action. Ask China how that worked out for them a hundred years ago, when every major European power repeatedly embarrassed them and demanded all kinds of humiliating special treatment afterwards.
Having studied the Opium Wars in some depth, China's government was certainly decadent and corrupt at the time. However, what caused their continued defeats and humiliations was their serial welching on every treaty they signed. The mandarins were so racist they kept convincing themselves that treaties with white guys weren't binding, and they were so stupid that they kept repeating the experiment until the Summer Palace was burned to the ground.
Naturally (and especially in China) there has been much revisionist history written about this period. But if you go and look at the primary materials, you can get a pretty good idea of what actually happened.
That's not to say the the Western powers (and their trading companies) were pure by any means. But China's problem was vastly magnified by their own actions.
One thing I hardly see in official discussions of the debt ceiling is any hint that they know voluntarily defaulting is not just fiscally, but _morally_ wrong.
Nowhere do I read about direct concern for those who have invested in the US. Only, sometimes, indirect concern that they might not take the same risks.
I know it is unlikely that these people wouldn't have been paid, (and I know that many of these people aren't totally deserving of compassion), but isn't refusing to pay people that you owe, when you can, morally wrong, akin to theft?
Not sure if this has been said before somewhere significant (or even here), maybe it's just chance I haven't seen this said. But it irks me.
You agree with me.
Ooookay. I'm not going to get on the personal level, sorry. Keep your capitalist fantasy, I keep my "socialist" reality and I guess we'll both be happy that way.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Well, the problem is we ARE heading into the direction of an IP based economy in most of the western world. There's very little else we'll export in the foreseeable future. With manufacturing being send abroad more and more, agriculture hardly being an economic factor and services being pretty hard to export, especially when the US seem hell bent on making coming into the country as a tourist as unpleasant as possible, there is very little left to keep the foreign trade balance at least half way in check.
Another problem is that the USA people buy the goods, the USA government buys the goods, but the export is done by corporations who don't give half a shit about the USA. A government has an interest in the well being of a country (seriously, it's its only right to exist. If it doesn't, get rid of it, NOW!). The citizens of a country might have the well being of that country at least as a partial interest. A corporation or company has no vested interest. If the country doesn't please them anymore, they move away. Without any remorse. You should never rely on any company to have any interest in the economy of a nation. They do not. It's neither their job nor their agenda. The IP, now, is held nearly exclusively by corporations. There is very little IP held by nations (if at all, I couldn't really think of any examples now, most nations follow the creed that any IP they'd hold would be property of its citizens, hence public), and few individuals (who might, for personal, emotional or rational reasons have any interest in a country's existence) hold any IP. It's almost entirely in the hands of corporations. It's not like agriculture, where you can't simply pack and go because you cannot take the soil with you. It's not like manufacturing where you can simply pack the raw materials that are still in the mine and go. IP laws are very transportable. Whether my company is here or in Abu Dhabi makes no difference for me, as a corporation.
And that's the big danger this poses. Corporations can easily hold countries hostage. Play by my rules or I'll go to a country that does, and your export statistics look like those of some third world country, your rating goes down the drain and you're bankrupt before the next sunrise.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
You will care when interest rates rise for everyone from the local bonds building your schools to state bonds building roads and bridges because those levels of gov't are dependent on federal funds, that is taxes paid by state residents and laundered through the federal government and returned at varying ratios with strings attached. It may even effect the interest rate on your home mortgage if it's not fixed.
The ratings agencies have warned the feds for months. They wanted to see $4 trillion in cuts and only one plan offered that. It was the one called "Cut, Cap & Balance" and passed by the Republican-led House first with some Democrats joining in. The Democrat-controlled Senate voted immediately to table the bill. It never even got a debate.
The White House belittled the plan as "Duck, Dodge & Dismantle" when all the cuts talked about are reductions in automatic increases. Since the Budget Act of 1974, the federal government depends on "baseline budgeting" and today that means a guarantee that budgets will rise 7.5% over the prior year every year. We should be using "zero-based budgeting" where departments must justify every budget dollar.
We know from debt commissions and other studies, there are billions--maybe $100-200 billion according to the non-partisan GAO--in overlapping and duplicative spending but we have Democrats screaming nothing should be touched and anyone who wants spending reform is a "terrorist" (Vice Pres. Biden) or wants to "destroy" government (Minority Leader Pelosi). This is NOT helpful.
Republicans offered their long term reform ideas months ago in the form of the so-called "Ryan plan." Democrats offered criticism all year but no formal counter proposal. There was nothing in writing that could be "scored" by the CBO and Obama's budget received ZERO votes in the Senate. Senator Majority Leader Reid said it would be foolish for his congressional Democrats to offer a budget. That body hasn't passed a budget period in 829 days. Way to avoid responsibility and accountability!
Instead the president's party and its allies used the GOP proposal in divisive, misleading campaign ads. One even showed a doppelgänger of Congressman Ryan pushing an wheelchair-bound elderly woman over a cliff when the plan itself doesn't effect existing benefits for anyone 55 or older. Again, NOT helpful. (Hey, what happened to the "new tone" of "civility" after the Tuscan shooting?)
The president talks about "millionaires and billionaires" when the actual tax changes would effect, not those super rich alone, but persons making $200,000 or couples at $250,000. Small business people filing as S-corps or a cops and teachers in some high cost of living areas like NYC. Taxation needs fundamental reform not just higher rates on easy political targets who are also the most able to avoid taxation. Just as Ireland about Bono.
For anyone reading here who doesn't know and feels guilty a
Reminds me of http://math-www.uni-paderborn.de/~axel/us-d.html, an article I came across that compared US culture to German culture. (not sure how applicable it is to Europe in general
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
Dumocrats have controlled the congress for over 40 years, now we all have to pay!
Say thanks to GWB and RC.
Leslie Satenstein Montreal Quebec Canada
Corporation have little loyalty, but they still have owners. So ultimately, it could be that these owners do not care about countries. But is that a good premise? Have people like that been adapting to power shifts for centuries? Corporation will not care if owners do not care. But, who would those be, if they exist?
unfinished: (adj.)
Yeah, I bet it would get pretty personal for you if you showed up with your assertions that food is cheap and abundant during the Middle Eastern revolutions this year, be it Tunisia, Egypt, Bahrain or Libya. It would have gotten pretty personal for you there and you wouldn't have made it out of there alive.
You can't handle the truth.
We've obviously all been hoodwinked. This is just another move to make fortunes for the ruling elite leaving the poor man holding the bag(and only the bag it wasn't worth stealing).
I bet it would get pretty personal for you if you came to these places and started spouting your socialist views on how cheap food is that your government is subsidizing farmers and then paying farmers to destroy it
Swaziland: HIV patients 'eat dung to make drugs work'
http://www.catholicnewsagency.com/news/out_of_food_zimbabweans_eating_cow_dung/
Food Prices Fuel Egypt Unrest
Egypt and Tunisia usher in the new era of global food revolutions
Spike in global food prices contributes to Tunisian violence
Food price jumps protested in Tunisia, Algeria, Morocco
Egypt and Tunisia: rocked by the global food crisis
Hunger in Syria, Libya and Yemen
Ukraine to control food prices
Rising food prices increase squeeze on poor - Oxfam
As Food Prices Spike, Azerbaijanis Endure Border Chaos To Shop In Iran
For dummies: The impact of the global food crisis on Azerbaijan - in pictures
Estonia Raises Inflation Forecast on Global Food and Fuel Prices
Nigeria: food price up as inflationary rate drop
High food prices 'caused Niger hunger'
Mexico: Food prices reach record high
China's food price inflation hits 14.4% in June
Lithuania and Latvia catching up with Estonia
Food prices rise, wages donâ(TM)t
China food prices spike as floods ruin farmland
Brazil: Food Prices Surge and Head Toward Dangerous Levels
Rise in food prices causing major concerns in Russia
Stockpiling as Russian food prices soar
Food prices have soared most in Venezuela, Bolivia and Argentina
Thousands protest against high food prices in Delhi
India: A spike in food prices is especiall
You can't handle the truth.
Ah, the good old No True Scotsman! Never fails.
Do you know that anybody can play that game? Any economist can say that his theory is correct because no country ever followed exactly what he proposed.
How is it possible when dollar is pegged to OPEC oil?
Slashdot = Sarcasm
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The owners of a company rarely handle the direction the company is heading these days. Companies are owned by shareholders who often don't even know what shares they own, since they simply dumped money on some investment bank to "make more of it" for them. That's what makes corporations intelligent entities without remorse or conscience.
The owners don't know they own it. The investment bankers have a duty to invest the money trusted to them wisely and cannot care about countries or their wellbeing. And CEOs cannot let their personal feelings for their country overrule the needs of the company, even if they are uneasy with the idea of dumping thousands of workers, their primary duty is towards the owners of the company.
If you now have a system where employees getting stock as compensation for something, you might end up with the quite perverted situation that the employee himself is forcing his CEO to eliminate his job. For the good of the investor, who is said employee. I dunno what that's called, poetic injustice?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Are you really trying hard to misunderstand me or are you just trying to defend your position with more and more harebrained arguments? Ok, ok, I bite.
Mostly because debunking it is easy. So Africa and some areas of Asia has a food shortage, and hence it's a supply side shortage because, hey, it's obvious! More food, more cheaper food, and they all can eat! Right?
Nope. There's plenty of food lying around, stockpiled in the western democracies, going to waste. Why don't we send it there? Because they don't have the money to buy it. Again, demand side cannot fulfill one of its crucial requirements: Having the means to acquire what they want to have to fulfill their needs. If we produced food cheaper that would still not change. Food is amongst the first requirement of a human according to the hierarchy of needs. People would do ANYTHING to fulfill this need, before even considering safety, shelter or anything 'higher up'. They would spend whatever they have to at least satisfy that need.
The only reason for no supply in this area is simply that there is nothing to be gained from supplying it because the demand side cannot compensate you in any way. And an unstable government isn't really something that encourages me to supply my goods there either. Why should I send food, no matter how cheap I could produce it, into an area where it's more likely to get stolen than to get bought?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The debt and deficit are permanent problems. Raising the debt ceiling, while necessary, is a band aid. Until we change our policy of money as debt we are just seeing the beginnings of this problem. We need something like The Monetary Reform Act to drive a stake in the heart of debt and the central banks that own us.
Google: /tin foil hat comments in 3... 2....
Money As Debt
The Monetary Reform Act
The Money Masters
Utilizing the synergization of benchmark e-solutions to pre-workaround action items!
You'd be very popular in these places, all of which could produce more food on their own if government was not taxing and subsidizing and regulating food in the world:
Swaziland: HIV patients 'eat dung to make drugs work'
http://www.catholicnewsagency.com/news/out_of_food_zimbabweans_eating_cow_dung/
Food Prices Fuel Egypt Unrest
Egypt and Tunisia usher in the new era of global food revolutions
Spike in global food prices contributes to Tunisian violence
Food price jumps protested in Tunisia, Algeria, Morocco
Egypt and Tunisia: rocked by the global food crisis
Hunger in Syria, Libya and Yemen
Ukraine to control food prices
Rising food prices increase squeeze on poor - Oxfam
As Food Prices Spike, Azerbaijanis Endure Border Chaos To Shop In Iran
For dummies: The impact of the global food crisis on Azerbaijan - in pictures
Estonia Raises Inflation Forecast on Global Food and Fuel Prices
Nigeria: food price up as inflationary rate drop
High food prices 'caused Niger hunger'
Mexico: Food prices reach record high
China's food price inflation hits 14.4% in June
Lithuania and Latvia catching up with Estonia
Food prices rise, wages donâ(TM)t
China food prices spike as floods ruin farmland
Brazil: Food Prices Surge and Head Toward Dangerous Levels
Rise in food prices causing major concerns in Russia
Stockpiling as Russian food prices soar
Food prices have soared most in Venezuela, Bolivia and Argentina
Thousands protest against high food prices in Delhi
India: A spike in food prices is especially painful for the poor
You can't handle the truth.
Makes sense. Just the same reason sometimes we get shocked when we learn Chicken are raised and processed, and start buying organic products and fair treatment. Or fair coffee price. When there are too level of indirection. If people had to kills their own cattle or chicken, things would be different. Sometimes a documentary can alter the direction of an industry (even if slowly). Maybe it's a matter of having more awareness.
I also think that free trade and globalization negatively affected the USA. But that corporation would heavily resist some adjustments, because they want a fair pie of emerging economies. And if there's any protection in the USA, getting a pie of emerging economies will be harder still.
unfinished: (adj.)
I read through these 1,000 comments, and it is really tragic how the so-called "left" has been completely, utterly indoctrinated with economic illiteracy in order that bankers might profit in their continued looting of this nation. While you haven't exhibited the penchant for that inquisitorial moral crusade to hunt down all the racists, sexists, and homophobic white people who are the reason the world is going to hell, I have no doubt that particular theory appeals to you as well.
The first, fundamental concept that must be understood is this: The federal government DOES NOT tax the people in order to raise revenue. There is no need. A sovereign nation with a fiat currency can create as much money as possible. While it is possible for hyperinflation to occur, that typically only happens when the money creation is much greater than economic growth or there are extraneous issues like war. That, ultimately however is the reason taxes are imposed: it is a direct way to control inflation, i.e. it is the way the government takes money out of circulations.
Now, the other more complicated matter pertains to that ratio of taxation and money creation, and why public debt is not only necessary but has always existed since the founding of the very first cities and advanced economies. Taxation MUST be less than money creation otherwise people will become poorer. The only way for personal wealth to increase is for the total money supply to increase, and the only way that can happen in a rational fashion is with a government or an entity with government powers coordinating that creation in a given social order.
If you really want to know the truth, it was the "surplus" years under Clinton that really precipitated this crisis. The immediate result was a rapid loss of incomee, which could only be remediated by massive borrowing on a personal level. This was intentional to MAKE YOU a debt slave.
Now, we have this nonsense. And why is it? Because the solution is for the government to simply print money until aggregate demand and employment returns with rational public works projects like every society has employed from Hammurabi until modern times. But to do that will 1) reduce the value of the debt holders notes due to inflation and 2) free you from their grasp.
All of this is a sham.
What's worse is the truly wealthy, the people who benefit from this high level corruption and the trillions of dollars given to the banks instead of put into public works projects don't even pay income taxes. Why? They are paid with capital instruments, and therefore pay ridiculously low capital gains taxes.
I encourage you to read the works of genuine progressive economists like Michael Hudson, and to search for the various top sites of economists who promote Modern Monetary Theory. You'll learn a lot, and realize why your specific example has zero relevance to our continually collapsing economy and only serves to make bankers richer at your expense.
I don't read or respond to AC posts
Ah, the good old No True Scotsman! Never fails.
Do you know that anybody can play that game? Any economist can say that his theory is correct because no country ever followed exactly what he proposed.
I wouldn't say this is a No True Scotsman situation. We've been able to spend ourselves out of recessions before. Does that give you debt? Yes it does, debt that you pay off when the money comes in. I'd like to see the "pay off debt" part actually happen someday.
I did not overlook your list. It just doesn't mean jack. We were discussing the US economy and how to fix it, as far as I am concerned.
All the nations you're citing are facing far more dire problems than the question whether cheaper production or more money in the pockets of the people is the solution. Also, we were discussing the matter of the US economy and how to solve their problems. I'm not responsible for every nation around the globe, thankfully. And I guess you're happy about that as well.
Most of the countries you name are facing one or more of the following problems:
1. War/civil unrest/internal insecurity
2. Rampart corruption
3. Not even remotely a market economy
These problems cannot be solved by "more production" or "cheaper production", at the very least not alone that way. First those three problems have to be solved, because without solving them you can't even begin to produce cheaper.
This isn't really to my concern right now, since, as stated above, we were discussing the economy crisis in the US and many parts of the western world. And there, with "there" being pretty much any country in the western world, i.e. US, most of western/central Europe, Australia and so on, the problem is certainly not a shortage of goods.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I did not overlook your list. It just doesn't mean jack. We were discussing the US economy and how to fix it, as far as I am concerned.
- you were never discussing how to fix any economy, your views can't fix an economy.
All the nations you're citing are facing far more dire problems than the question whether cheaper production or more money in the pockets of the people is the solution.
- affordable food is near the top of all dire problems.
I'm not responsible for every nation around the globe
in your own words:
Is there anything you could not buy, provided you had the money? Food? There's more food getting produced than we can possibly eat. Hell, government subsidies exist to destroy food, if anything could be more backwards I can't think of it. So we need cheaper food? Food IS already as cheap as it could possibly get, there is a certain amount of work and investment to get food produced and the margins are already razor thin, how much cheaper do you want to make it?
so you are not responsible for world's problems yet in your estimate food is as cheap as it must be and it is correct that governments are involved in food production, subsidizing production and destruction of the resource, production of which the world sees huge shortages of.
And I guess you're happy about that as well.
- people with views like yours are in power in European countries and some are in US and other places. The fewer of people like you there are in governments around the world the better.
These problems cannot be solved by "more production" or "cheaper production", at the very least not alone that way.
- all of their problems would be solved by exactly the same thing: more and cheaper production.
on, the problem is certainly not a shortage of goods.
Food is not the only resource of which there is shortage of, and in your socialist ideology and complete misunderstanding of what economy is about the people must be consuming, never mind if they are producing anything, thus people can be consuming with other people's money, producing nothing of value in exchange for their consumption and somehow that's supposed to be an equitable and workable economic model.
Anyway, you may want to find a more useful way to waste your time and to talk to me and I have things to do.
You can't handle the truth.
Actually, I need no theory. I need to look out the window and know that high tax is a pretty good idea. With high being relative, I pay about 40% in tax directly (total is about 60% considering VAT and such). I can deal with that, considering that I see how my tax money is being spent.
The world economy is in a downturn, yet people have work here. Everyone's going bankrupt, except our local companies. Nobody on the planet has money to go shopping, but our shopping malls report normal sales. Other banks need bailouts, ours don't dare to touch the offer (mostly because of the strings attached basically put them at the mercy of the government, something the US should probably have done, too).
I dunno, but somehow... It seems that works out better than the US "let the market sort it out" ideal.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I offered you a few posts ago that you keep your capitalist fantasy, I'll keep my "socialist" reality and we'll both be happy.
The offer still stands.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The problem with this is that producing in country A and selling in county B does not work. We're currently seeing that it does not work out in the long run. We're trying to produce in China and try to sell it in the US and Europe. How is that supposed to work out?
You can do that for a while, at least as long as not everyone is doing it and hence jobs (and thus income) still exists in the US and Europe, and as long as people have some kind of savings or at least some way to get deeper in dept (and have people who are willing to do so for consumption).
And as soon as it was no longer possible to lend more money or get some job for more income, people stopped consuming and we're now where, well, where we're now.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Should of?? Righto chap. That explains why the conjunction is spelled should'f.
But seriously, it's "should have" and if you don't know that you're kinda retarded.
Who cares.
Everyone who has counted the US out has ended up being wrong and loosing.
Get on the winning team.
That's not exactly easy to do when 19% of your budget goes to pay for a war that you can't just suddenly yank troops out of, 40% go to entitlements that can't easily be scaled back, and most of the rest is mandatory spending. The reason our government is in trouble is that the economy is in the tank. The government's problems can't feasibly be fixed without either fixing the economic downturn first or raising taxes.
I don't think you realize what the numbers look like if you're blaming the current administration in any significant way. The deficit in FY2010 was $1.171 trilion, and total discretionary spending was only $1.378 trillion, which means that basically the government would have to cut out nearly eighty-five percent of discretionary spending just to not have a deficit. To get back to the spending level from the 2000 budget, the government would have to cut out all discretionary spending and $374 billion in mandatory spending.
The bottom line is that there is simply no way to sustain the current level of mandatory expenditures without raising tax revenue in one way or another. Therefore, unless we are wiling to cut medicare/medicaid/social security payouts (and basically screw over a lot of the elderly in our country), our only real options are to either pump more money into the economy so that businesses will then pay more money in taxes, or raise taxes.
The only absolutely guaranteed way to solve the problem is by raising taxes. Neither party appears to be willing to do that. And that's why we are in the situation we're in now, with one of the lowest marginal tax rates on average income workers of nearly any developed country, and a government that can't pay its bills. Unfortunately, we have Republicans who campaign on "no new taxes" and Democrats who are so afraid of Republicans blaming them for new taxes that they aren't willing to raise taxes either. That's how we got into this mess, and I have exactly zero faith in either party having the testicular fortitude to get us out. Until the public accepts that our tax rates are exceptionally low by the standards of most first-world countries and agree to an increase in marginal tax rates, our country is basically screwed, and all the Keynesian stimuli in the world are just going to push the problem a little further down the road.
While we're at it, we should roughly double the current minimum wage and add some import tariffs to counteract the increase in taxation and bring jobs back to the U.S. Again, though, both parties are too afraid of losing the next election to actually do any of those things.... And this, ultimately, is why the Founding Fathers wanted Congress positions to be spare-time jobs, not principal employment, but I digress....
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Monetary policy is a complex thing. The short answer: Sovereign nations do not "borrow" money as you borrow money. They create money. The purpose of taxation is to create demand for money within the political sphere of influence of a given power as well as control the inflationary effects that necessarily come from money creation. Modern economies issue debt to provide financial stability, while the US has gone even further in a system some call imperialist (Read Michael Hudson's Super Imperialism). The US Empire as it exists today would be impossible without the vast issuance of debt.
But, when it comes to the ratings agencies, you'll just have to read this.
http://bilbo.economicoutlook.net/blog/?p=15580
I don't read or respond to AC posts
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It is not in the hands of US President, Administration, The House, The Senate or Supreme Court.
Americans should mold USA into low cost, high quality and exported oriented nation and amend Constitution accordingly.
Slashdot = Sarcasm
I feel a big driver of this downgrade was to restore credibility to the ratings agencies. The ratings agencies have been considered a joke since the financial crisis started. Either to avoid being completely dismantled after having a AAA rated US government default, or more likely to bare their teeth after being shown to be fools, S&P was trying to be aggressive about this downgrade.
I work in the industry, and I can assure you that the big short was pretty spot-on about the ratings agencies. They are hardly on the street and considered a bunch of hacks that have to be dealt with, not anyone doing any serious work.
Unfortunately, democracy has that weak point. The majority of the people will accept a situation that's not maintainable. It's easy to get elected by promising the workers increases in their pensions.
Well, make me president then. I think I can make every American a millionaire in 4 years. I mean given the current situation it should be to hard to create hyperinflation...
If you want to get technical, the Congress is also supposed to pass a budget by April 15 under the Congressional Budget Act of 1974; but we don't see them doing that either. Instead, they just pass Continuing Resolutions to keep spending levels the same as they were or slightly reduced on a percentage basis in order to prevent a complete government shutdown.
I wish I could just delay doing work in my job forever.
As I recall this happened to Canada years ago, back in the 1990's. It put the scare into people. Allowed politicians to make the hard unpopular decisions like raising taxes and limiting services. After that, we ran pretty much balanced or surplus budgets until ironically we put the "Conservatives" into power. Who then proceeded to run the largest deficit ever in Canadian history. Granted this was because they did the whole bailout and throw money at the problem hoping it will go away policy like every other government in the world. I love how the argument now is, well just imagine how much worse it would be now if we hadn't done that, it would be way worse! Politics would be funny if it wasn't so real...
Anyway maybe this will allow politicians to make some correct decisions for a change. Because despite what people say about politicians acting all stupid, they act this way because the people are like that. They want all these services, yet do not believe somehow that they need to pay for them, hence a huge deficit. As soon as at least a large group of the population accepts the fact that "shit ain't free", then politicians can start raising taxes, and cutting services, which is basically what is required to eliminate the deficit. You can't just reduce it, you need surpluses to start paying down debt. This isn't rocket science people.
There many things. One of them is the theory of economy where certain debt levels are considered safe. This is just a guess and a bet really but historically it worked this way. It also makes sense to invest in a country with such a big financial market and relatively clear and transparent legal system this offset some of the risks associated with economy that is lame. At some point comes realization that not only the levels of debt and deficit are too high but also that there is no political way to get them in balance. The american political system is corrupt to the bone but was able to handle the situation till now. it becomes apparent also for eonomists (who are just bean counters not real scientitsts not even engineers) that situation is not sustainable. There is a lot to say about how to get out of the mess but fixing deficits of your country and your state apparatus is a must. This can be done. We will see at what level of pain the fixing will start.
Right, they spend it on ME.
Kind of like a government daddy taking my allowance money and telling me it's an investment. He tells me how happy I'll be after he pays me back, cause he'll pay me back lots extra for being so patient. Just as soon as the nice Nigerian man sends him the check.
Personally I'll wait until the end of this term to see how much of Bush's damage he can undo.
As we've seen, he's not interested in undo-ing Bush's damage: nominating Geitner, et al, who got us into the mess in the first place, giving massive subsidies (a.ka. bailouts) to the banks who funded his 2008 campaign with no strings attached, re-instating the Bush tax cuts, cutting social entitlement programs that could spur our economy, the tax holiday, banking de-regulations, etc, etc, etc. All of these things have been counter to the advice of the great majority of economists and not coincidently benefit his major campaign donors or potential donors. Without campaign finance reform, this is going to go on forever.
It usually does work. Countries tend to specialize on something they can do better. The problem is that macroeconomic conditions can make it so that most goods that can be exported (things that can be shipped or delivered remotely) are always cheaper to do in one country vs another (like a highly devalued Yuan for several decades). So there was an economist that "proved" this wouldn't happen (David Ricardo) as all that mattered what not the absolute costs, but the relative costs. But the theory was obviously shortsighted, because there a large lag in between where a richer nation still has credit and higher overall costs (typically labor and taxes), so for almost all industries, and given a decision of where to manufacture driven at the company level, most companies will chose the lower cost alternative, regardless of the relative costs of production.
What I am trying to say, anyway, is something else, Countries have different endowments. And if each was a "company" (which they are not, but suppose they could) they are better suited to specializing in certain goods and services. They can produce more of what they are very efficient at producing, generating a surplus, and importing goods some other country is extremely efficient at producing. Probably, exporting Bananas from Alaska, and importing Ice from Colombia wouldn't make sense (in spite of the fact that they COULD if they wished so). This is better that having Alaska produce enough Bananas and Ice for internal consumption and having Colombia do the same, because each one will be very inefficient at some things. That is what Ricardo wanted to say. But the problem faced today is when macroeconomic and fiscal conditions (which have intertemporal preferences factored in, decisions such as let's do subsidies in my country until most other firms in this industry anywhere else collapse, and then, raise taxes when we are mostly alone) make it so to the analogy of Alaska being a cheaper alternative to producing Bananas than doing in Colombia (imagine the labor rates where 4 times cheaper in Alaska vs Colombia, there where subsidies, and that domes and structures for growing Bananas and heating was almost free for 50 years, etc). I this cases (and it's a bad example because Bananas trees don't need maintenance and do not become obsolete quickly), global firms would chose Ice from Alaska, and Bananas from Alaska. It wouldn't happen to all goods at the same time, and given that richer countries have more and better credit, you'd start to see in Colombia a similar thing that what happens with China and the USA. In the long run, it's unsustainable, and this has more to do with artificial conditions (exchange rates, excessive lending to the USA by buying treasury bonds for decades, etc) and lower standards of living in China, than with being what makes most sense. And Ricardo didn't predict this, but it's obvious. Companies decide what to produce individually, so in the short term, this situations create what we see today. But they shouldn't. Raising taxes on imports levels this off. Imagine people from Alaska wanted to export Bananas, which with all the subsidies, etc. costed 10% less than in Colombia. I Colombia had a 20% tax, they wouldn't be able to export anything at that price. And companies would prefer Colombia, for their domestic market, be served from Colombia.
This is why I brought import duties.
unfinished: (adj.)
HERE HERE!
In English it's subsidies, not subsidiaries.
You have failed to prove your point, sir. Are you declining to argue it further?
If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
Technically, I needn't prove it. It has been tried where I live. And looking around myself, I gotta say it works. I have an affordable flat, crime rate is low, unemployment is low, average salary is fairly high and even the lowest incomes can survive on a single income. When I look across the borders around me in Europe, to Madrid, to Athens, to Paris and now to London, I gotta say SOMETHING about it must have worked out.
I'm not here to evangelize. I present and offer an example, along with an explanation how it works. Take it or leave it, the decision is yours.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.